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Federal Aviation Administration, DOT.
Notice of policy.
The Federal Aviation Administration announces its policy for the type certification of certain unmanned aircraft systems as a special class of aircraft.
This policy is effective September 18, 2020.
Andrew Guion, Programs and Procedures Section, AIR–694, Small Airplane Standards Branch, Policy and Innovation Division, Aircraft Certification Service, Federal Aviation Administration, 901 Locust St., Room 301, Kansas City, MO 64106, telephone (816) 329–4141, facsimile (816) 329–4090.
In 2012, Congress passed the FAA Modernization and Reform Act of 2012 (Pub. L. 112–95). Section 332 of Public Law 112–95 (codified at 49 U.S.C. 44802) directed the FAA to develop a comprehensive plan to safely accelerate the integration of unmanned aircraft systems (UAS) into the National Airspace System (NAS). As part of that plan, the FAA issued the Operation and Certification of Small Unmanned Aircraft Systems final rule (81 FR 42064, June 28, 2016), which added 14 CFR part 107 to the FAA's regulations in Title 14 of the Code of Federal Regulations (14 CFR).
Part 107 sets forth rules for the operation of small UAS
The FAA establishes airworthiness criteria and issues type certificates to ensure the safe operation of aircraft in accordance with 49 U.S.C. 44701(a) and 44704. Section 44704 requires the Administrator to find an aircraft, aircraft engine, propeller, or appliance is properly designed and manufactured, performs properly, and meets the regulations and minimum standards prescribed under section 44701(a) before issuing a type certificate for it.
14 CFR part 21 contains the FAA's procedural requirements for airworthiness and type certification. When the FAA promulgated part 21 as part of its recodification to combine and streamline the Civil Air Regulations, it originally required applicants for a type certificate to show that the product met existing airworthiness standards (29 FR 14562, October 24, 1964). Existing airworthiness standards for aircraft and other products, issued as a separate part of the FAA's regulations, are: Normal category airplanes under 14 CFR part 23, transport category airplanes under 14 CFR part 25, normal category rotorcraft under 14 CFR part 27, transport category rotorcraft under 14 CFR part 29, manned free balloons under 14 CFR part 31, aircraft engines under 14 CFR part 33, and propellers under 14 CFR part 35.
The FAA subsequently amended part 21 to add procedural requirements for the issuance of type certificates for special classes of aircraft (52 FR 8040, March 13, 1987). In the final rule (amendment 21–60), the FAA explained that it intended the special class category to include, in part, those aircraft that would be eligible for a standard airworthiness certificate but for which certification standards do not exist due to their unique, novel, or unusual design features. The FAA further stated that the “decision to type certificate an aircraft in either the special class aircraft category or under . . . the FAR is entirely dependent upon the aircraft's unique, novel, and/or unusual design features.” (52 FR 8041).
Specifically, the final rule (amendment 21–60) revised § 21.17(b) to include the certification procedure for special classes of aircraft. For special classes of aircraft, for which airworthiness standards have not been issued, the applicable airworthiness requirements will be the portions of those existing standards contained in parts 23, 25, 27, 29, 31, 33, and 35 found by the FAA to be appropriate for the aircraft and applicable to a specific type design, or such airworthiness criteria as the FAA may find provide an equivalent level of safety to those parts.
An “unmanned aircraft” is an aircraft operated without the possibility of direct human intervention from within or on the aircraft. See 49 U.S.C. 44801(11); 14 CFR 1.1. Unmanned aircraft include all classes of airplanes, rotorcraft, and powered-lift aircraft. Many UAS elements, while essential for safe operation, are part of the UAS system but are not permanent features of the unmanned aircraft. For example, instead of traditional landing gear with wheels and brakes, many UAS have a launch and recovery system. Additionally, because the pilot is not situated within the aircraft, unique configurations and applications of airframes, powerplants, fuels, and materials are possible and can result in flight characteristics different from those of conventional aircraft. These features specific to UAS are the very unique, novel, and/or unusual features the special class category was designed to accommodate.
A notice of policy and request for comments regarding the type certification of certain UAS was published in the
The FAA received 66 comments. The majority of the commenters were individual UAS operators. The remaining commenters included UAS manufacturers, the Choctaw Nation of Oklahoma (CNO), the People's Republic of China (PRC), and organizations such as the Aerospace Industries Association (AIA), the Aircraft Owners and Pilots Association (AOPA), Airlines for America (A4A), the Air Line Pilots Association (ALPA), the Association for Unmanned Vehicle Systems International (AUVSI), the Commercial Drone Alliance (CDA), the National Agricultural Aviation Association (NAAA), SAE International (SAE), and the Small UAV Coalition. The following summarizes the comments received and the FAA's response.
AIA, AOPA, A4A, Amazon Prime Air, the Choctaw Nation, the Commercial Drone Alliance, SAE, and twelve other commenters expressed support for the policy.
An anonymous commenter requested the FAA publish a timeline for the certification process. FAA Order 8110.4C,
An individual requested that the FAA establish a less restrictive process for UAS type certification for first responders and emergency management operators for State agencies and subdivisions. The commenter suggested that because the primary job of emergency responders is public safety, the type certification process was burdensome and unwarranted. Certain FAA civil certification and safety oversight regulations do not apply to public aircraft. Aircraft that do not meet the qualifications for public aircraft status are civil aircraft.
Aero Systems West requested the FAA provide an accelerated process for small UAS with parachute safety systems installed. The commenter stated that controlling descent rate is the most important contributor to decreasing the probability of human injury during a UAS flight mishap. The FAA disagrees that a different process is appropriate for designs that incorporate a parachute system. While a parachute recovery system may mitigate some risks for a UAS, it is, by itself, unlikely to provide comprehensive mitigation of all potential risks such that an accelerated type certification process would be suitable.
Another individual questioned how the public could provide meaningful comments on the particularized airworthiness criteria for each applicant when the applicant's proprietary operational and design data are normally withheld by the FAA. Under the process for certification as a special class of aircraft, the FAA will publish a notice for public comment on the particularized airworthiness criteria for each applicant. The commenter is correct that the FAA cannot disclose proprietary or confidential design data from manufacturers in these notices because such disclosure is prohibited by the Trade Secrets Act, 18 U.S.C. 1905 (1979). Instead, the FAA will provide a general description of the product, similar to what will be shown on the type certificate data sheet (TCDS). This is the same process the FAA has followed for the certification of special class aircraft such as gliders, airships, and very light airplanes.
The CNO and the CDA requested that the FAA clarify the effect of this policy on other rules. This request was specific to a statement in the proposed policy that the policy would apply only to the procedures for the type certification of UAS and is not intended to establish or impact other FAA rules (operations, pilot certification, or maintenance) regarding UAS. These commenters agreed that a type certificate will not provide a UAS operator with operational authority, but stated the FAA should clarify that the operating limitations in the TCDS will address, and therefore impact, issues such as operations, pilot certification, or maintenance. The FAA agrees that type certification of individual UAS may include operating limitations that impact operations, pilot certification, or maintenance. The purpose of the statement in the proposal was to advise the public that the FAA does not intend for this policy to overrule FAA regulations regarding UAS, particularly other FAA rules outside of part 21.
An individual and AOPA requested that the FAA exempt model aircraft from this policy, and fifteen individual commenters objected to the policy contending that it would have a negative impact on hobbyists. The CNO and the CDA stated the policy should apply to all UAS regardless of weight. Several commenters requested that the FAA clarify the types of advanced operations, in addition to package delivery, affected by the policy and which UAS may require type certification.
This policy addresses the process the FAA will use to establish airworthiness standards for type certification of some UAS with no occupants onboard, when a UAS manufacturer requests type certification. Whether a UAS requires a type certificate depends upon the weight of the UAS, the purpose of the operations, and the particular operating rules under which the UAS is expected to operate.
One commenter requested the policy not apply to UAS carrying occupants, as
AIA requested that the scope of the policy also include optionally piloted aircraft. The commenter stated that optionally piloted aircraft are becoming increasingly possible as technology continues to mature. The FAA disagrees. An optionally piloted aircraft (OPA) is a manned aircraft that can be flown or controlled by the onboard pilot in command or by another individual from a location not onboard the aircraft.
The CNO and the CDA requested that the type certification policy be streamlined, flexible, and account for changing technologies. The commenters stated that the type certification process should take months instead of years and should accommodate innovation. The FAA responds that this policy provides a flexible type certification process that allows particularized airworthiness criteria for each product design. Under this policy, as technologies change and applicants propose innovative and unique type designs, so too may the airworthiness criteria evolve. The FAA further notes that the pace of any certification program is driven by many factors, including the complexity of the project and the applicant's development and testing timelines.
Joby Aviation requested the FAA prioritize using existing airworthiness standards under the process in § 21.17(a) when a product closely matches the characteristics of the airplane or rotorcraft class and where special conditions (under § 21.16) can be reasonably used to address differences. The commenter stated the approach of using the flexibility of the special class process in § 21.17(b) makes sense for certain UAS or products where it is not reasonable to apply existing airworthiness standards. The purpose of this policy is to use the flexibility provided in the § 21.17(b) certification process to address the unique configurations and innovative applications of airframes, powerplants, fuels, and materials found in most UAS designs. For unmanned airplane and unmanned rotorcraft designs where the airworthiness standards in part 23 or 27, respectively, are appropriate for the certification basis, the FAA may still issue type certificates under the processes in §§ 21.16 and 21.17(a). The certification path for each individual UAS project will be based on applicability, relevance, appropriateness, and suitability.
Joby Aviation also requested that the FAA certificate passenger-carrying UAS under the existing, proven standards in part 23 or part 27, as appropriate to the individual aircraft design, under the process in § 21.17(a). Kilroy Aviation suggested a multi-tiered certification approach for UAS, with a tier for passenger-carrying UAS. These comments are beyond the scope of this policy, which does not apply to UAS that carry occupants.
Another commenter requested that the FAA define the certification types, methods, and timeline more thoroughly before issuing this policy. This commenter stated that the widely varying types and uses of UAS make one blanket type of certification ineffective, or even meaningless. The FAA notes that this policy is only a procedural policy for establishing the airworthiness standards for the type certification of some UAS. The notice of proposed policy requesting comments for the type certification of unmanned aircraft systems, which published in the
The PRC requested that the FAA's policy use the three UAS categories (open, specific, and certified) proposed by the Joint Authorities for Rulemaking on Unmanned Systems (JARUS) and issued by the European Union.
Kilroy Aviation, the CNO, and the CDA commented on FAA resources for UAS certification projects. The CNO and the CDA requested the FAA allocate sufficient personnel to support the exponential increase in UAS certification projects. Kilroy Aviation requested the FAA delegate UAS compliance findings to designees. The FAA is committed to the safe and efficient integration of UAS into the NAS, and type certification of UAS is an important step in that process. The FAA will continue to assess its resources and make any necessary adjustments to process certification projects of UAS and other aircraft. However, comments regarding the delegation of UAS certification findings to designees are beyond the scope of this policy.
One commenter requested the policy prohibit UAS manufacturers from self-certifying their designs. This comment is beyond the scope of this policy. This policy outlines only the process for how the FAA will establish airworthiness standards for the type certification of certain UAS. FAA Order 8110.4C contains procedures and policy for the type certification of products, including how an applicant for a type certificate demonstrates compliance.
The CNO and the CDA requested the FAA ensure early and frequent coordination among FAA offices. These commenters stated that inter-office coordination between those responsible for issuing the type certificate and those responsible for issuing operational authority was critical, so that applicants have the authority to operate the UAS when its type certificate is issued. The FAA agrees. A type certificate is a design approval and only one of several
ALPA requested the FAA limit the duration of the policy to not more than two years, as the process should only be interim until the FAA develops certification regulations specifically designed for UAS. The FAA does not agree. At this time, it is not possible to foresee when generally applicable airworthiness standards for UAS would be established or what form they may take. The FAA may supersede this policy at any time by issuing generally applicable standards through rulemaking.
An individual requested the policy define unmanned aircraft using consistent taxonomy. This commenter noted that many common UAS designs are not easy to categorize as an airplane, rotorcraft, or hybrid lift. This commenter also requested that the policy define the term “unmanned aircraft system,” as that term is not defined in 14 CFR 1.1. The FAA agrees that UAS designs are diverse. However, this policy only addresses the process for how the FAA will establish airworthiness standards for the type certification of certain UAS as a special class. Although there is no corresponding definition in 14 CFR part 1, the term “unmanned aircraft system” is defined by statute at 49 U.S.C. 44801(12) as an unmanned aircraft and its associated elements (including communication links and the components that control the unmanned aircraft) that are required for the operator to operate safely and efficiently in the NAS.
ALPA, the CNO, the CDA, NAAA, Wing Aviation LLC (Wing Aviation), Kilroy Aviation, Valqari LLC, and six individual commenters requested the FAA adopt specific airworthiness criteria for UAS. These criteria included subjects such as weather, collision avoidance, marking and coloring, strobe lighting, system safety assessments, payload, weight, software, propeller shrouds and other safety equipment, noise, batteries, public safety, and control stations. Kilroy Aviation requested the FAA consider using the certification criteria for “small category VTOL aircraft” adopted by EASA. Amazon Prime Air requested that, while the FAA uses the process under § 21.17(b) for type certification, the agency also form a working group to evaluate and create new rules for UAS airworthiness standards. These comments are beyond the scope of this policy. This policy outlines only the procedures for how the FAA will establish airworthiness standards for the type certification of certain UAS. The particularized airworthiness criteria for each applicant will vary as appropriate and applicable to the specific UAS design. The FAA will announce and seek public comment on the airworthiness criteria for each applicant. The FAA will also continue to work with the public, industry, other civil aviation authorities, and standards development organizations to create and refine standards and policy for UAS.
Wing Aviation and other commenters requested the airworthiness criteria for UAS be performance-based. The FAA agrees and anticipates issuing performance-based airworthiness criteria based on each applicant's design when possible. The FAA will announce and seek public comment on these criteria for each applicant.
Kilroy Aviation, the CNO, and the CDA requested the FAA harmonize UAS certification standards with EASA and other foreign civil aviation authorities. The FAA agrees that having harmonization and consistency on UAS policy and requirements with foreign authorities is prudent; however, the implementation of this comment is beyond the scope of this policy.
The CNO, the CDA, Valqari LLC, and three individual commenters requested the FAA adopt specific criteria and rules for UAS based on operational factors. These factors included beyond visual line of sight (BVLOS) operations (especially in rural areas), designated airspace below 400 feet for agricultural drone use, night operations, and location of the UAS operation. Operational considerations, such as BVLOS and detect and avoid requirements, are beyond the scope of this policy.
Several commenters also requested that the policy be risk-based and account for the specific risks encountered by each UAS within its operating environment. The FAA agrees and plans to use a risk-based approach for UAS type certification. The FAA anticipates issuing performance-based airworthiness criteria for each individual applicant's design. For example, some applicants will demonstrate compliance with the criteria by durability and reliability (D&R) testing at a level tailored for the design based on its risk. The D&R testing would result in an acceptable number of successful flight hours, representative of mission cycles to substantiate the overall reliability of the UAS.
Several commenters requested that the FAA restrict UAS operations over residential areas and schools and provide protections for citizens' right to privacy. The operational issues raised by these comments are beyond the scope of this policy, which is limited to the process for establishing airworthiness standards for type certification.
The CNO, the CDA, and an individual requested that the FAA combine operational authority with the issuance of the type certificate. These commenters suggested that since the airworthiness criteria for each type-certificated UAS will go through the public notice and comment process, that process should include any exemptions from parts 91 and 61 (general operating and flight rules and flight crew certification requirements) necessary to operate. These commenters further suggested that the conditions and limitations typically included in the grant of an exemption could then be incorporated on the TCDS as operating limitations. This policy outlines the process for how the FAA will establish airworthiness standards for the type certification of certain UAS. The process for granting relief from operational and airmen certification rules is addressed in 14 CFR part 11.
Kilroy Aviation, the CNO, the CDA, and an individual requested that the FAA issue additional guidance or rulemaking or recognize standards for UAS certification in a timely manner. The FAA is committed to developing the regulations, policy, procedures, guidance material, and training requirements necessary to support the safe and efficient integration of UAS into the NAS. The implementation of these activities is beyond the scope of this policy.
Droneport Texas LLC requested the FAA update remote pilot training requirements and study aids so pilots are aware of the distinctions for type-certificated UAS. This commenter also requested the FAA create specialized training for maintainers, operators, and remote pilots of UAS type certificated as a special class of aircraft. One individual requested the FAA develop
An anonymous commenter opposed the policy and stated it will stifle innovation, limit recreation, and unnecessarily intrude on personal freedoms. Fifteen individual commenters opposed the policy based on concerns it would overburden hobbyists and negatively impact the model aircraft community. The FAA infers that these commenters would like the FAA to withdraw the policy. This policy will not burden or negatively impact a person conducting limited recreational operations with a small unmanned aircraft under 49 U.S.C. 44809, because type certification is not required for these operations. For other UAS, type certification may be required, depending on the weight of the UAS, the purpose of the operations, and the operating rules to which the UAS is subject. This policy provides a timely and flexible type certification process to ensure that a UAS design complies with appropriate safety standards.
Two individual commenters requested that the FAA extend the comment period in order to solicit additional input and define additional requirements. These comments noted that the comment period for this notice overlapped with the comment period for the FAA's proposed rulemaking on remote identification of UAS (84 FR 72438, December 31, 2019). The FAA has considered the request and determined that 30 days provided an appropriate time for comment on the proposed policy, as sufficient feedback on the policy was provided by the public during the comment period.
Some commenters expressed concerns about the FAA's proposed remote identification rule. Other commenters stated opposition to FAA's rules for small UAS in part 107. DJI Technology, Inc., commented on operations and associated waivers under part 107. Because these comments concern FAA rulemakings on other issues, they are outside the scope of this policy.
Two commenters requested the FAA address UAS-related products (3-D printed parts, test benches). DJI Technology, Inc., requested that the FAA revise its regulations to allow American companies to manufacture UAS at facilities outside the United States. An individual commenter requested that the FAA revise 14 CFR 21.25(a)(1) to allow UAS as a special purpose operation for issuance of a restricted category type certificate. These comments are outside the scope of this policy, which specifies a process for establishing airworthiness standards for type certification of certain UAS.
The FAA also received and reviewed several comments that were very general, stated the commenter's viewpoint without a suggestion specific to the policy, or did not make a request the FAA can act on. These comments are outside the scope of this policy.
The FAA has determined that some UAS may be type certificated as a “special class” of aircraft under § 21.17(b). The FAA will issue type certificates for UAS with no occupants onboard under the process in § 21.17(b). However, the FAA may still issue type certificates under § 21.17(a) for airplane and rotorcraft UAS designs where the airworthiness standards in part 23, 25, 27 or 29, respectively, are appropriate for the certification basis. This policy applies only to the procedures for the type certification of UAS, and is not intended to establish policy impacting other FAA rules pertaining to unmanned aircraft, such as operations, pilot certification, or maintenance.
The FAA will seek public comment on the particularized airworthiness criteria for each applicant as certification standards for this new special class evolve. Once generally applicable standards are identified, the FAA may conduct rulemaking.
The FAA's part 107 rulemaking on small UAS was only the first step in the FAA's plan to integrate UAS into the NAS. Many long-term activities are required for full integration of present and future UAS operations, which will include the delivery of packages and transportation of people. The UAS affected by this policy will include those used for package delivery. Future FAA activity, through either further policy or rulemaking, will address type certification for UAS carrying occupants.
The contents of this document do not have the force and effect of law and are not meant to bind the public in any way. This document is intended only to provide clarity to the public regarding existing requirements under the law or agency policies.
Department of Transportation, Federal Aviation Administration (FAA).
Extension to order.
This action extends the Order Limiting Operations at New York LaGuardia Airport (LGA) published on December 27, 2006, as most recently extended September 18, 2018. The Order remains effective until October 29, 2022.
This action is effective on September 18, 2020.
Requests may be submitted by mail to the Slot Administration Office, System Operations Services, AJR–0, Room 300W, 800 Independence Avenue SW, Washington, DC 20591, or by email to:
For questions concerning this Order contact: Bonnie Dragotto, Regulations Division, FAA Office of the Chief Counsel, AGC–250, Room 916N, Federal Aviation Administration, 800 Independence Avenue SW, Washington, DC 20591; telephone (202) 267–3808; email
You may obtain an electronic copy using the internet by:
(1) Searching the Federal eRulemaking Portal (
(2) Visiting the FAA's Regulations and Policies web page at
(3) Accessing the Government Printing Office's web page at
You also may obtain a copy by sending a request to the Federal
The FAA has historically limited the number of arrivals and departures at LGA during peak demand periods through the implementation of the High Density Rule (HDR), to address constraints based on LGA's limited runway capacity.
The FAA issued an Order on December 27, 2006, adopting temporary limits pending the completion of rulemaking to address long term limits and related policies.
Under the Order for LGA, as amended, the FAA (1) maintains the current hourly limits on scheduled and unscheduled operations at LGA during the peak period; (2) imposes an 80 percent minimum usage requirement for Operating Authorizations (OAs) with defined exceptions; (3) provides a mechanism for withdrawal of OAs for FAA operational reasons; (4) provides for a lottery to reallocate withdrawn, surrendered, or unallocated OAs; and (5) allows for trades and leases of OAs for consideration for the duration of the Order.
The reasons for issuing the Order have not changed appreciably since it was implemented. Based upon experience from the 2018–2020 period, runway capacity at LGA remains limited, while demand for access to LGA remains high. In 2009, the FAA reduced the scheduling limits under this Order from 75 operations per hour to 71 per hour in order to provide an opportunity to improve operations.
The FAA has reviewed the on-time and other performance metrics in the peak May to August 2018 and 2019 months and found declining performance in several metrics relative to the same period in 2008 and year over year.
In the FAA's 2018 actions extending the JFK and LGA Orders, the FAA noted that it has received specific proposals for policy changes that would necessitate amending the Orders.
The FAA finds that notice and comment procedures under 5 U.S.C. 553(b) are impracticable, unnecessary, and contrary to the public interest, as carriers have begun planning schedules for the winter 2020/2021 season and no substantive changes are included in this action. For these reasons, the FAA also finds that it is impracticable and contrary to the public interest to delay the effective date of this action under 5 U.S.C. 553(d).
The Order, as amended, is recited below in its entirety:
With respect to scheduled operations at LaGuardia:
1. The Order governs scheduled arrivals and departures at LaGuardia from 6 a.m. through 9:59 p.m., Eastern Time, Monday through Friday and from 12 noon through 9:59 p.m., Eastern Time, Sunday. Seventy-one (71) Operating Authorizations are available per hour and will be assigned by the FAA on a 30-minute basis. The FAA will permit additional, existing operations above this threshold; however, the FAA will retire Operating Authorizations that are surrendered to the FAA, withdrawn for non-use, or unassigned during each affected hour until the number of Operating Authorizations in that hour reaches seventy-one (71).
2. The Order took effect on January 1, 2007, and will expire on October 29, 2022.
3. The FAA will assign operating authority to conduct an arrival or a departure at LaGuardia during the affected hours to the air carrier that holds equivalent slot or slot exemption authority under the High Density Rule of FAA slot exemption rules as of January 1, 2007; to the primary marketing air carrier in the case of AIR–21 small hub/non-hub airport slot
4. For administrative tracking purposes only, the FAA will assign an identification number to each Operating Authorization.
5. An air carrier may lease or trade an Operating Authorization to another carrier for any consideration, not to exceed the duration of the Order. Notice of a trade or lease under this paragraph must be submitted in writing to the FAA Slot Administration Office, facsimile (202) 267–7277 or email
6. Each air carrier holding an Operating Authorization must forward in writing to the FAA Slot Administration Office a list of all Operating Authorizations held by the carrier along with a listing of the Operating Authorizations actually operated for each day of the two-month reporting period, within 14 days after the last day of the two-month reporting period beginning January 1 and every two months thereafter. Any Operating Authorization not used at least 80 percent of the time over a two-month period will be withdrawn by the FAA except:
A. The FAA will treat as used any Operating Authorization held by an air carrier on Thanksgiving Day, the Friday following Thanksgiving Day, and the period from December 24 through the first Saturday in January.
B. The FAA will treat as used any Operating Authorization obtained by an air carrier through a lottery under paragraph 7 for the first 120 days after allocation in the lottery.
C. The Administrator of the FAA may waive the 80 percent usage requirement in the event of a highly unusual and unpredictable condition which is beyond the control of the air carrier and which affects carrier operations for a period of five consecutive days or more.
7. In the event that Operating Authorizations are withdrawn for nonuse, are surrendered to the FAA, or are unassigned, the FAA will determine whether any of the available Operating Authorizations should be reallocated. If so, the FAA will conduct a lottery using the provisions specified under 14 CFR 93.225. The FAA may retime an Operating Authorization prior to reallocation in order to address operational needs.
8. If the FAA determines that a reduction in the number of allocated Operating Authorizations is required to meet operational needs, such as reduced airport capacity, the FAA will conduct a weighted lottery to withdraw Operating Authorizations to meet a reduced hourly or half-hourly limit for scheduled operations. The FAA will provide at least 45 days' notice unless otherwise required by operational needs. Any Operating Authorization that is withdrawn or temporarily suspended will, if reallocated, be reallocated to the air carrier from which it was taken, provided that the air carrier continues to operate scheduled service at LaGuardia.
9. The Vice President, System Operations Services, in coordination with the Chief Counsel of the FAA, is the final decision maker for determinations under this Order.
10. The FAA may modify or withdraw any provision in this Order on its own or on application by any carrier for good cause shown.
With respect to unscheduled flight operations at LaGuardia, the FAA adopts the following:
1. The Order applies to all operators of unscheduled flights, except helicopter operations, at LaGuardia from 6 a.m. through 9:59 p.m., Eastern Time, Monday through Friday and from 12 noon through 9:59 p.m., Eastern Time, Sunday.
2. The Order took effect on January 1, 2007, and will expire on October 29, 2022.
3. No person can operate an aircraft other than a helicopter to or from LaGuardia unless the operator has received, for that unscheduled operation, a reservation that is assigned by the David J. Hurley Air Traffic Control System Command Center's Airport Reservation Office (ARO), or for unscheduled visual flight rule operations, received clearance from ATC. Additional information on procedures for obtaining a reservation is available via the internet at
4. Three (3) reservations are available per hour for unscheduled operations at LaGuardia. The ARO will assign reservations on a 30-minute basis.
5. The ARO receives and processes all reservation requests. Reservations are assigned on a “first-come, first-served” basis, determined as of the time that the ARO receives the request. A cancellation of any reservation that will not be used as assigned is required.
6. Filing a request for a reservation does not constitute the filing of an instrument flight rules (IFR) flight plan, as separately required by regulation. After the reservation is obtained, an IFR flight plan can be filed. The IFR flight plan must include the reservation number in the “remarks” section.
7. Air Traffic Control will accommodate declared emergencies without regard to reservations. Nonemergency flights in direct support of national security, law enforcement, military aircraft operations, or public aircraft operations will be accommodated above the reservation limits with the prior approval of the Vice President, System Operations Services, Air Traffic Organization. Procedures for obtaining the appropriate reservation for such flights are available via the internet at
8. Notwithstanding the limits in paragraph 4, if the Air Traffic Organization determines that air traffic control, weather, and capacity conditions are favorable and significant delay is not likely, the FAA can accommodate additional reservations over a specific period. Unused operating authorizations can also be temporarily made available for unscheduled operations. Reservations for additional operations are obtained through the ARO.
9. Reservations cannot be bought, sold, or leased.
10. The Vice President, System Operations Services, in coordination with the Chief Counsel of the FAA, is the final decision maker for determinations under this Order.
11. The FAA may modify or withdraw any provision in this Order on its own
The FAA may enforce the Order through an enforcement action seeking a civil penalty under 49 U.S.C. 46301(a). The FAA or Department of Justice also could file a civil action in U.S. District Court, under 49 U.S.C. 46106 or 46107, respectively, seeking to enjoin any carrier from violating the terms of the Order.
Department of Transportation, Federal Aviation Administration (FAA).
Extension to order.
This action extends the Order Limiting Operations at John F. Kennedy International Airport (JFK) published on January 18, 2008, and most recently extended on September 17, 2018. The Order remains effective until October 29, 2022.
This action is effective on September 18, 2020.
Requests may be submitted by mail to Slot Administration Office, System Operations Services, AJR–0, Room 300W, 800 Independence Avenue SW, Washington, DC 20591, or by email to:
For questions concerning this Order contact: Bonnie Dragotto, Regulations Division, FAA Office of the Chief Counsel, AGC–250, Room 916K, Federal Aviation Administration, 800 Independence Avenue SW, Washington, DC 20591; telephone (202) 267–3808; email
You may obtain an electronic copy using the internet by:
(1) Searching the Federal eRulemaking Portal (
(2) Visiting the FAA's Regulations and Policies web page at
(3) Accessing the Government Printing Office's web page at
You also may obtain a copy by sending a request to the Federal Aviation Administration, Office of Rulemaking, ARM–1, 800 Independence Avenue SW, Washington, DC 20591, or by calling (202) 267–9680. Make sure to identify the amendment number or docket number of this rulemaking.
The FAA historically limited the number of arrivals and departures at JFK through the implementation of the High Density Rule (HDR).
Under the Order, as amended, the FAA (1) maintains the current hourly limits of 81 scheduled operations at JFK during the peak period; (2) imposes an 80 percent minimum usage requirement for Operating Authorizations (OAs)
The reasons for issuing the Order have not changed appreciably since it was implemented. Based upon experience from the 2018–2020 period, demand for access to JFK remains high and multiple new entrant and other incumbent airlines have been waitlisted for new peak period operations and retiming existing flights to higher demand hours. Many of these airlines were on a waitlist for several scheduling seasons. The average hourly flights and allocated slots in the busiest hours were generally at the limits under this Order.
The FAA has reviewed the on-time and other performance metrics for the past two years in the peak months—May to August 2018 and 2019—and generally found continuing improvements relative to the same peak period in 2008. Year over year trends show a modest decrease in performance overall largely due to the closure of Runway 13L/31R for construction in 2019.
In the FAA's 2018 actions extending the JFK and LGA Orders, the FAA noted that it has received specific proposals for policy changes that would necessitate amending the Orders.
Accordingly, the FAA is extending the expiration date of this Order until October 29, 2022. This expiration date coincides with the extended expiration date for the Order limiting operations at LGA, as also extended by action published elsewhere in this issue of the
The FAA finds that notice and comment procedures under 5 U.S.C. 553(b) are impracticable, unnecessary, and contrary to the public interest, as carriers have begun planning schedules for the winter 2020/2021 season and no significant substantive changes are included in this action. For these reasons, the FAA also finds that it is impracticable and contrary to the public interest to delay the effective date of this action under 5 U.S.C. 553(d).
This Order is the equivalent of limited local rules as referenced in the IATA WSG and takes precedence over the WSG where there are differences.
Under current rules, the FAA uses an approach adapted from the WSG for reallocating available OAs at JFK.
The Order, as amended, is recited below in its entirety.
1. This Order continues the process for assigning operating authority to conduct an arrival or a departure at JFK during the affected hours to any certificated U.S. air carrier or foreign air carrier. The FAA will not assign operating authority under this Order to any person or entity other than a certificated U.S. or foreign air carrier with appropriate economic authority and with operating authority from FAA under 14 CFR part 121, 129, or 135. This Order applies to the following:
a. All U.S. air carriers and foreign air carriers conducting scheduled operations at JFK as of the date of this Order, any U.S. air carrier or foreign air carrier that operates under the same designator code as such a carrier, and any air carrier or foreign-flag carrier that has or enters into a codeshare agreement with such a carrier.
b. All U.S. air carriers or foreign air carriers initiating scheduled or regularly conducted commercial service to JFK while this Order is in effect.
c. The Vice President, System Operations Services, in coordination with the Chief Counsel of the FAA, is the final decision maker for determinations under this Order.
2. This Order governs scheduled arrivals and departures at JFK from 6 a.m. through 10:59 p.m., Eastern Time, Sunday through Saturday.
3. This Order took effect on March 30, 2008, and will expire October 29, 2022.
4. Under the authority provided to the Secretary of Transportation and the FAA Administrator by 49 U.S.C. 40101, 40103, and 40113, we hereby order that:
a. No U.S. air carrier or foreign air carrier initiating or conducting scheduled or regularly conducted commercial service at JFK may conduct such operations without an Operating Authorization assigned by the FAA.
b. Except as otherwise authorized by the FAA based on historic precedence, scheduled U.S. air carrier and foreign air carrier arrivals and departures will not exceed 81 per hour from 6 a.m. through 10:59 p.m., Eastern Time.
c. The Administrator may change the limits if the Administrator determines that capacity exists to accommodate additional operations without a significant increase in delays.
5. For administrative tracking purposes only, the FAA will assign an identification number to each Operating Authorization.
6. A carrier holding an Operating Authorization may request the Administrator's approval to move any arrival or departure scheduled from 6 a.m. through 10:59 p.m. to another half hour within that period. Except as provided in paragraph 7, the carrier must receive the written approval of the Administrator, or his delegate, prior to conducting any adjusted arrival or departure. All requests to move an allocated Operating Authorization must be submitted to the FAA Slot Administration Office, facsimile (202) 267–7277 or email
7. For the duration of this Order, a carrier may enter into a lease or trade of an Operating Authorization to another carrier for any consideration. Notice of a trade or lease under this paragraph must be submitted in writing to the FAA Slot Administration Office, facsimile (202) 267–7277 or email
8. A carrier may not buy, sell, trade, or transfer an Operating Authorization, except as described in paragraph 7.
9. Historical rights to Operating Authorizations and withdrawal of those rights due to insufficient usage will be determined on a seasonal basis and in accordance with the schedule approved by the FAA prior to the commencement of the applicable season.
a. For each day of the week that the FAA has approved an operating schedule, any Operating Authorization not used at least 80% of the time over the time-frame authorized by the FAA under this paragraph will be withdrawn by the FAA for the next applicable season except:
i. The FAA will treat as used any Operating Authorization held by a carrier on Thanksgiving Day, the Friday following Thanksgiving Day, and the period from December 24 through the first Saturday in January.
ii. The Administrator of the FAA may waive the 80% usage requirement in the event of a highly unusual and unpredictable condition which is beyond the control of the carrier and which affects carrier operations for a period of five consecutive days or more.
b. Each carrier holding an Operating Authorization must forward in writing to the FAA Slot Administration Office a list of all Operating Authorizations held by the carrier along with a listing of the Operating Authorizations and:
i. The dates within each applicable season it intends to commence and complete operations.
A. For each winter scheduling season, the report must be received by the FAA no later than August 15 during the preceding summer.
B. For each summer scheduling season, the report must be received by the FAA no later than January 15 during the preceding winter.
ii. The completed operations for each day of the applicable scheduling season:
A. No later than September 1 for the summer scheduling season.
B. No later than January 15 for the winter scheduling season.
iii. The completed operations for each day of the scheduling season within 30 days after the last day of the applicable scheduling season.
10. In the event that a carrier surrenders to the FAA any Operating Authorization assigned to it under this Order or if there are unallocated Operating Authorizations, the FAA will determine whether the Operating Authorizations should be reallocated. The FAA may temporarily allocate an Operating Authorization at its discretion. Such temporary allocations will not be entitled to historical status for the next applicable scheduling season under paragraph 9.
11. The FAA considers the following factors and priorities in allocating Operating Authorizations, which the FAA has determined are available for reallocation—
a. Historical requests for allocation of an Operating Authorization in the same time;
b. New entrant status;
c. Retiming of historic Operating Authorizations;
d. Extension of a seasonal Operating Authorization to year-round service;
e. The effective period of operation;
f. The extent and regularity of intended use with priority given to year-round services;
g. The operational impacts of scheduled demand, including the hourly and half-hour demand and the mix of arrival and departure flights; and
h. Airport facility constraints.
Any carrier that is not approved for allocation of an Operating Authorization by the FAA may request it be placed on a waiting list for consideration should an Operating Authorization in the requested time become available during that scheduling season.
12. If the FAA determines that an involuntary reduction in the number of allocated Operating Authorizations is required to meet operational needs, such as reduced airport capacity, the FAA will conduct a weighted lottery to withdraw Operating Authorizations to meet a reduced hourly or half-hourly limit for scheduled operations. The FAA will provide at least 45 days' notice unless otherwise required by operational needs. Any Operating Authorization that is withdrawn or temporarily suspended will, if reallocated, be reallocated to the carrier from which it was taken, provided that the carrier continues to operate scheduled service at JFK.
13. The FAA may enforce this Order through an enforcement action seeking a civil penalty under 49 U.S.C. 46301(a). The FAA or Department of Justice also could file a civil action in U.S. District Court, under 49 U.S.C. 46106 or 46107, respectively, seeking to enjoin any carrier from violating the terms of this Order.
14. The FAA may modify or withdraw any provision in this Order on its own or on application by any carrier for good cause shown.
Federal Aviation Administration (FAA), DOT.
Final rule.
This rule establishes, amends, suspends, or removes Standard Instrument Approach Procedures (SIAPs) and associated Takeoff Minimums and Obstacle Departure Procedures (ODPs) for operations at certain airports. These regulatory actions are needed because of the adoption of new or revised criteria, or because of changes occurring in the National Airspace System, such as the commissioning of new navigational facilities, adding new obstacles, or changing air traffic requirements. These changes are designed to provide safe and efficient use of the navigable airspace and to promote safe flight operations under instrument flight rules at the affected airports.
This rule is effective September 18, 2020. The compliance date for each SIAP, associated Takeoff Minimums, and ODP is specified in the amendatory provisions.
The incorporation by reference of certain publications listed in the regulations is approved by the Director of the Federal Register as of September 18, 2020.
Availability of matters incorporated by reference in the amendment is as follows:
1. U.S. Department of Transportation, Docket Ops–M30, 1200 New Jersey Avenue SE, West Bldg., Ground Floor, Washington, DC 20590–0001.
2. The FAA Air Traffic Organization Service Area in which the affected airport is located;
3. The office of Aeronautical Navigation Products, 6500 South MacArthur Blvd., Oklahoma City, OK 73169 or,
4. The National Archives and Records Administration (NARA). For information on the availability of this material at NARA, email
All SIAPs and Takeoff Minimums and ODPs are available online free of charge. Visit the National Flight Data Center at
Thomas J. Nichols, Flight Procedures and Airspace Group, Flight Technologies and Procedures Division, Flight Standards Service, Federal Aviation Administration. Mailing Address: FAA Mike Monroney Aeronautical Center, Flight Procedures and Airspace Group, 6500 South MacArthur Blvd., Registry Bldg. 29, Room 104, Oklahoma City, OK 73169. Telephone: (405) 954–4164.
This rule amends Title 14 of the Code of Federal Regulations, Part 97 (14 CFR part 97), by establishing, amending, suspending, or removes SIAPS, Takeoff Minimums and/or ODPS. The complete regulatory description of each SIAP and its associated Takeoff Minimums or ODP for an identified airport is listed on FAA form documents which are incorporated by reference in this amendment under 5 U.S.C. 552(a), 1 CFR part 51, and 14 CFR part 97.20. The applicable FAA forms are FAA Forms 8260–3, 8260–4, 8260–5, 8260–15A, and 8260–15B when required by an entry on 8260–15A.
The large number of SIAPs, Takeoff Minimums and ODPs, their complex nature, and the need for a special format make publication in the
The material incorporated by reference is publicly available as listed in the
The material incorporated by reference describes SIAPS, Takeoff Minimums and/or ODPS as identified in the amendatory language for part 97 of this final rule.
This amendment to 14 CFR part 97 is effective upon publication of each separate SIAP, Takeoff Minimums and ODP as Amended in the transmittal. Some SIAP and Takeoff Minimums and textual ODP amendments may have been issued previously by the FAA in a Flight Data Center (FDC) Notice to Airmen (NOTAM) as an emergency action of immediate flight safety relating directly to published aeronautical charts.
The circumstances that created the need for some SIAP and Takeoff Minimums and ODP amendments may require making them effective in less than 30 days. For the remaining SIAPs and Takeoff Minimums and ODPs, an effective date at least 30 days after publication is provided.
Further, the SIAPs and Takeoff Minimums and ODPs contained in this amendment are based on the criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these SIAPs and Takeoff Minimums and ODPs, the TERPS criteria were applied to the conditions existing or anticipated at the affected airports. Because of the close and immediate relationship between these SIAPs, Takeoff Minimums and ODPs, and safety in air commerce, I find that notice and public procedure under 5 U.S.C. 553(b) are impracticable and contrary to the public interest and, where applicable, under 5 U.S.C 553(d), good cause exists for making some SIAPs effective in less than 30 days.
The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore—(1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26,1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal.
For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air Traffic Control, Airports, Incorporation by reference, Navigation (Air).
Accordingly, pursuant to the authority delegated to me, Title 14, Code of Federal Regulations, Part 97 (14 CFR part 97) is amended by establishing, amending, suspending, or removing Standard Instrument Approach Procedures and/or Takeoff Minimums and Obstacle Departure Procedures effective at 0901 UTC on the dates specified, as follows:
49 U.S.C. 106(f), 106(g), 40103, 40106, 40113, 40114, 40120, 44502, 44514, 44701, 44719, 44721–44722.
Federal Aviation Administration (FAA), DOT.
Final rule.
This rule amends, suspends, or removes Standard Instrument Approach Procedures (SIAPs) and associated Takeoff Minimums and Obstacle Departure Procedures for operations at certain airports. These regulatory actions are needed because of the adoption of new or revised criteria, or because of changes occurring in the National Airspace System, such as the commissioning of new navigational facilities, adding new obstacles, or changing air traffic requirements. These changes are designed to provide for the safe and efficient use of the navigable airspace and to promote safe flight operations under instrument flight rules at the affected airports.
This rule is effective September 18, 2020. The compliance date for each SIAP, associated Takeoff Minimums, and ODP is specified in the amendatory provisions.
The incorporation by reference of certain publications listed in the regulations is approved by the Director of the Federal Register as of September 18, 2020.
Availability of matter incorporated by reference in the amendment is as follows:
1. U.S. Department of Transportation, Docket Ops–M30, 1200 New Jersey Avenue SE, West Bldg., Ground Floor, Washington, DC 20590–0001;
2. The FAA Air Traffic Organization Service Area in which the affected airport is located;
3. The office of Aeronautical Navigation Products, 6500 South MacArthur Blvd., Oklahoma City, OK 73169 or,
4. The National Archives and Records Administration (NARA). For information on the availability of this material at NARA, email
All SIAPs and Takeoff Minimums and ODPs are available online free of charge. Visit the National Flight Data Center online at
Thomas J. Nichols, Flight Procedures and Airspace Group, Flight Technologies and Procedures Division, Flight Standards Service, Federal Aviation Administration. Mailing Address: FAA Mike Monroney Aeronautical Center, Flight Procedures and Airspace Group, 6500 South MacArthur Blvd., Registry Bldg. 29, Room 104, Oklahoma City, OK 73169. Telephone: (405) 954–4164.
This rule amends Title 14, Code of Federal Regulations, Part 97 (14 CFR part 97) by amending the referenced SIAPs. The complete regulatory description of each SIAP is listed on the appropriate FAA Form 8260, as modified by the National Flight Data Center (NFDC)/Permanent Notice to Airmen (P–NOTAM), and is incorporated by reference under 5 U.S.C. 552(a), 1 CFR part 51, and 14 CFR 97.20. The large number of SIAPs, their complex nature, and the need for a special format make their verbatim publication in the
This amendment provides the affected CFR sections, and specifies the SIAPs and Takeoff Minimums and ODPs with their applicable effective dates. This amendment also identifies the airport and its location, the procedure and the amendment number.
The material incorporated by reference is publicly available as listed in the
The material incorporated by reference describes SIAPs, Takeoff Minimums and ODPs as identified in the amendatory language for part 97 of this final rule.
This amendment to 14 CFR part 97 is effective upon publication of each separate SIAP and Takeoff Minimums and ODP as amended in the transmittal. For safety and timeliness of change considerations, this amendment incorporates only specific changes contained for each SIAP and Takeoff Minimums and ODP as modified by FDC permanent NOTAMs.
The SIAPs and Takeoff Minimums and ODPs, as modified by FDC permanent NOTAM, and contained in this amendment are based on the criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these changes to SIAPs and Takeoff Minimums and ODPs, the TERPS criteria were applied only to specific conditions existing at the affected airports. All SIAP amendments in this rule have been previously issued by the FAA in a FDC NOTAM as an emergency action of immediate flight safety relating directly to published aeronautical charts.
The circumstances that created the need for these SIAP and Takeoff Minimums and ODP amendments require making them effective in less than 30 days.
Because of the close and immediate relationship between these SIAPs, Takeoff Minimums and ODPs, and safety in air commerce, I find that notice and public procedure under 5 U.S.C. 553(b) are impracticable and contrary to the public interest and, where applicable, under 5 U.S.C. 553(d), good cause exists for making these SIAPs effective in less than 30 days.
The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore—(1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a
Air traffic control, Airports, Incorporation by reference, Navigation (Air).
Accordingly, pursuant to the authority delegated to me, Title 14, Code of Federal regulations, Part 97, (14 CFR part 97), is amended by amending Standard Instrument Approach Procedures and Takeoff Minimums and ODPs, effective at 0901 UTC on the dates specified, as follows:
49 U.S.C. 106(f), 106(g), 40103, 40106, 40113,40114, 40120, 44502, 44514, 44701, 44719, 44721–44722.
By amending: § 97.23 VOR, VOR/DME, VOR or TACAN, and VOR/DME or TACAN; § 97.25 LOC, LOC/DME, LDA, LDA/DME, SDF, SDF/DME; § 97.27 NDB, NDB/DME; § 97.29 ILS, ILS/DME, MLS, MLS/DME, MLS/RNAV; § 97.31 RADAR SIAPs; § 97.33 RNAV SIAPs; and § 97.35 COPTER SIAPs, Identified as follows:
Consumer Product Safety Commission.
Final rule; delay of effective date.
On May 24, 2019, the Consumer Product Safety Commission (Commission, or CPSC) issued a direct final rule incorporating sections of APSP–16 2017 as the successor drain cover standard under the Virginia Graeme Baker Pool and Spa Safety Act (VGBA, or Act). We are publishing this final rule to delay the effective date of the CPSC's mandatory standard for drain covers, due to the COVID–19 pandemic.
The effective date for the direct final rule published on May 24, 2019, at 84 FR 24021, is delayed from November 24, 2020, until May 24, 2021.
Mark Eilbert, Mechanical Engineer, Directorate for Laboratory Sciences, Consumer Product Safety Commission, 5 Research Place, Rockville, MD 20850; telephone: 301–987–2232; email:
The VGBA, 15 U.S.C. 8001
On February 17, 2011, the Association of Pool and Spa Professionals (APSP) approved the ANSI/APSP/IAPMO–16 2011 standard,
On August 18, 2017, APSP published APSP–16 2017. On May 24, 2019, the Commission published a direct final rule in the
On March 24, 2020, the Pool & Hot Tub Alliance (PHTA)
APSP–16 2017 establishes materials, testing, use, installation, and marking requirements for new or replacement bather-accessible suction outlet fitting assemblies (SOFAs), other than maintenance drains, which are designed to be fully submerged in any pool. CPSC
APSP–16 2017 reduced the test time for hair to approach the suction outlet cover in the hair entrapment testing. The cumulative reduction in test time decreases the test burden in two separate iterative hair test procedures, without affecting test results. In another change, APSP–16 2017 expands the scope of the hair tests to include locations at all outlet pipes within SOFAs that can be reached by the test hair. This change ensures that any outlet in a SOFA, within reach of the 16-inch test hair, will be tested. Multiple outlet SOFAs are typically installed in larger pools. For affected SOFAs, the change will tend to lower water flow ratings because the lowest flow among all the outlets tested becomes the flow rating.
The definition section of APSP–16 2017 includes a definition of “Unblockable SOFA”:
A suction outlet fitting assembly that, when installed according to the manufacturer's instructions, cannot be shadowed by an 18 in. x 23 in. (457 mm x 584 mm) Body Blocking Element, and has a rated flow through the remaining open area beyond the shadowed portion that cannot create a suction force in excess of the force calculated in Equation 2.
The Commission incorporated this definition into its mandatory drain cover standard.
Section 8.4 of APSP–16 2017 contains requirements for the labelling of a SOFA, requiring identifying information, such as the manufacturer name and cover/grate part number, and date of the installation of the cover/grate. Section 8.5.1 contains labeling requirements for Registered Design Professional (RDP) SOFAs. Section 9.3 adds provisions regarding a General Certificate of Conformity (GCC) that are consistent with the Consumer Product Safety Act and VGBA. These requirements identify the product, the manufacturer, and the test lab that performed the analysis, as well as state the standard to which the product was tested, and when and where it was tested. Because the presence of this information makes it easy to identify relevant safety information about the product, the Commission found these requirements to be in the public interest, and thus, incorporated them into its mandatory drain cover standard.
PHTA requested that the Commission extend the effective date of the mandatory drain cover standard. This may delay the implementation of the changes that were made to APSP–16 2017 and incorporated into the mandatory drain cover standard. The multiple outlet testing has some direct benefit to public safety due to modestly lowered water flow ratings for those multiple outlet SOFA types. The other changes—hair entrapment test times, the new definitions and labelling—are in the public interest and may indirectly benefit public safety. However, the Commission does not believe extending the effective date would have a significant negative impact on safety. The Commission believes that up to a 6-month extension of the effective date is not expected to adversely affect public safety because:
(1) Multiple outlet SOFAs are typically installed in large public pools, predominately located outdoors and open in the warmest months, and are less likely to be installed in public spas open during other seasons. Outdoor pools are likely to continue to transition towards full capacity for summer 2020, at a pace dependent upon developments with the COVID–19 crisis. Less exposure overall to outdoor pools will lessen the public's exposure to affected SOFA installations, which are those in new construction or replacements. Accordingly, the Commission does not expect a delay in the availability of SOFAs complying with APSP–16 2017 to adversely impact public safety;
(2) According to the 2019 CPSC entrapment report,
(3) An extension of the effective date prior to Memorial Day 2021 will require firms to comply before the seasonal opening of most outdoor public pools in the United States.
The Commission is issuing this final rule without an additional opportunity for public comment. Under section 553(b)(3)(B) of the Administrative Procedure Act (APA), general notice and the opportunity for public comment are not required for a rulemaking when an “agency for good cause finds (and incorporates the finding and a brief statement of reasons therefor in the rules issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.”
The COVID–19 pandemic has disrupted economic activity in the United States. Executive Order 13294 urges federal agencies to take actions to reduce regulatory burdens that arise as a result of the pandemic “consistent with applicable law and with protection of the public health and safety.” Due to the COVID–19 pandemic, manufacturers may face difficulties in their ability to comply with the new requirements of the mandatory drain cover standard by the November 24, 2020, effective date set in the DFR. Therefore, the Commission is delaying the effective date of the drain cover standard until May 24, 2021. Delaying the effective date will not have an adverse impact on public health and safety; and as encouraged by E.O. 13924, the delayed effective date will help provide relief from disruptions exacerbated by the pandemic. Because of the relatively short time frame until the original November 24, 2020 effective date is scheduled to go into effect, and for the reasons discussed above, the Commission finds that there is good cause consistent with the public interest to issue the rule without advance notice and comment.
The APA generally requires a 30-day delayed effective date for final rules, except for: (1) Substantive rules which grant or recognize an exemption or relieve a restriction; (2) interpretative rules and statements of policy; or (3) as otherwise provided by the agency for good cause.
The Regulatory Flexibility Act (RFA) generally requires that agencies review proposed and final rules for their potential economic impact on small entities, including small businesses, and prepare regulatory flexibility analyses. 5 U.S.C. 603 and 604. The RFA applies to any rule that is subject to notice and comment procedures under section 553 of the APA.
The COVID–19 pandemic has severely impacted the business operations of many sectors of the U.S. economy. Businesses have curtailed operations in efforts to safeguard the health of their employees and customers; these actions include restrictions imposed by state and local governments. PHTA reported that SOFA manufacturers have also been impacted by disruptions caused by the pandemic, ranging from limited to substantial disruptions. While test labs remained open, some manufacturers reportedly experienced longer delays in completing testing since March. Furthermore, according to PHTA, product changes, such as molding, tooling, and labeling, are often necessary after the results of testing are reported. These tasks could be affected by restrictions, which vary by location.
On May 19, 2020, President Trump issued Executive Order (E.O.) 13924, “Regulatory Relief to Support Economic Recovery.” 85 FR 31385. E.O. 13924 encourages Federal agencies to address the economic consequences of COVID–19 by: Rescinding, modifying, waiving, or providing exemptions from regulations and other requirements that may inhibit economic recovery, consistent with applicable law and with protection of the public health and safety, with national and homeland security, and with budgetary priorities and operational feasibility. They should also give businesses, especially small businesses, the confidence they need to reopen by providing guidance on what the law requires; by recognizing the efforts of businesses to comply with often-complex regulations in complicated and swiftly changing circumstances; and by committing to fairness in administrative enforcement and adjudication.
The Commission has identified approximately 20 firms that currently manufacture products that would appear to be affected by the revised standard. Under size standards issued by the U.S. Small Business Administration, manufacturers of SOFAs with fewer than 750 employees (including their subsidiaries and affiliates) are considered to be small businesses.
VGBA-compliant drain cover sales are comprised of covers sold with new pools and replacement covers for previously installed pools. Current sales of SOFAs are unknown; however, statistics reported by APSP provide a rough indication of the number of units sold annually. APSP reports that 58,000 in-ground pools, 184,029 hot tubs, and 2,432 commercial pools were sold or installed in 2014.
As discussed in Section C and D of this preamble, the Commission believes that an extension of the effective date, up to 6 months, will not have a significant adverse effect on public safety. Therefore, the Commission is providing relief to SOFA manufacturers as a result of the COVID–19 crisis, by extending the effective date of the drain cover standard. The Commission has considered the two separate requests submitted by PHTA. The 60-day extension is the minimum request made by PHTA, based on their most current estimates of potential impact on the pool and spa SOFA manufacturers. The 6-month extension is the maximum request made by PHTA, based on their early, although erroneous, understanding of test laboratory closures.
Due to the uncertainties surrounding the COVID–19 pandemic, and the likely minimal impact that an extension of the effective date might have on public safety, and the direction in E.O. 13294 to address the economic consequences of COVID–19, the Commission is delaying the effective date of the mandatory drain cover standard in 16 CFR part 1450 by 6 months, to May 24, 2021.
The drain cover standard does not impose any information collection requirements. Accordingly, this rule is not subject to the Paperwork Reduction Act, 44 U.S.C. 3501–3520.
The Commission's regulations provide a categorical exclusion for the Commission's rules from any requirement to prepare an environmental assessment or an environmental impact statement where they “have little or no potential for
Section 26(a) of the CPSA, 15 U.S.C. 2075(a), provides that where a consumer product safety standard is in effect and applies to a product, no state or political subdivision of a state may either establish or continue in effect a requirement dealing with the same risk of injury unless the state requirement is identical to the Federal standard. Section 26(c) of the CPSA also provides that states or political subdivisions of states may apply to the CPSC for an exemption from this preemption under certain circumstances. Section 1404(a) of the VGBA specifies that a rule issued under section 1404(b) of the VGBA shall be treated as a consumer product safety standard under the CPSA, thus, implying that the preemptive effect of section 26(a) of the CPSA would apply. Therefore, the rule will invoke the preemptive effect of section 26(a) of the CPSA when it becomes effective.
The Congressional Review Act (CRA; 5 U.S.C. 801–808) states that, before a rule may take effect, the agency issuing the rule must submit the rule, and certain related information, to each House of Congress and the Comptroller General. 5 U.S.C. 801(a)(1). The submission must indicate whether the rule is a “major rule.” The CRA states that the Office of Information and Regulatory Affairs (OIRA) determines whether a rule qualifies as a “major rule.” Pursuant to the CRA, this rule does not qualify as a “major rule,” as defined in 5 U.S.C. 804(2). To comply with the CRA, the Office of the General Counsel will submit the required information to each House of Congress and the Comptroller General.
Internal Revenue Service (IRS), Treasury.
Final regulations.
This document contains final regulations concerning the rehabilitation credit, including rules to coordinate the new 5-year period over which the credit may be claimed with other special rules for investment credit property. These final regulations affect taxpayers that claim the rehabilitation credit.
Barbara J. Campbell, (202) 317–4137.
This document amends the Income Tax Regulations (26 CFR part 1) to finalize rules under section 47 of the Internal Revenue Code (Code). On May 22, 2020, the Department of the Treasury (Treasury Department) and the IRS published a notice of proposed rulemaking (REG–124327–19) in the
The Treasury Department and the IRS received three written comments on the proposed regulations. No requests for a public hearing were made, and no public hearing was held. After consideration of the comments, this Treasury decision adopts the proposed regulations without modification.
The three comments submitted in response to the proposed regulations are available at
Two of the comments were supportive of the proposed regulations and did not provide any suggested revisions or additions. This summary of comments does not further address those comments.
The other comment did not disagree with or suggest revision to any of the rules in the proposed regulations. The comment raised issues that the commenter believes the proposed regulations did not address. These include the potential impact of the new 5-year period on a partner's capital account under § 1.704–1 (partner's distributive share) when a partnership directly owns the property, whether and how the partnership allocates the rehabilitation credit to partners, potential reporting obligations by a partnership on Schedule K–1 (Form 1065), the treatment of the remaining ratable share when a partner sells a partnership interest within the 5-year credit period, and the interaction of § 1.704–1 with § 1.50–1 (lessee's income inclusion following election of lessor of investment credit property to treat lessee as acquirer).
With respect to the potential impact of the new 5-year period on a partner's capital account under § 1.704–1 when the partnership directly owns the QRB, the comment concluded that for partners “there would be a capital account effect that would not take into account the 5-year allocation of the credit.” Partnership capital accounting rules are addressed in the regulations to section 704, and therefore are not included in these final regulations. However, for clarification, the Treasury Department and the IRS agree that there
With respect to whether and how the partnership allocates the rehabilitation credit to partners, the comment specifically asked “whether the partners are allocated 20 percent of the credit each year although all of the credit basis is reduced in the first year when the property is placed in service or whether, after the first year, the remaining four years over which the credit is spread is taken into account and applied solely at the partner level over those remaining years, consistent with the section 1.50–1 regulations.” Partnership allocation rules of general business credits are specifically addressed in the regulations to section 704, and therefore are not included in these final regulations. However, for clarification, the rehabilitation credit is not allocated by the partnership, but is calculated at the partner level and claimed by the partner ratably over the 5-year credit period. As under section 47 prior to the TCJA, the partnership allocates qualified rehabilitation expenditures (QREs) to its partners. Under section 47(b), QREs with respect to any QRB are taken into account for the taxable year in which the QRB is placed in service.
By way of further explanation, the calculation of the rehabilitation credit at the partner level is made as part of calculating the investment credit under section 46, which is listed as a current year general business credit under section 38. Section 1.704–1(b)(4)(ii), which requires allocations with respect to the investment tax credit provided by section 38 to be made in accordance with the partners' interests in the partnership, provides that allocations of cost or qualified investment (as opposed to the investment credit itself, which is not determined at the partnership level) that are made in accordance with § 1.46–3(f) shall be deemed to be made in accordance with the partners' interests in the partnership. For purposes of the investment credit, part of those allocations to partners would include QREs to calculate the rehabilitation credit. Partners then compute the investment credit at the partner level based on partner level limitations.
Lastly, addressing issues related to potential reporting obligations by a partnership on Schedule K–1, the sale of a partnership interest within the 5-year credit period, and the interaction of § 1.704–1 with § 1.50–1 (including amending § 1.704–1 as recommended in the comment) is beyond the scope of the final regulations.
These final regulations apply to taxable years beginning on or after September 18, 2020. However, taxpayers may choose to apply these final regulations for QREs paid or incurred after December 31, 2017, in taxable years beginning before September 18, 2020, provided the taxpayers apply the final regulations in their entirety and in a consistent manner. See section 7805(b)(7).
This regulation is not subject to review under section 6(b) of Executive Order 12866 pursuant to the Memorandum of Agreement (April 11, 2018) between the Treasury Department and the Office of Management and Budget regarding review of tax regulations.
In accordance with the Regulatory Flexibility Act (5 U.S.C. chapter 6), it is hereby certified that these final regulations will not have a significant economic impact on a substantial number of small entities. Although the rules may affect small entities, data are not readily available about the number of taxpayers affected. The economic impact of these regulations is not likely to be significant, however, because these final regulations substantially incorporate statutory changes made to section 47 by the TCJA that have been effective for QREs paid or incurred after December 31, 2017. The final regulations will assist taxpayers in understanding the changes to section 47 and make it easier for taxpayers to comply with those changes and section 50, which was not changed by the TCJA.
Pursuant to section 7805(f) of the Internal Revenue Code, these regulations were submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact on small business. No comments were received from the Small Business Administration.
The principal author of these final regulations is Barbara J. Campbell, Office of the Associate Chief Counsel (Passthroughs and Special Industries), IRS. However, other personnel from the Treasury Department and the IRS participated in their development.
Income taxes, Reporting and recordkeeping requirements.
Accordingly, 26 CFR part 1 is amended as follows:
26 U.S.C. 7805 * * *
(a)
(b)
(c)
(d)
(e)
(1)
(2
(3)
(4)
(5)
(f)
This section applies to taxable years beginning on or after September 18, 2020. Taxpayers may choose to apply this section for taxable years beginning before September 18, 2020, provided the taxpayer applies this section in its entirety and in a consistent manner.
Coast Guard, DHS.
Final rule.
This final rule makes non-substantive technical, organizational, and conforming amendments to existing Coast Guard regulations. In addition, this technical amendment updates the statutory authority citations for many Coast Guard regulations since the Frank LoBiondo Coast Guard Authorization Act of 2018 redesignated existing United States Code provisions into new titles and sections. This rule will have no substantive effect on the regulated public.
This final rule is effective September 18, 2020.
To view documents mentioned in this preamble as being available in the docket, go to
For information about this document call or email Kate Sergent, Coast Guard; telephone 202–372–3860, email
We did not publish a notice of proposed rulemaking for this rule. Under title 5 of the United States Code (U.S.C.), Section 553(b)(A), the Coast Guard finds that this final rule is exempt from notice and public comment rulemaking requirements because these changes involve rules of agency organization, procedure, or practice. In addition, the Coast Guard finds that notice and comment procedures are unnecessary for this final rule under 5 U.S.C. 553(b)(B), as this rule consists of only technical and editorial corrections and these changes will have no substantive effect on the public. Under 5 U.S.C. 553(d)(3), the Coast Guard finds that, for the same reasons, good cause exists for making this final rule effective upon publication in the
This final rule, which becomes effective on September 18, 2020, makes technical and editorial corrections throughout titles 33 and 46 of the Code of Federal Regulations (CFR). These changes are necessary to update authority citations, correct errors, update contact information, and make other non-substantive amendments that improve the clarity of the CFR. This rule does not create or change any substantive requirements.
This final rule is issued under the authority of 5 U.S.C. 552(a) and 553; 14 U.S.C. 102 and 503; and Department of Homeland Security Delegation No. 0170.1 and authorities listed at the end of this rule for each CFR part this rule amends.
The Coast Guard periodically issues technical, organizational, and conforming amendments to existing regulations in titles 33 and 46 of the CFR. These technical amendments provide the public with accurate and current regulatory information, but do not change the effect of any Coast Guard regulations on the public.
On December 4, 2018, Congress enacted the Frank LoBiondo Coast Guard Authorization Act of 2018 (Authorization Act), Public Law 115–282, 132 Stat. 4192. The Authorization Act redesignated multiple provisions within U.S.C. titles 14, 33, 46, and 50, without substantive change, in an effort to reorganize these titles. The Authorization Act redesignated two of our main regulatory authorities, without change, from 14 U.S.C. 2 and 633 into 14 U.S.C. 102 and 503, respectively. Additionally, the Authorization Act redesignated the Ports and Waterways Safety Act (PWSA) provisions, previously located in 33 U.S.C. 1221 through 1236, without substantive change into the new Chapter 700 of U.S.C. title 46, entitled “Ports and Waterways Safety.”
This rule updates the authority citations in 33 CFR parts 1, 2, 3, 5, 6, 8, 13, 17, 23, 25, 26, 40, 45, 50, 51, 52, 55, 62, 64, 66, 67, 70, 72, 74, 76, 80, 82, 101, 103, 104, 105, 106, 107, 109, 114, 115, 118, 125, 126, 127, 143, 145, 146, 150, 153, 154, 155, 156, 160, 161, 162, 164, 165, 166, 167, and 169.
Additionally, within title 33 of the CFR, this rule updates the authority citations for subparts 1.01, 1.05, 1.07, 1.08, 1.10, 1.20, and 1.26 in part 1 and subpart B in part 25.
This rule updates the authority citations in 46 CFR parts 1, 2, 4, 7, 8, 35, 39, and 68.
Additionally, within title 46 of the CFR, this rule updates the authority citation for subpart 1.03.
In § 1.01–40, this rule revises an in-text citation from 14 U.S.C. 47(a) to its new designation in 14 U.S.C. 304.
Section 1.05–25 contains information on the public docket. All of the docket information is maintained electronically on
In the parentheses appearing after the regulatory text of § 1.08–1, this rule replaces the citation to 14 U.S.C. 633 with its redesignated section in 14 U.S.C. 503.
In the note to § 1.20–1, this rule replaces the citations to 14 U.S.C. 632 and 633 with their redesignated sections in 14 U.S.C. 505 and 503, respectively.
In § 1.26–10, this rule replaces the citation to 14 U.S.C. 891 with its redesignated section in 14 U.S.C. 4101. In the note to this section, this rule makes the same change.
In § 1.26–15, in paragraph (a) and in the note after the regulatory text, this rule updates the 14 U.S.C. citations from sections 641(b) and 654 to redesignated sections 901(b) and 942, respectively.
In the note to § 2.5, this rule replaces an incorrect cross-reference to 46 CFR 10.103 with the correct reference in 46 CFR 10.107 concerning the definition of “inland waters.” Title 46 CFR 10.107 contains the relevant definition.
In § 2.22(a)(1)(i), this rule removes the reference to the PWSA provisions in 33 U.S.C. 1221–1232 and replaces the citation with 46 U.S.C. subtitle VII, titled “Ports and Waterways Safety,” which is where the PWSA provisions were redesignated by the Authorization Act. We also update in this paragraph the references to 50 U.S.C. 191–195 with their new designations in 46 U.S.C. 70051–70054.
In § 2.32(c), this rule updates the citations to 14 U.S.C. 89(a) and 86 to their new designations, 14 U.S.C. 522 and 545, respectively.
In § 3.01–5, this rule replaces the citation to 14 U.S.C. 633 with its redesignated section in 14 U.S.C. 503.
In the definition of “Auxiliary Act” in § 5.1, this rule updates the previous citations to 14 U.S.C. 821–894 to their newly redesignated citations in 14 U.S.C. 3901–3913 and 4101–4104.
In § 5.17, this rule replaces the citation to 14 U.S.C. 823a with its redesignated section in 14 U.S.C. 3904.
In § 5.18(c), this rule replaces the citation to 14 U.S.C. 707 with its redesignated section in 14 U.S.C. 3707.
In § 5.30(b)(1) and (b)(2), this rule updates references to 14 U.S.C. 822 with its redesignated section in 14 U.S.C. 3902.
In § 5.40(c)(2), this rule updates the citations to 14 U.S.C. 638, 639, and 892 with their redesignated sections, 14 U.S.C. 933, 934, and 4102.
In § 6.18–1, this rule updates the citation 50 U.S.C. 192 to its redesignated citation in 46 U.S.C. 70052.
In § 8.1(b)(2), this rule updates references to 14 U.S.C. 712 with its redesignated section in 14 U.S.C. 3713.
In § 13.01–1, this rule updates references to 14 U.S.C. 500 with its redesignated section in 14 U.S.C. 2744.
In § 23.30, this rule updates references to 14 U.S.C. 638(b) with its redesignated section in 14 U.S.C. 933(b). Additionally, this rule changes the text in the restatement of the statute from “Each Person” to “Every person” to conform to the actual text of 14 U.S.C. 933(b).
In § 25.131(a)(5) through (8), this rule updates references to 14 U.S.C. 642, 646, 647, and 830 with their redesignated sections, 14 U.S.C. 546, 937, 938, and 3911 respectively.
In the parentheses appearing after the regulatory text of § 26.02, this rule replaces the 14 U.S.C. 2 citation with its redesignated section in 14 U.S.C. 102.
In the Civil Penalty Adjustment Table in table 1 to § 27.3, this rule updates U.S.C. title 14 citations to their redesignated sections as noted herein. Specifically, the penalties for Confidentiality of Medical Quality Assurance Records (first offense and subsequent offenses), previously in 14 U.S.C. 645(i), were redesignated without change into 14 U.S.C. 936(i) by the Authorization Act.
In § 52.2(a), this rule updates the in-text citation to 14 U.S.C. 425 to its redesignated section in 14 U.S.C. 2507.
In § 66.01–45, this rule updates the in-text citation to 14 U.S.C. 83 to its redesignated section in 14 U.S.C. 542.
In § 67.40–25, this rule updates the in-text citation 14 U.S.C. 85 to its redesignated section in 14 U.S.C. 544.
In the parenthetical after § 72.05–1(b), this rule updates the citation to 14 U.S.C. 93 to its redesignated section in 14 U.S.C. 504.
This rule removes the text “in accordance with Part 25 of the title” from § 74.01–1. In 1981, the Coast Guard removed all claims, except for defensive claims, from 33 CFR part 25. Section 74.01–1 deals with claims for damages. Because a claim for damages is not a defensive claim, referencing part 25 in this section is not a proper cross-reference. Removing this language will not have any effect on a claim for damages made under this section.
In § 83.22(c), this rule revises a formatting inconsistency. After the word “length” in paragraph (c), this rule changes the hyphen to a colon to align it with the other paragraphs in this section that end with a colon.
In § 100.35(c), this rule removes reference to the Act of April 28, 1908 because the Act was repealed by the Authorization Act of 2018. The section will continue to state that special local regulations must be issued under the authority of 46 U.S.C. 70041 authorized by 33 CFR 1.05–1, which contains the Coast Guard's rulemaking delegations.
In § 101.415(a), this rule updates the in-text citations to 33 U.S.C. 1232 and 50 U.S.C. 192 because they were redesignated into 46 U.S.C. 70036 and 70052, respectively, by the Authorization Act.
In Part 105, this rule deletes Appendix A—Facility Vulnerability and Security Measures Summary (Form CG–6025) because the form in Appendix A is not current. The current version of form CG–6025 is available at the Coast Guard forms web address. In §§ 105.140(b),105.405(a)(18), and 105.410(e), this rule removes references to the form in Appendix A and inserts a Coast Guard web address,
In § 107.200, within the definition of “U.S. territorial waters,” this rule updates the in-text citation to 50 U.S.C. 195 to its redesignated section 46 U.S.C. 70054. This amendment will have no substantive effect on the definition because the text of 50 U.S.C. 195 was redesignated by the Authorization Act into 46 U.S.C. 70054 without change.
In § 114.05, within the definition of “United States Coast Guard or Coast Guard”, this rule updates the in-text citation to 14 U.S.C. 1 to its identical redesignated section, 14 U.S.C. 101.
In §§ 114.25, 114.50, 115.60, and 115.70 within the parentheses after the regulatory texts, this rule updates the citations to 14 U.S.C. 633 with its redesignated section in 14 U.S.C. 503.
This rule corrects the names of the drawbridges in § 117.149 from 3rd Street and 4th Street drawbridges to Third Street and Fourth Street drawbridges. On June 28, 2019, the Coast Guard issued a technical amendment final rule that contained this same change (84 FR 30879). The amendment could not be incorporated into § 117.149 at the time because the section was suspended. Now that the suspension of § 117.149 has been lifted, the Coast Guard is using this rule to change the names of the drawbridges.
In § 117.235, regarding the Conrail bridge, this rule adds the bridge operator's name to the regulatory text. This amendment will help vessel operators determine whom to contact for information and requests regarding the Conrail bridge operation.
In § 117.243, concerning Norfolk Southern Railway Bridge on the Nanticoke River, this rule adds the drawbridge operator's name and updates the existing phone number in the regulatory text. This updated information is necessary for vessel operators to contact the Norfolk Southern Railway Bridge operators as needed.
In § 117.569(a), this rule also adds the bridge operator's name and contact information for the Conrail railroad bridge on the Pocomoke River so vessel operators can contact the bridge operator as needed.
In the section name of § 117.785, this rule corrects the spelling of the Genesee River from the previous incorrect spelling of “Genessee” River.
This rule corrects the name of the Livingston Ave. (Amtrak) Bridge in § 117.791(c) from the previous incorrect spelling of “Livingstone”.
Section 117.903(a) contains the regulations for bridges on Darby Creek, including the Conrail railroad bridge. This rule removes the word, “automated,” from the Conrail railroad bridge's name to reflect the proper name of the bridge.
In § 117.1087, this rule corrects the name of the Canadian National Bridge by removing “Railroad” from the bridge name in paragraph (b) and capitalizing “Bridge” in its name in both paragraphs (b) and (c).
In § 118.5, this rule updates the in-text citation to 14 U.S.C. 85 to its redesignated section in 14 U.S.C. 544.
In § 126.13(b), this rule removes references to the PWSA (33 U.S.C. 1232) and inserts the citation to 46 U.S.C. 70036, because the Authorization Act repealed and redesignated the relevant PWSA provision to 46 U.S.C. 70036.
Similarly, in §§ 126.25 and 126.33, this rule removes the references to the repealed section 13 of the PWSA (33 U.S.C. 1232) and inserts the redesignated citation in 46 U.S.C. 70036.
In § 127.015(c)(1), this rule adds the word “Policy” to correct the title of the Assistant Commandant for Prevention Policy (CG–5P).
In § 148.5, this rule adds the word “Policy” to correct the title of the Assistant Commandant for Prevention Policy (CG–5P).
This rule updates the office symbol for Assistant Commandant for Prevention Policy (CG–5P) in § 148.105(i). The Coast Guard reorganized offices so that the relevant office within the previous CG–5 became CG–5P.
In § 148.115(a), this rule adds the word “Policy” to correct the title of the Assistant Commandant for Prevention Policy (CG–5P).
In § 148.207(c), this rule updates the Coast Guard web address that contains the list of deepwater port projects and corrects the responsible office to the Vessel and Facility Operating Standards Division (CG–OES–2). The updated web address is
In § 148.209(a), this rule updates the web address in the regulations for a list of the Federal agencies involved in the deep water port licensing. The updated web address is
This rule updates the current web address listed in § 148.252(d) where the public can obtain a proposed subpoena form. The updated web address is
This rule updates the office symbol for the Assistant Commandant for Prevention Policy (CG–5P) in §§ 148.222(b), 149.15(a), (d) and (e). The Coast Guard reorganized offices so that the relevant office within the previous CG–5 became CG–5P.
In § 151.28, this rule updates the office symbol designation from “(CG–5431)” to “(CG–CVC–1),” to reflect the redesignated office symbol.
In § 151.66(b)(3), this rule corrects the spelling of “Discharges” in the title of table § 151.66(b)(3).
In § 155.1015(c)(1), this rule replaces the citation to 14 U.S.C. 827 with its redesignated section, 14 U.S.C. 3908.
In § 160.1, this rule removes references to the repealed PWSA (33 U.S.C. 1221) and inserts 46 U.S.C. Chapter 700, “Ports and Waterways Safety” to reflect the Authorization Act's redesignation of regulatory authority.
In § 160.107, this rule removes the repealed PWSA sections, 33 U.S.C. 1221–1232, and inserts 46 U.S.C. Chapter 700 as a current source of authority for denial of entry.
In § 160.320, this rule removes reference to the repealed authority in 33 U.S.C. 1223(b), and inserts its redesignated authority for the Secretary to control vessel movement in 46 U.S.C. 70002.
In §§ 161.1 and 161.6, this rule removes references to the repealed PWSA and inserts 46 U.S.C. Chapter 700, “Ports and Waterways Safety” to reflect the redesignation of our regulatory authority.
In the authorities listed in the parentheses below the note to § 162.80, this rule updates the repealed PWSA authority, 33 U.S.C. 1231, to its redesignated section, 46 U.S.C. 70034.
In the parentheses following the regulatory text of §§ 164.25, 164.35, and 164.37, this rule replaces the repealed PWSA authority with its redesignated authority in 46 U.S.C. Chapter 700.
In the note to § 164.46(b), this rule replaces the repealed PWSA citation, 33 U.S.C. 1223(b)(3), with its redesignated section, 46 U.S.C. 70002.
In the parentheses following the regulatory text of § 164.53, this rule replaces the repealed PWSA authority citation, 33 U.S.C. 1221, with it our updated regulatory authority, 46 U.S.C. 70034.
In § 164.82(c), this rule replaces an outdated cross-reference to a reporting requirements section that no longer exists. This section references § 161.124 as the source of the requirement to report any malfunction of vessel operating equipment or other restricted maneuverability to the Coast Guard. A final rule titled, “National Vessel Traffic Services Regulations” (59 FR 36316), issued on July 15, 1994, deleted § 161.124 from the CFR and consolidated all of the reporting requirements into the new section § 161.18(a). When § 164.82(c) was implemented by the final rule, “Navigation Safety Equipment for Towing Vessels” (61 FR 35064), issued on July 3, 1996, the cross-referenced section, § 161.124, had already been deleted. The vessel malfunction and restricted maneuverability reporting requirement was moved into table 161.18(a), Row Q, by the “National Vessel Traffic Services Regulations” final rule. This rule inserts table 161.18(a), Row Q, as the correct cross-reference for the vessel malfunction or deficiency reporting requirement mentioned in § 164.82(c). Additionally, this rule removes the in-text summary of § 161.124 in subparagraphs (c)(1), (2) and (3) because that section no longer exists.
Section 165.5(a) currently states that an “authorized Coast Guard official” may establish a security zone, safety zone, or regulated navigation area. This rule will add in paragraph (a), a cross-reference to 33 CFR 1.05–1, where the rulemaking delegations are listed, as the source for determining the proper Coast Guard official to issue these regulations.
In § 165.9(d), this rule replaces the citations 14 U.S.C. 91 and 633 with their redesignated sections, 14 U.S.C. 527 and 503, respectively.
In § 165.758(d), this rule replaces the authority citation to 33 U.S.C. 1231 with its redesignated section, 46 U.S.C. 70034.
This rule redesignates § 165.784 titled “Safety Zone, Schuylkill River; Philadelphia, PA” as § 165.559, without change, so that it is listed within the correct Coast Guard district. This safety zone is geographically located in District 5, but it was inadvertently given a section number that placed it among District 7 regulations in part 165.
In the parentheses after § 165.810, this rule removes the repealed PWSA authorities, 33 U.S.C. 1223 and 1224, and inserts the redesignated authority, 46 U.S.C. Chapter 700.
This rule changes the section number of a 14th Coast Guard District safety zone titled “Safety Zones; Hawaiian Islands Commercial Harbors, HI” from § 165.14–1414 to § 165.1415 to align with the section numbering scheme within part 165.
In §§ 166.110 and 167.15(a), this rule removes references to the repealed PWSA authorities, 33 U.S.C. 1223(c) and 33 U.S.C. 1223, respectively, and inserts the redesignated authority, 46 U.S.C. 70003.
In §§ 169.135(b) and (c), the Coast Guard is including an email address reporting option for the Right Whale Mandatory Ship Reporting System. Currently, email reports are permitted and comprise the majority of the reports received. This will update the contact information and communication vectors to reflect current technology.
In § 177.03(c), this rule replaces the 14 U.S.C. 89 citation with its redesignated section, 14 U.S.C. 522.
In § 16.500(b)(1) and (b)(2), this rule updates the web address for submitting the form titled “U.S. Department of Transportation Drug and Alcohol Testing MIS Data Collection Form.” The updated web address is
In § 28.50, this rule replaces the 14 U.S.C. 89 citation with its redesignated section, 14 U.S.C. 522.
In § 28.275(a)(2), this rule removes “46 CFR” preceding the cross-reference citation and replaces it with a section symbol in order to align with the formatting of all other cross-references in this section.
In § 30.30–1(c), this rule replaces the repealed PWSA authority, 33 U.S.C. 1228(a)(5), with its redesignated authority in 46 U.S.C. 70021(a)(5).
In § 39.1005(a), this rule updates the Coast Guard's mailing address for the Office of Design and Engineering Standards.
In § 39.1015, this rule corrects a cross-reference to 33 CFR 39.1013(a) to the intended citation of 46 CFR 39.1013(a).
We developed this rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on these statutes or Executive orders.
Executive Orders 12866 (Regulatory Planning and Review) and 13563 (Improving Regulation and Regulatory Review) direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (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. Executive Order 13771 (Reducing Regulation and Controlling Regulatory Costs) directs agencies to reduce regulation and control regulatory costs and provides that “for every one new regulation issued, at least two prior regulations be identified for elimination, and that the cost of planned regulations be prudently managed and controlled through a budgeting process.”
The Office of Management and Budget (OMB) has not designated this rule a significant regulatory action under section 3(f) of Executive Order 12866. Accordingly, OMB has not reviewed it. Because this rule is not a significant regulatory action, this rule is exempt from the requirements of Executive Order 13771.
This rule involves non-substantive technical amendments and internal agency practices and procedures; it will not impose any additional costs. The unquantified benefits of the non-substantive technical amendments are increased clarity of regulations and alignment with the updated section numbers for statutory authority citations that the Coast Guard already references in new rulemakings. In addition, the correction of technical items such as Coast Guard offices, bridge titles and addresses, as well as current web addresses will improve ability to reference and contact the correct entities.
Under the Regulatory Flexibility Act, 5 U.S.C. 601–612, we have considered whether this rule will have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.
This rule is not preceded by a notice of proposed rulemaking. The Regulatory Flexibility Act does not apply when notice and comment rulemaking is not required. Therefore, this rule is exempt from the requirements of the Regulatory Flexibility Act. This rule consists of technical, organizational, and conforming amendments and does not have any substantive effect on the regulated industry or small businesses.
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996, Public Law 104–121, we offer to assist small entities in understanding this rule so that they can better evaluate its effects on them and participate in the rulemaking. The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.
The Paperwork Reduction Act of 1995, 44 U.S.C. 3501–3520, requires that the Coast Guard consider the impact of paperwork and other information collection burdens. The Coast Guard has determined that there is no new requirement for information collection associated with this final rule.
A rule has implications for federalism under Executive Order 13132 (Federalism) if it has a substantial direct effect on States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this rule under Executive Order 13132 and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.
The Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1531–1538, requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Although this rule will not result in such expenditure, we do discuss the effects of this rule elsewhere in this preamble.
This rule will not cause a taking of private property or otherwise have taking implications under Executive Order 12630 (Governmental Actions and Interference with Constitutionally Protected Property Rights).
This rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988 (Civil Justice Reform) to minimize litigation, eliminate ambiguity, and reduce burden.
We have analyzed this rule under Executive Order 13045 (Protection of Children from Environmental Health Risks and Safety Risks). This rule is not an economically significant rule and will not create an environmental risk to health or risk to safety that might disproportionately affect children.
This rule does not have tribal implications under Executive Order 13175 (Consultation and Coordination with Indian Tribal Governments), because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes,
We have analyzed this rule under Executive Order 13211 (Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use). We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy.
The National Technology Transfer and Advancement Act, codified as a note to 15 U.S.C. 272, directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through OMB, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (
This rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards.
We have analyzed this rule under Department of Homeland Security Management Directive 023–01, Rev. 1, associated implementing instructions, and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321–4370f), and have concluded that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. A final Record of Environmental Consideration supporting this determination is available in the docket. For instructions on locating the docket, see the
This rule is categorically excluded under paragraphs A3 and L54 of Appendix A, table 1 of DHS Instruction Manual 023–01, Rev. 1.
Administrative practice and procedure, Authority delegations (Government agencies), Freedom of information, Penalties.
Administrative practice and procedure, Law enforcement.
Organization and functions (Government agencies).
Volunteers.
Harbors, Security Measures, Vessels.
Armed forces reserves.
Decorations, Medals, Awards.
Government property.
Aircraft, Signs and symbols, Vessels.
Authority delegations (Government agencies), Claims.
Communications equipment, Marine safety, Radio, Telephone, Vessels.
Administrative practice and procedure, Penalties.
Military academies.
Military personnel, Reporting and recordkeeping requirements.
Administrative practice and procedure, Disability benefits, Military personnel, Retirement.
Administrative practice and procedure, Military personnel.
Administrative practice and procedure, Archives and records, Military personnel.
Day care, Government employees, Infants and children, Military personnel.
Navigation (water).
Navigation (water), Reporting and recordkeeping requirements.
Intergovernmental relations, Navigation (water), Reporting and recordkeeping requirements.
Continental shelf, Navigation (water), Reporting and recordkeeping requirements.
Navigation (water), Penalties.
Government publications, Navigation (water).
Navigation (water).
Navigation (water).
Navigation (water), Treaties, Waterways.
Navigation (water), Treaties.
Fishing vessels, Navigation (water), Waterways.
Marine safety, Navigation (water), Reporting and recordkeeping requirements, Waterways.
Harbors, Maritime security, Reporting and recordkeeping requirements, Security measures, Vessels, Waterways.
Harbors, Maritime security, Reporting and recordkeeping requirements, Security measures, Vessels, Waterways.
Maritime security, Reporting and recordkeeping requirements, Security measures, Vessels.
Maritime security, Navigation (water), Reporting and recordkeeping requirements, Security measures, Waterways.
Continental shelf, Maritime security, Reporting and recordkeeping requirements, Security measures.
Harbors, Marine safety, Maritime security, Navigation (water), Reporting and recordkeeping requirements, Security measures, Vessels, Waterways.
Anchorage grounds.
Bridges.
Administrative practice and procedure, Bridges, Reporting and recordkeeping requirements.
Bridges.
Bridges.
Administrative practice and procedure, Harbors, Reporting and recordkeeping requirements, Security measures, Vessels.
Explosives, Harbors, Hazardous substances, Reporting and recordkeeping requirements.
Fire prevention, Harbors, Hazardous substances, Natural gas, Reporting and recordkeeping requirements, Security measures.
Continental shelf, Marine safety, Occupational safety and health, Vessels.
Continental shelf, Fire prevention, Marine safety, Occupational safety and health.
Continental shelf, Marine safety, Occupational safety and health, Reporting and recordkeeping requirements, Vessels.
Harbors, Marine safety, Navigation (water), Occupational safety and health, Oil pollution, Reporting and recordkeeping requirements.
Administrative practice and procedure, Oil pollution, Penalties, Reporting and recordkeeping requirements, Water pollution control.
Hazardous substances, Oil pollution, Reporting and recordkeeping requirements, Water pollution control.
Alaska, Fire prevention, Hazardous substances, Oil pollution, Reporting and recordkeeping requirements.
Alaska, Hazardous substances, Oil pollution, Reporting and recordkeeping requirements.
Hazardous substances, Oil pollution, Reporting and recordkeeping requirements, Water pollution control.
Administrative practice and procedure, Harbors, Hazardous materials transportation, Marine safety, Navigation (water), Personally identifiable information, Reporting and recordkeeping requirements, Seamen, Vessels, Waterways.
Harbors, Navigation (water), Reporting and recordkeeping requirements, Vessels, Waterways.
Navigation (water), Waterways.
Marine, Navigation (water), Reporting and recordkeeping requirements, Waterways.
Harbors, Marine safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, Waterways.
Anchorage grounds, Marine safety, Navigation (water), Waterways.
Harbors, Marine safety, Navigation (water), Waterways.
Endangered and threatened species, Marine mammals, Navigation (water), Radio, Reporting and recordkeeping requirements, Vessels, Water pollution control.
Marine safety.
Administrative practice and procedure, Organization and functions (Government agencies), Reporting and recordkeeping requirements.
Marine safety, Reporting and recordkeeping requirements, Vessels.
Administrative practice and procedure, Drug testing, Investigations, Marine safety, National Transportation Safety Board, Nuclear vessels, Radiation protection, Reporting and recordkeeping requirements, Safety, Transportation.
Law enforcement, Vessels.
Administrative practice and procedure, Organization and functions (Government agencies), Reporting and recordkeeping requirements, Vessels.
Drug testing, Marine safety, Reporting and recordkeeping requirements, Safety, Transportation.
Alaska, Fire prevention, Fishing vessels, Marine safety, Occupational safety and health, Reporting and recordkeeping requirements, Seamen.
Cargo vessels, Foreign relations, Hazardous materials transportation, Penalties, Reporting and recordkeeping requirements, Seamen.
Cargo vessels, Marine safety, Navigation (water), Occupational safety and health, Reporting and recordkeeping requirements, Seamen.
Cargo vessels, Fire prevention, Hazardous materials transportation, Incorporation by reference, Marine safety, Occupational safety and health, Reporting and recordkeeping requirements.
Oil pollution, Vessels.
For the reasons discussed in the preamble, the Coast Guard amends 33 CFR parts 1, 2, 3, 5, 6, 8, 13, 17, 23, 25, 26, 27, 40, 45, 50, 51, 52, 55, 62, 64, 66, 67, 70, 72, 74, 76, 80, 82, 83, 100, 101, 103, 104, 105, 106, 107, 109, 114, 115, 117, 118, 125, 126, 127, 143, 145, 146, 148, 149, 150, 151, 153, 154, 155, 156, 160, 161, 162, 164, 165, 166, 167, 169, and 177, and 46 CFR parts 1, 2, 4, 7, 8, 16, 28, 30, 35, 39, and 68 as follows:
14 U.S.C. 502, 503, 505; 33 U.S.C. 401, 491, 525, 1321, 2716, and 2716a; 42 U.S.C. 9615; 49 U.S.C. 322; Department of Homeland Security Delegation No. 0170.1; section 1.01–70 also issued under the authority of E.O. 12580, 3 CFR, 1987 Comp., p. 193; and sections 1.01–80 and 1.01–85 also issued under the authority of E.O. 12777, 3 CFR, 1991 Comp., p. 351.
5 U.S.C. 552, 553, App. 2; 14 U.S.C. 102, 502, 503, 505; 33 U.S.C. 471, 499; 49 U.S.C. 101, 322; Department of Homeland Security Delegation No. 0170.1.
(a) The Coast Guard maintains an electronic public docket for each petition for rulemaking and each Coast Guard rulemaking project and notice published in the
14 U.S.C. 503; 14 U.S.C. 501; 33 U.S.C. 1321(b)(6)(B); 46 U.S.C. 2103; Department of Homeland Security Delegation 0701.1.
14 U.S.C. 503; 49 CFR 1.46(b).
5 U.S.C. 552; 14 U.S.C. 503, sec. 6(b)(1), 80 Stat. 937 (49 U.S.C. 1655(b)(1)); 49 CFR 1.46(b).
5 U.S.C. 301; 14 U.S.C. 503, 505, 49 U.S.C. 322; 49 CFR 1.46 and part 9.
14 U.S.C. 503; 49 CFR 1.46(k).
14 U.S.C. 503; 33 U.S.C. 70031; Public Law 89–670, 80 Stat. 931, 49 U.S.C. 108; Public Law 107–296, 116 Stat. 2135, 2249, 6 U.S.C. 101 note and 468; Department of Homeland Security Delegation No. 0170.1.
(a) * * *
(1) * * *
(i) Statutes included within subtitle II, subtitle VI, and subtitle VII, title 46, U.S.C.; the Act of June 15, 1917, as amended (46 U.S.C. 70051–70054); and the Vessel Bridge-to-Bridge Radiotelephone Act (33 U.S.C. 1201–1208), and any regulations issued under the authority of these statutes.
(c) For the purposes of 14 U.S.C. 522, 14 U.S.C. 545, 33 U.S.C. 409, and 33 U.S.C. 1471
14 U.S.C. 501, 504; Public Law 107–296, 116 Stat. 2135; Department of Homeland Security Delegation No. 0170.1, para. 2(23).
14 U.S.C. 503, 3901, 3902, 3903, 3904, 3905, 3907, 3908, 3909, 3910, 3911, 3912, 3913, 4102.
40 Stat. 220, as amended; 50 U.S.C. 70051.
14 U.S.C. 503.
14 U.S.C. 503, 2744; 49 U.S.C. 1655(b); sec. 6(b)(1), 80 Stat. 938; 49 CFR 1.4 (a)(2) and (f).
10 U.S.C. 2601; 14 U.S.C. 501, 503; Treasury Dept. Order 167–1, 18 FR 671.
14 U.S.C. 933, 934; E.O. 10707; 3 CFR, 1954–1958 Comp., p. 364.
The revision reads as follows:
Section 933(b) of title 14 U.S.C. reads as follows:
14 U.S.C. 503; 49 CFR 1.45(a); 49 CFR 1.45(b); 49 CFR 1.46(b), unless otherwise noted.
(a) * * *
(5) To carry out the functions of the Secretary under the Act of August 16, 1937, as amended (14 U.S.C. 546);
(6) To carry out the functions of the Secretary under the Act of June 15, 1936, as amended (14 U.S.C. 937);
(7) To carry out the functions of the Secretary under the Act of August 4, 1949, as amended (14 U.S.C. 938);
(8) To carry out the functions of the Secretary under the Act of February 19, 1941, as amended (14 U.S.C. 3911);
14 U.S.C. 503, 937; 49 CFR 1.46(b).
14 U.S.C. 102, 33 U.S.C. 1201–1208; Public Law 107–295, 116 Stat. 2064; Department of Homeland Security Delegation No. 0170. Rule 1, International Regulations for the Prevention of Collisions at Sea.
Secs. 1–6, Public Law 101–410, 104 Stat. 890, as amended by Sec. 31001(s)(1), Public Law 104–134, 110 Stat. 1321 (28 U.S.C. 2461 note); Department of Homeland Security Delegation No. 0170.1, sec. 2 (106).
14 U.S.C. 503 and 1922.
14 U.S.C. 2302, 2371; Public Law 107–296, 116 Stat. 2135.
10 U.S.C. 1554; 14 U.S.C. 501, 503; Department of Homeland Security Delegations No. 0160.1(II)(B)(1), 0170.1(II)(23).
10 U.S.C. 1553; 14 U.S.C. 501, 503; Department of Homeland Security
10 U.S.C. 1552; 14 U.S.C. 501, 503; Department of Homeland Security Delegations No. 0160.1(II)(B)(1), 0170.1(II)(23).
14 U.S.C. 2922.
14 U.S.C. 544; 43 U.S.C. 1333; 46 U.S.C. 70031, 70041; Department of Homeland Security Delegation No. 0170.1.
14 U.S.C. 503; 33 U.S.C. 409; 42 U.S.C. 9118; 43 U.S.C. 1333; 46 U.S.C. 70034; Department of Homeland Security Delegation No. 0170.1.
14 U.S.C. 542, 543, 544; 43 U.S.C. 1333; Public Law 107–296, 116 Stat. 2135; Department of Homeland Security Delegation No. 0170.1.
14 U.S.C. 503, 544; 43 U.S.C. 1333; Department of Homeland Security Delegation No. 0170.1.
33 U.S.C. 408, 411, 412; 14 U.S.C. 501, 503, 543, 545, 546.
14 U.S.C. 503, 544; 43 U.S.C. 1333; Department of Homeland Security Delegation No. 0170.1.
14 U.S.C. 501, 503, 504, 541, 544, 545, 546, 701, 938; 49 CFR 1.46 (b).
14 U.S.C. 501, 901.
14 U.S.C. 102, 503; 33 U.S.C. 151(a).
14 U.S.C. 102, 503; 33 U.S.C. 1602; E.O. 11964, 42 FR 4327, 3 CFR, 1977 Comp., p. 88; 49 CFR 1.46(n).
Sec. 303, Public Law 108–293, 118 Stat. 1042 (33 U.S.C. 2071); Department of Homeland Security Delegation No. 0170.1.
46 U.S.C. 70041; 33 CFR 1.05–1.
(c) The special local regulations referred to in paragraph (a) of this section, when issued and published by the Commander of a Coast Guard District or COTP as authorized by 33 CFR 1.05–1(i), must have the status of regulations issued pursuant to 46 U.S.C 70041.
46 U.S.C. 70034, 70051, 70052, Chapter 701; Executive Order 12656, 3 CFR 1988 Comp., p. 585; 33 CFR 1.05–1, 6.04–11, 6.14, 6.16, and 6.19; Department of Homeland Security Delegation No. 0170.1.
(a)
46 U.S.C. 70034, 70051, 70102, 70103, 70104, 70112, 70116; 33 CFR 1.05–1, 6.04–11, 6.14, 6.16, and 6.19; Department of Homeland Security Delegation No. 0170.1.
46 U.S.C. 70051, 70116, Chapter 701; 33 CFR 1.05–1, 6.04–11, 6.14, 6.16, and 6.19; Department of Homeland Security Delegation No. 0170.1.
46 U.S.C. 70034, 70103, 70116; Sec. 811, Public Law 111–281, 124 Stat. 2905; 33 CFR 1.05–1, 6.04–11, 6.14, 6.16, and 6.19; Department of Homeland Security Delegation No. 0170.1.
(e) Each facility owner or operator that submits one FSP to cover two or more facilities of similar design and operation must address facility-specific information that includes the design and operational characteristics of each facility and must complete a separate Facility Vulnerability and Security Measures Summary (Form CG–6025), for each facility covered by the plan. The form is available at
46 U.S.C. 70051, 70116, Chapter 701; 33 CFR 1.05–1, 6.04–11, 6.14, 6.16, and 6.19; Department of Homeland Security Delegation No. 0170.1.
14 U.S.C. 701; 46 U.S.C. 70051, 70052, 70053; Presidential Proclamation 6867, 61 FR 8843, 3 CFR, 1996 Comp., p. 8; Presidential Proclamation 7757, 69 FR 9515 (March 1, 2004); Secretary of Homeland Security Order 2004–001; Department of Homeland Security Delegation No. 0170.1; and 33 CFR 1.05–1.
33 U.S.C. 471; 46 U.S.C. 70034; Public Law 107–296, 116 Stat. 2135; Department of Homeland Security Delegation No. 0170.1.
33 U.S.C. 401, 406, 491, 494, 495, 499, 502, 511, 513, 514, 516, 517, 519, 521, 522, 523, 525, 528, 530, 533, and 535(c), (e), and (h); 14 U.S.C. 503; 49 U.S.C. 1655(g); Public Law 107–296, 116 Stat. 2135; 33 CFR 1.05–1 and 1.01–60, Department of Homeland Security Delegation Number 0170.1.
c. 425, sec. 9, 30 Stat. 1151 (33 U.S.C. 401); c. 1130, sec. 1, 34 Stat. 84 (33 U.S.C. 491); sec. 5, 28 Stat. 362, as amended (33 U.S.C. 499); sec. 11, 54 Stat. 501, as amended (33 U.S.C. 521); c. 753, title V, sec. 502, 60 Stat. 847, as amended (33 U.S.C. 525); 86 Stat. 732 (33 U.S.C. 535); 14 U.S.C. 503.
33 U.S.C. 499; 33 CFR 1.05–1; and Department of Homeland Security Delegation No. 0170.1.
The draws of the Third Street bridge, mile 0.0, and the Fourth Street bridge, mile 0.2, both at San Francisco, shall open on signal if at least one hour notice is given.
(a) * * *
(3) When notice is required, the owner operator of the vessel must contact the bridge operator (Delmarva Central Railroad Company) with an estimated time of passage by calling 1–802–774–0305.
33 U.S.C. 494; 14 U.S.C. 503, 544; Department of Homeland Security Delegation No. 0170.1.
R.S. 4517, 4518, secs. 19, 2, 23 Stat. 58, 118, sec. 7, 49 Stat. 1936, sec. 1, 40 Stat. 220; 46 U.S.C. 570–572, 2, 689, 70051 and 70105; E.O. 10173, E.O. 10277, E.O. 10352, 3 CFR, 1949–1953 Comp. pp. 356, 778, 873.
46 U.S.C. 70034; 49 CFR 1.46.
46 U.S.C. 70034; 46 U.S.C. Chapter 701; Department of Homeland Security Delegation No. 0170.1.
43 U.S.C. 1333(d)(1), 1348(c), 1356; 49 CFR 1.46; section 143.210 is also issued under 14 U.S.C. 946 and 31 U.S.C. 9701.
Sec. 633, 63 Stat. 545; sec. 4, 67 Stat. 462; 14 U.S.C. 503; 43 U.S.C. 1333.
43 U.S.C. 1333, 1348, 1350, 1356; 46 U.S.C. 70001, 70116; Sec. 109, Public Law No. 109–347, 120 Stat. 1884; Department of Homeland Security Delegation No. 0170.1.
33 U.S.C. 1504; Department of Homeland Security Delegation No. 0170.1 (75).
(c) Docketed material for each deepwater port project is also available to the public electronically at the Federal Docket website at
33 U.S.C. 1504, 1509; Department of Homeland Security Delegation No. 0170.1 (75).
33 U.S.C. 1321(j)(1)(C), (j)(5), (j)(6), (m)(2), 1509(a); 46 U.S.C. 70034; E.O. 12777, sec. 2; E.O. 13286, sec. 34, 68 FR 10619; Department of Homeland Security Delegation No. 0170.1.
33 U.S.C. 1321, 1902, 1903, 1908; 46 U.S.C. 6101; Public Law 104–227 (110 Stat. 3034); Public Law 108–293 (118 Stat. 1063), § 623; E.O. 12777, 3 CFR, 1991 Comp. p. 351; DHS Delegation No. 0170.1, sec. 2(77).
14 U.S.C. 503; 33 U.S.C. 1321, 1903, 1908; 42 U.S.C. 9615; 46 U.S.C. 6101; E.O. 12580, 3 CFR, 1987 Comp., p. 193; E.O. 12777, 3 CFR, 1991 Comp., p. 351; Department of Homeland Security Delegation No. 0170.1.
33 U.S.C. 1321(j)(1)(C), (j)(5), (j)(6), and (m)(2); 46 U.S.C. 70011, 70034; sec. 2, E.O. 12777, 56 FR 54757; Department of Homeland Security Delegation No. 0170.1. Subpart F is also issued under 33 U.S.C. 2735. Vapor control recovery provisions of Subpart P are also issued under 42 U.S.C. 7511b(f)(2).
3 U.S.C. 301 through 303; 33 U.S.C. 1321(j), 1903(b), 2735; 46 U.S.C. 70011; 70034; E.O. 12777, 56 FR 54757, 3 CFR, 1991 Comp., p. 351; Department of Homeland Security Delegation No. 0170.1. Section 155.1020 also issued under section 316 of Pub. L. 114–120. Section 155.480 also issued under section 4110(b) of Pub. L. 101–380.
33 U.S.C. 1321(j); 46 U.S.C. 3703, 3703a, 3715, 70011, 70034; E.O. 11735, 3 CFR 1971–1975 Comp., p. 793; Department of Homeland Security Delegation No. 0170.1.
46 U.S.C. 70001–70003, 70011, 70034, and 701; Department of Homeland Security Delegation No. 0170.1. Subpart C is also issued under the authority of 33 U.S.C. 70011 and 46 U.S.C. 3715.
This subchapter contains regulations implementing 46 U.S.C. Chapter 700 “Ports and Waterways Safety” and related statutes.
46 U.S.C. 70001, 70002, 70003, 70034, 70114, 70119; Pub. L. 107–295, 116 Stat. 2064; Department of Homeland Security Delegation No. 0170.1.
46 U.S.C. 70034; Department of Homeland Security Delegation No. 0170.1.
46 U.S.C. 2103, 3703, 70034; E.O. 12234, 45 FR 58801, 3 CFR, 1980 Comp., p. 277. Sec. 164.13 also issued under 46 U.S.C. 8502. Sec. 164.46 also issued under 46 U.S.C. 70114 and Sec. 102 of Pub. L. 107–295. Sec. 164.61 also issued under 46 U.S.C. 6101. Department of Homeland Security Delegation No. 0170.1.
(c) Reporting. The owner, master, or operator of each towing vessel whose equipment is inoperative or otherwise
46 U.S.C. 70034, 70051; 33 CFR 1.05–1, 6.04–1, 6.04–6, and 160.5; Department of Homeland Security Delegation No. 0170.1.
46 U.S.C. 70001, 70003; 49 CFR 1.46.
46 U.S.C. 70001, 70003; Department of Homeland Security Delegation No. 0170.0.
46 U.S.C. 70005, 70034, 70115, Department of Homeland Security Delegation No. 0170.1.
(b) * * *
(1) By email to
(2) HF voice communication; or
(3) VHF voice communications.
(c) HF reports made directly to the Coast Guard's Communications Command (COMMCOM) in Chesapeake, VA, or VHF reports made to Coast Guard shore units, should only be made by ships not equipped with INMARSAT C. Ships in this category must provide all the required information to the Coast Guard watchstander.
46 U.S.C. 4302, 4308, 4311; Pub. L. 103–206, 107 Stat. 2439.
5 U.S.C. 552; 14 U.S.C. 503; 46 U.S.C. 7701; 46 U.S.C. Chapter 93; Secs. 101, 888, and 1512, Pub. L. 107–296, 116 Stat. 2135; Department of Homeland Security Delegation No. 0170.1; § 1.01–35 also issued under the authority of 44 U.S.C. 3507; and § 1.03–55 also issued under the authority of 46 U.S.C. 3306(j).
5 U.S.C. 552; 14 U.S.C. 503; 46 U.S.C. 7701; 46 U.S.C. Chapter 93; Public Law 107–296, 116 Stat. 2135; Department of Homeland Security Delegation No. 1070; § 1.01–35 also issued under the authority of 44 U.S.C. 3507.
Sec. 622, Pub. L. 111–281; 33 U.S.C. 1903; 43 U.S.C. 1333; 46 U.S.C. 2103, 2110, 3306, 3703, 70034; Department of Homeland Security Delegation No. 0170.1(II)(77), (90), (92)(a), (92)(b); E.O. 12234, 45 FR 58801, 3 CFR, 1980 Comp., p. 277, sec. 1–105.
43 U.S.C. 1333; 46 U.S.C. 2103, 2303A, 2306, 6101, 6301, 6305, 70034; 50 U.S.C. 198; Department of Homeland Security Delegation No. 0170.1. Subpart 4.40 issued under 49 U.S.C. 1903(a)(1)(E).
14 U.S.C. 503; 33 U.S.C. 151; Department of Homeland Security Delegation No. 0170.1.
33 U.S.C. 1903, 1904, 3803 and 3821; 46 U.S.C. 3103, 3306, 3316, 3703, and 70034; Department of Homeland Security Delegation No. 0170.1 and Aug. 8, 2011 Delegation of Authority, Anti-Fouling Systems.
46 U.S.C. 2103, 3306, 7101, 7301, and 7701; Department of Homeland Security Delegation No. 0170.1.
46 U.S.C. 3316, 4502, 4505, 4506, 6104, 8103, 10603; Department of Homeland Security Delegation No. 0170.1.
46 U.S.C. 2103, 3306, 3703; Department of Homeland Security Delegation No. 0170.1(II)(92)(a), (92)(b).
33 U.S.C. 1321(j); 46 U.S.C. 3306, 3703, 6101, 70011, 70034; 49 U.S.C. 5103, 5106; E.O. 12234, 45 FR 58801, 3 CFR, 1980 Comp., p. 277; E.O. 12777, 56 FR 54757, 3 CFR, 1991 Comp., p. 351; Department of Homeland Security Delegation No. 0170.1.
42 U.S.C. 7511b(f)(2); 46 U.S.C. 3306, 3703, 3715(b), 70011, 70034; E.O. 12234, 45 FR 58801, 3 CFR, 1980 Comp., p. 277; Department of Homeland Security Delegation No. 0170.1.
14 U.S.C. 946; 31 U.S.C. 9701; 42 U.S.C. 9118; 46 U.S.C. 2103, 2110; 46 U.S.C. app. 876; Department of Homeland Security Delegation No. 0170.1.
United States Patent and Trademark Office, Department of Commerce.
Final rule; correction.
The United States Patent and Trademark Office (Office or USPTO) makes corrections to a final rule that set or adjusted patent fees that was published on August 3, 2020. This rule fixes typographical errors and makes other nonsubstantive changes to improve clarity in the regulations.
This correction is effective October 2, 2020.
Brendan Hourigan, Director of the Office of Planning and Budget, by telephone at 571–272–8966; or Dianne Buie, Director, Forecasting and Analysis Division, by telephone at 571–272–6301.
A.
Accordingly, prior notice and opportunity for public comment for the changes in this rulemaking are not required pursuant to 5 U.S.C. 553(b) or (c), or any other law.
The 30-day delay in effectiveness is not applicable because this rule is not a substantive rule, as the changes in this rule have no impact on the standard for reviewing patent applications. As discussed above, the changes in this rulemaking involve correcting typographic errors in the final rule published on August 3, 2020. These changes are administrative in nature and will have no substantive impact on the evaluation of a patent application. The purpose of a delay in effectiveness is to allow affected parties time to modify their behaviors, businesses, or practices to come into compliance with new regulations. This rule imposes no additional requirements on the affected entities. Therefore, the requirement for a 30-day delay in effectiveness is not applicable, and the rule is made effective on October 2, 2020.
B.
C.
D.
In FR Doc. 2020–16559, appearing on page 46932 in the
(d) * * *
(a) * * *
(6) Late payment fee pursuant to PCT Rule 16
Environmental Protection Agency (EPA).
Final rule.
The Environmental Protection Agency (EPA) is finalizing approval of a portion of State Implementation Plan (SIP) revisions for South Carolina submitted by the South Carolina Department of Health and Environmental Control (SC DHEC) through letters dated August 8, 2014, and August 12, 2015, and a portion of a SIP revision for Tennessee submitted by the Tennessee Department of Environment and Conservation (TDEC) through a letter dated February 17, 2014. The South Carolina SIP revisions modify a provision that requires fossil fuel-fired steam generators having a heat input capacity of more than 250 million British thermal units (Btu) per hour (Btu/hr) to submit continuous opacity monitoring reports required by the SIP on a quarterly basis. This provision is modified to allow such reporting on a semiannual basis instead. The South Carolina SIP does not contain any other continuous opacity monitoring report requirements for the subject sources, and this rule revision has no impact on any federal reporting requirements. Specifically, the South Carolina SIP revisions do not override any other reporting requirements that might continue to require more frequent reporting. The Tennessee SIP revision adds a new provision that requires any
This rule is effective October 19, 2020.
EPA has established a docket for this action under Docket Identification No. EPA–R04–OAR–2016–0655. All documents in the docket are listed on the
Joel Huey, Air Planning and Implementation Branch, Air and Radiation Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street SW, Atlanta, Georgia 30303–8960, or Sean Lakeman, Air Regulatory Management Section, Air Planning and Implementation Branch, Air and Radiation Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street SW, Atlanta, Georgia 30303–8960. Mr. Huey can be reached by telephone at (404) 562–9104 or via electronic mail at
In a July 21, 2020 (85 FR 44027), notice of proposed rulemaking (NPRM), EPA proposed to approve revisions to the South Carolina SIP, submitted by SC DHEC on August 8, 2014, and August 12, 2015, concerning the frequency with which fossil fuel-fired steam generators are required to submit continuous opacity monitoring reports to the State. In that NPRM, EPA also proposed to approve a revision to the Tennessee SIP, submitted by TDEC on February 17, 2014, concerning the frequency with which major sources subject to the title V operating permit program are required to report excess emissions data to the State. These SIP revisions would change certain existing quarterly emission reporting requirements to semiannual requirements for affected facilities. Due to a conflict with the federal rule at that time, EPA stated that the Agency did not intend to take final action on these SIP revisions unless and until EPA has taken final action to revise Appendix P of 40 CFR part 51 (Appendix P), as proposed in the Agency's February 21, 2020, notice of proposed rulemaking.
In a final action published on August 14, 2020 (85 FR 49596), EPA finalized revisions to Appendix P that changed the minimum frequency for submitting reports of excess emissions from “each calendar quarter” to “twice per year at 6-month intervals” for the four source categories subject to Appendix P (fossil fuel-fired steam generators, nitric acid plants, sulfuric acid plants, and fluid bed catalytic cracking unit catalyst regenerators at petroleum refineries). As a result, states may establish semiannual reporting as the minimum frequency for affected sources to submit reports of excess emissions to the state. This reporting frequency aligns with what EPA has generally established as the reporting frequency applicable to the Appendix P source categories under more recently updated regulations. Due to this change to Appendix P, the South Carolina SIP revision and the Tennessee SIP revision are no longer in conflict with the federal requirement for quarterly excess emissions reporting for the four source categories subject to Appendix P.
EPA received no adverse comments on the July 21, 2020, NPRM, which includes the full rationale behind the proposed approval of the revisions to the South Carolina and Tennessee SIPs. EPA is taking final action to approve these SIP revisions because they are consistent with the provisions of the CAA.
In this rule, EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, EPA is incorporating by reference South Carolina Regulation 61–62.5 Standard No. 1, Section IV, “
EPA is approving a portion of South Carolina's August 8, 2014, and August 12, 2015, SIP revisions to change Rule 61–62.5 Standard 1, Section IV.B.1 to provide that the owner or operator of any fossil fuel-fired steam generators having a heat input capacity of more than 250 million Btu/hr shall submit a written continuous opacity monitor report to SC DHEC semiannually or more often if requested, thus revising the existing requirement to submit such reports on a quarterly basis. EPA is also approving Tennessee's February 17,
Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. See 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. These actions merely approve state law as meeting Federal requirements and do not impose additional requirements beyond those imposed by state law. For that reason, these actions:
• Are not a significant regulatory action subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);
• Are not an Executive Order 13771 (82 FR 9339, February 2, 2017) regulatory action because SIP approvals are exempted under Executive Order 12866;
• Do not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• Are certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
• Do not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104–4);
• Do not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• Are not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• Are not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);
• Are not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA; and
• Do not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).
In addition, for Tennessee, the SIP is not approved to apply on any Indian reservation land or in any other area where EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), nor will it impose substantial direct costs on tribal governments or preempt tribal law.
For South Carolina, because this final action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law, this final action for the State of South Carolina does not have Tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). Therefore, this action will not impose substantial direct costs on Tribal governments or preempt Tribal law. The Catawba Indian Nation (CIN) Reservation is located within the boundary of York County, South Carolina. Pursuant to the Catawba Indian Claims Settlement Act, S.C. Code Ann. 27–16–120 (Settlement Act), “all state and local environmental laws and regulations apply to the [Catawba Indian Nation] and Reservation and are fully enforceable by all relevant state and local agencies and authorities.” The CIN also retains authority to impose regulations applying higher environmental standards to the Reservation than those imposed by state law or local governing bodies, in accordance with the Settlement Act.
The Congressional Review Act, 5 U.S.C. 801
Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by November 17, 2020. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. See section 307(b)(2).
Environmental protection, Air pollution control, Carbon monoxide, Incorporation by reference, Intergovernmental relations, Lead, Nitrogen dioxide, Ozone, Particulate matter, Reporting and recordkeeping requirements, Sulfur oxides, Volatile organic compounds.
For the reasons stated in the preamble, the EPA amends 40 CFR part 52 as follows:
42 U.S.C. 7401
(c) * * *
(c) * * *
Environmental Protection Agency (EPA).
Final rule.
The Environmental Protection Agency (EPA) is taking final action to approve the “Imperial County 2018 Redesignation Request and Maintenance Plan for Particulate Matter Less Than 10 Microns in Diameter (PM
This rule is effective on October 19, 2020.
The EPA has established a docket for this action under Docket ID No. EPA–R09–OAR–2019–0654. All documents in the docket are listed on the
Ginger Vagenas, EPA Region IX, 75 Hawthorne St., San Francisco, CA 94105. By phone at 415–972–3964, or by email at
Throughout this document, the terms “we,” “us,” and “our” mean the EPA.
On April 2, 2020 (85 FR 18509), under section 110(k) of the Clean Air Act (CAA or “Act”), the EPA proposed to approve the Imperial PM
In our proposed rule, we provided background information on the NAAQS for particulate matter with an aerodynamic diameter less than or equal to a nominal ten micrometers (PM
In response to the nonattainment designation, CARB and the Imperial County Air Pollution Control District (ICAPCD or “District”) adopted control measures, including the District's Regulation VIII (“Fugitive Dust Rules”), and air quality plans to attain the PM
For our proposed rule, we reviewed CARB's request for redesignation for compliance with the criteria for redesignation in CAA section 107(d)(3)(E) and determined that the Imperial Valley Planning Area met the criteria for redesignation from nonattainment to attainment for the PM
Second, in our proposed rule, we found that, with approval of certain SIP elements for which we proposed approval, the Imperial Valley Planning Area will have a fully approved applicable SIP under section 110(k) that meets all applicable requirements under section 110 and part D for the purposes of redesignation.
Third, based on our previous approval of the District's Regulation VIII fugitive dust rules as part of the Imperial County portion of the California SIP, we proposed to find that the improvement in air quality in the Imperial Valley Planning Area is due to permanent and enforceable emissions reductions.
Lastly, we proposed to approve the motor vehicle emissions budgets (MVEBs or “budgets”) in the Imperial PM
Please see our April 2, 2020 proposed rule for a detailed discussion of the background for this action and the rationale for our proposed approval of the Imperial PM
Our April 2, 2020 proposed rule provided a 30-day public comment period that closed on May 4, 2020. During this period, we received comments from a private citizen and from the Torres Martinez Desert Cahuilla Indian Tribe (“Torres Martinez Tribe” or “Tribe”). A summary of the comments and our responses follow.
The Imperial PM
The Salton Sea will continue to shrink, especially as drainage flows from local agricultural use are significantly reduced in 2017 and beyond. Stabilizing the parts of the playa expected to be emissive as they are exposed will minimize dust. The State's Salton Sea Management Program (SSMP) and Phase I Plan and [the Imperial Irrigation District's] Salton Sea Air Quality Management Program (SS AQM Program) are designed to proactively provide reasonable controls as the playa is exposed. 2016 Amendments to ICAPCD Rule 804 allow establishment of alternate BACM on exposed playa that is not stabilized; this provides an adopted contingency mechanism for any emissive playa that is not stabilized as it is exposed. Imperial PM
As we noted in our proposed rule, these efforts include the State's establishment in 2015 of the Salton Sea Task Force, which has developed a 10-year plan that endeavors to expedite wildlife habitat construction and to suppress dust from playa that will be exposed in the future. The Imperial Irrigation District's Salton Sea Air Quality Mitigation Program, which applies in addition to other programs and requirements, represents another of these efforts. It includes three components: a monitoring program and development of an emissions inventory; a dust control strategy that includes the development and testing of dust control measures; and the implementation of an annual proactive dust control plan that includes performance modeling.
The District also notes that state law and water transfer permits include requirements to control PM
With respect to the potential for increases in airborne PM
Lastly, we acknowledge the Imperial County Board of Supervisors' proclamation of a local emergency for air pollution at the Salton Sea but do not view the proclamation as irreconcilable with the redesignation request also adopted by the Imperial County Board of Supervisors (as members of the Imperial County Air Pollution Control Board of Directors).
The State of California's initial response to Imperial County's proclamation is contained in a letter dated January 6, 2020, from Wade Crowfoot, Secretary for Natural Resources and Jared Blumenfeld, Secretary for Environmental Protection (referred to herein collectively as the “State”), which is included in the docket for this rulemaking. The letter from the State acknowledges the urgent public health problem posed by the Salton Sea and outlines the significant work underway
Finally, we note that, in support of the redesignation request, the Imperial PM
NNSR requires the application of the highest level of control (lowest achievable emissions rate or LAER) to sources that have the potential to emit 70 tons of PM
The Tribe asserts that this inaccuracy (bias low) in the highest and most important measurements of the dataset affects the analysis in two ways. First, for days where the NAAQS was exceeded and monitors recorded values of 985 or 995 μg/m
The Tribe asserts that CARB and the District knowingly operated these monitors and reported low biased concentrations for the over-range hours, although the sampler manufacturer provided a variety of options for obtaining the correctly calculated hourly values. These options included changing the sampler range to allow measurements in the range known to occur in the region as well as manually retrieving the over-range values from a file contained in the sampler's memory. The Tribe notes that, during this period, the Torres Martinez PM
Historically, the maximum concentration that this monitor could measure was a function of two instrument settings: The offset, which sets the minimum concentration measured by the instrument, and the range, which sets the full-scale range of the concentration measurement system. The standard range setting for the BAM 1020 is 1,000 µg/m
The BAM 1020 instrument manual has been revised many times since its initial FEM designation, including several revisions during the 2014 to 2018 time period. An early revision of the BAM 1020 instrument manual relevant to the earliest data used in this action (revision K, released in October 2012) and a more recent revision (revision U, released in November 2017) both include information concerning the standard and optional ranges.
After evaluation and consideration of these factors, including the potential loss of resolution at lower concentrations, CARB and ICAPCD chose to transition from the standard range to one of the other optional ranges. The CARB-operated Calexico (AQS ID: 06–025–0005) monitors' upper range was increased to 5,000 µg/m
The EPA disagrees with the Tribe's assertion that on days where the NAAQS was exceeded and at least one monitor reported an hourly concentration at the maximum value allowed by the range setting, the inaccuracy of this value limits the exceptional events conclusions and analysis. The EPA reviews the information and analyses in an air agency's exceptional events demonstration package using a weight of evidence approach. The EPA considers a variety of evidence when evaluating whether the exceptional event criteria were met, and weighs the available evidence based on its relevance, degree of certainty, persuasiveness, and other considerations appropriate to the individual pollutant, as well as the nature and type of event. As further described in the response to the following comment, the EPA considered many types of analyses in its consideration of the exceptional event demonstrations concurred on in this action, several of which are independent of the hourly data reported by the instrument. Concerns that the highest hourly concentrations reported by the instrument may have been artificially low for some events do not undermine the weight of evidence showing that there was a clear causal relationship between the monitored exceedances and the associated high wind dust events.
The EPA also disagrees with the Tribe's assertion that days that did not exceed the NAAQS but at least one monitor reported an hourly concentration at the maximum value allowed by the range setting should have been reviewed as exceptional events. As described above, the EPA considers the reported data valid and appropriate for use in comparison to the NAAQS. The days referenced by the Tribe are therefore not eligible for treatment as exceptional events because they do not contribute to an exceedance or violation of any NAAQS.
Finally, data collected after all instruments were re-ranged continue to be consistent with attainment of the NAAQS in the Imperial Valley Planning Area. Based on certified 2019 data available in the Air Quality System (AQS), only two exceedance days were recorded in 2019: May 16, 2019 at Brawley and May 21, 2019 at Brawley, Niland and Westmorland. Preliminary 2020 data available in AQS and AirNow Tech indicate that no PM
The Tribe specifically expressed concern that spatial non-homogenous exceedances were a result of local sources of emissions with wind speeds less than 25 mph rather than transport from areas with sustained winds greater than 25 mph. For these exceedances, the EPA believes that the clear casual analyses demonstrated that the exceedances were caused by high wind dust exceptional events. In instances where the high winds that generated dust emissions were measured outside of the Imperial Valley Planning Area, NOAA HYSPLIT trajectories included in the demonstrations were consistent with transport from those outside areas. This, along with other supporting documentation and analyses in the demonstration, indicates that a clear causal relationship existed between the specific high wind dust event and the monitored exceedances.
Further, the EPA believes that the demonstrations addressed the potential influence of poorly controlled local
For concurred events between 2014 and 2017, the EPA had approved the PM
Under CAA section 110(k)(3), for the reasons set forth in this final rule and in our proposed rule, the EPA is approving the Imperial PM
In addition, under CAA section 107(d)(3)(D), we are approving CARB's request to redesignate the Imperial PM
Under the CAA, redesignation of an area to attainment and the accompanying approval of a maintenance plan under section 107(d)(3)(E) are actions that affect the status of a geographic area and do not impose any additional regulatory requirements on sources beyond those imposed by state law. Redesignation to attainment does not in and of itself create any new requirements, but rather results in the applicability of requirements contained in the CAA for areas that have been redesignated to attainment. Moreover, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, the EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely approves a State plan and redesignation request as meeting federal requirements and do not impose additional requirements beyond those imposed by state law. For these reasons, this action:
• Is not a significant regulatory action subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);
• Is not an Executive Order 13771 (82 FR 9339, February 2, 2017) regulatory action because SIP approvals are exempted under Executive Order 12866;
• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104–4);
• Does not have federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);
• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the Clean Air Act; and
• Does not provide the EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).
In addition, the State plan the EPA is approving does not apply on any Indian reservation land or in any other area where the EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule, as it relates to the maintenance plan, does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). However, the redesignation does apply to Indian country within the nonattainment area. In those areas of Indian country, the redesignation action will not result in the relaxation of measures and programs currently in place to protect air quality and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). The EPA invited the Torres Martinez Desert Cahuilla Indians and the Quechan Tribe of the Fort Yuma Indian Reservation, who have lands within the Imperial PM
The Congressional Review Act, 5 U.S.C. 801
Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by November 17, 2020. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)
Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Nitrogen dioxide, Particulate matter, Reporting and recordkeeping requirements, Sulfur oxides, Volatile organic compounds.
Environmental protection, Air pollution control, National parks, Wilderness areas.
42 U.S.C. 7401
Chapter I, title 40 of the Code of Federal Regulations is amended as follows:
42 U.S.C. 7401
(c) * * *
(541) The following plan was submitted on February 13, 2019 by the Governor's designee as an attachment to a letter dated February 6, 2019.
(i) [Reserved]
(ii)
(
(
42 U.S.C. 7401
Federal Emergency Management Agency, DHS.
Final rule.
This rule identifies communities where the sale of flood insurance has been authorized under the National Flood Insurance Program (NFIP) that are scheduled for suspension on the effective dates listed within this rule because of noncompliance with the floodplain management requirements of the program. If the Federal Emergency Management Agency (FEMA) receives documentation that the community has adopted the required floodplain management measures prior to the effective suspension date given in this rule, the suspension will not occur and a notice of this will be provided by publication in the
If you want to determine whether a particular community was suspended on the suspension date or for further information, contact Adrienne L. Sheldon, PE, CFM, Federal Insurance and Mitigation Administration, Federal Emergency Management Agency, 400 C Street SW, Washington, DC 20472, (202) 674–1087.
The NFIP enables property owners to purchase Federal flood insurance that is not otherwise generally available from private insurers. In return, communities agree to adopt and administer local floodplain management measures aimed at protecting lives and new construction from future flooding. Section 1315 of the National Flood Insurance Act of 1968, as amended, 42 U.S.C. 4022, prohibits the sale of NFIP flood insurance unless an appropriate public body adopts adequate floodplain management measures with effective enforcement measures. The communities listed in this document no longer meet that statutory requirement for compliance with program regulations, 44 CFR part 59. Accordingly, the communities will be suspended on the effective date in the third column. As of that date, flood insurance will no longer be available in the community. We recognize that some of these communities may adopt and submit the required documentation of legally enforceable floodplain management measures after this rule is published but prior to the actual suspension date. These communities will not be suspended and will continue to be eligible for the sale of NFIP flood insurance. A notice withdrawing the suspension of such communities will be published in the
In addition, FEMA publishes a Flood Insurance Rate Map (FIRM) that identifies the Special Flood Hazard Areas (SFHAs) in these communities. The date of the FIRM, if one has been published, is indicated in the fourth column of the table. No direct Federal financial assistance (except assistance pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act not in connection with a flood) may be provided for construction or acquisition of buildings in identified SFHAs for communities not participating in the NFIP and identified for more than a year on FEMA's initial FIRM for the community as having flood-prone areas (section 202(a) of the Flood Disaster Protection Act of 1973, 42 U.S.C. 4106(a), as amended). This prohibition against certain types of Federal assistance becomes effective for the communities listed on the date shown in the last column. The Administrator finds that notice and public comment procedures under 5 U.S.C. 553(b), are impracticable and unnecessary because communities listed in this final rule have been adequately notified.
Each community receives 6-month, 90-day, and 30-day notification letters addressed to the Chief Executive Officer stating that the community will be suspended unless the required floodplain management measures are met prior to the effective suspension date. Since these notifications were made, this final rule may take effect within less than 30 days.
Flood insurance, Floodplains.
Accordingly, 44 CFR part 64 is amended as follows:
42 U.S.C. 4001
Federal Communications Commission.
Final rule.
In this document, the Commission eliminates the Engineering Division of the Media Bureau and folds it into the Bureau's Industry Analysis Division. We take this step to account for changes in the Engineering Division's duties and in the organizational structure of the Commission. Incorporating the work and staff of the Engineering Division into the Industry Analysis Division is
Effective September 18, 2020.
Holly Saurer,
This is a summary of the Commission's
In this
More specifically, the Engineering Division processed cable industry regulatory filings (such as registrations and their updates, and signal leakage and proof of performance results), Cable Television Relay Service (CARS) applications, and requests for rulings on technical matters. As the industry has transitioned from analog to digital and from paper to electronic filing processes, and as the Commission has engaged in dozens of proceedings to modernize its rules, the Engineering Division's tasks have diminished. For example, many of the tasks that the Engineering Division used to perform, such as monitoring and enforcing proof-of-performance testing requirements and collecting FCC Form 325 (Annual Report of Cable Television Systems), are no longer necessary given updates to our rules. The Division's work is now primarily focused on consulting with other Bureaus and Offices and the Media Bureau's other divisions in all aspects of media-related technical rulemakings and enforcement and providing analysis of the Commission's cable industry data, as well as maintaining the Cable Operations and Licensing System (COALS) database, which includes the CARS licensing process.
Among other things, the IAD collects, compiles, analyzes and develops reports on relevant industry and market data and information, including conducting rulemakings and preparing reports to Congress on the status of competition in the media industry. With the recent creation of the Office of Economics and Analytics (OEA), the IAD's economists and a portion of its responsibilities were relocated to the new OEA.
For these reasons, we believe that combining the Engineering Division and the IAD will promote more effective use of Commission resources. Accordingly, we find that Engineering Division personnel and responsibilities should be moved into the IAD, and the Engineering Division should be eliminated as a separate Media Bureau division. The key objectives of this organizational change are to more efficiently deploy Commission resources, enhance the Bureau's understanding and analysis of the media industry, and rationalize and modernize our organizational structure. We believe that we can best accomplish these objectives through organizational change. In order to effectuate this change, we modify our rules to account for the reorganization.
The amendments adopted herein pertain to agency organization, procedure, and practice. Consequently, the notice and comment and effective date provisions of the Administrative Procedure Act contained in 5 U.S.C. 553(b) and (d) do not apply.
This document does not contain information collection requirements subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104–13. In addition, therefore, it does not contain any new or modified information collection burden for small business concerns with fewer than 25 employees, pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107–198, see 44 U.S.C. 3506(c)(4).
The Commission will not send a copy of this Order pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A), because the adopted rules exclusively relate to agency management or personnel.
Reporting and recordkeeping requirements.
For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR part 73 as follows:
47 U.S.C. 154, 155, 301, 303, 307, 309, 310, 334, 336, 339.
The Media Bureau and each of its Divisions provide information on the internet regarding rules and policies, pending and completed rulemakings, and pending applications. These sites also include copies of public notices and texts of recent decisions. The Media Bureau's address is
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Final rule; date of effectiveness for collection-of-information requirements.
NMFS announces approval by the Office of Management and Budget (OMB) of collection-of-information requirements contained in regulations published in a final rule on December 20, 2019. The final rule implements International Maritime Organization (IMO) requirements in Inter-American Tropical Tuna Commission (IATTC) Resolution C–18–06 (
This final rule is effective September 18, 2020. The amendments in amendatory instructions 2 and 6, published at 84 FR 70040 (December 20, 2019), are effective on September 18, 2020.
Copies of supporting documents are available via the Federal eRulemaking Portal:
Written comments regarding the burden-hour estimates or other aspects of the collection-of-information requirements contained in this rule may be submitted to the NMFS West Coast Region Long Beach Office at the address listed above, and to
Daniel Studt, NMFS, West Coast Region, 562–980–4073.
On December 20, 2019, NMFS published a final rule in the
This final rule has been determined to be not significant for the purposes of Executive Order 12866. This rule is not an Executive Order 13771 regulatory action because this rule is not significant under Executive Order 12866.
This final rule announces the date of effectiveness of new and revised collection-of-information requirements approved by OMB under PRA control number 0648–0387 that were published in the
The NOAA Assistant Administrator for Fisheries (AA) finds there is good cause to waive prior notice and opportunity for public comment for this action pursuant to 5 U.S.C. 553(b)(B) of the Administrative Procedure Act (APA), because prior notice and opportunity for public comment on this final rule is unnecessary and contrary to the public interest. In part, this action simply provides notice of OMB's approval of the reporting requirements at issue, which has already occurred, and renders those requirements effective. Thus, this part of this action does not involve any further exercise of agency discretion by NMFS or OMB. Moreover, the public has had prior notice and the opportunity to comment on the collection-of-information requirements. NMFS published a proposed rule including the collection-of-information requirements on April 16, 2019 (84 FR 15556), with comments accepted through May 16, 2019. NMFS received two comments on the collection-of-information requirements related to a proposed supplementation of a vessel departure notification and an ability to apply for associated permit applications online. The final rule published on December 20, 2019 (84 FR 70040), addressed these comments, keeping the proposed supplemental vessel departure notice in place for the reasons described there, while revising the purse seine vessel permit application collection-of-information requirements to allow for an online process. Both such processes were considered and approved under PRA control number 0648–0387. Additional opportunity for public comment at this point would not be meaningful and would be duplicative. Any further delay to allow for public comment is therefore unnecessary and would result in public confusion.
For the aforementioned reasons, the AA also finds good cause to waive the 30-day delay in the effectiveness of this action under 5 U.S.C. 553(d)(3).
These measures are thus exempt from the procedures of the Regulatory Flexibility Act because prior notice and comment are not required under the APA.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Temporary rule; closure.
NMFS is prohibiting directed fishing for Pacific cod by catcher vessels greater than or equal to 60 feet (18.3 meters (m)) length overall (LOA) using pot gear in the Bering Sea and Aleutian Islands management area (BSAI). This action is necessary to prevent exceeding the 2020 Pacific cod total allowable catch allocated to catcher vessels greater than or equal to 60 feet (18.3m) LOA using pot gear in the BSAI.
Effective 1200 hours, Alaska local time (A.l.t.), September 16, 2020, through 2400 hours, A.l.t., December 31, 2020.
Krista Milani, 907–581–2062.
NMFS manages the groundfish fishery in the BSAI exclusive economic zone according to the Fishery Management Plan for Groundfish of the Bering Sea and Aleutian Islands Management Area (FMP) prepared by the North Pacific Fishery Management Council under authority of the Magnuson-Stevens Fishery Conservation and Management Act. Regulations governing fishing by U.S. vessels in accordance with the FMP appear at subpart H of 50 CFR part 600 and 50 CFR part 679.
The 2020 Pacific cod total allowable catch (TAC) allocated to catcher vessels greater than or equal to 60 feet (18.3m) LOA using pot gear in the BSAI is 11,616 metric tons (mt) as established by the final 2020 and 2021 harvest specifications for groundfish in the BSAI (85 FR 13553, March 9, 2020).
In accordance with § 679.20(d)(1)(iii), the Administrator, Alaska Region, NMFS (Regional Administrator), has determined that the 2020 Pacific cod TAC allocated as a directed fishing allowance to catcher vessels greater than or equal to 60 feet (18.3m) LOA using pot gear in the BSAI will soon be reached. Consequently, NMFS is prohibiting directed fishing for Pacific cod by catcher vessels greater than or equal to 60 feet (18.3m) LOA using pot gear in the BSAI.
While this closure is effective the maximum retainable amounts at § 679.20(e) and (f) apply at any time during a trip.
NMFS issues this action pursuant to section 305(d) of the Magnuson-Stevens Act. This action is required by 50 CFR part 679, which was issued pursuant to section 304(b), and is exempt from review under Executive Order 12866.
Pursuant to 5 U.S.C. 553(b)(B), there is good cause to waive prior notice and an opportunity for public comment on this action, as notice and comment would be impracticable and contrary to the public interest, as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay the closure of Pacific cod by catcher vessels greater than or equal to 60 feet (18.3m) LOA using pot gear in the BSAI. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of September 14, 2020.
16 U.S.C. 1801
Office of Energy Efficiency and Renewable Energy, Department of Energy.
Notification of webinar public meeting and reopening of comment period.
On April 30, 2020, the U.S. Department of Energy (“DOE”) published in the
See the “Public Participation” section of this document for webinar registration information, participant instructions, and information about the capabilities available to webinar participants.
The docket web page can be found at
Mr. Jeremy Dommu, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies Office, EE–5B, 1000 Independence Avenue SW, Washington, DC 20585–0121. Telephone: (202) 586–9870. Email:
Mr. Michael Kido, U.S. Department of Energy, Office of the General Counsel, GC–33, 1000 Independence Avenue SW, Washington, DC 20585–0121. Telephone: (202) 586–8145. Email:
For further information on how to submit a comment, review other public comments and the docket, or participate in the webinar, contact the Appliance and Equipment Standards Program staff at (202) 287–1445 or by email:
The Energy Policy and Conservation Act of 1975, as amended (“EPCA”), prescribes energy conservation standards for various consumer products and certain commercial and industrial equipment, including small electric motors. EPCA also requires the Secretary of Energy to periodically determine whether more-stringent, amended standards would be technologically feasible and cost effective, and would result in significant conservation of energy. In a Notification of Proposed Determination (“NOPD”) published on April 30, 2020, DOE tentatively determined that more stringent small electric motors standards would not be cost effective, and, thus, did not propose to amend its energy conservation standards for this equipment. 85 FR 24146. DOE requested submission of written comment, data, and information pertaining to these standards by June 29, 2020.
This document announces that DOE will hold a webinar to discuss the proposed determination on October 6, 2020. Additionally, DOE will reopen the comment period for written comments until October 20, 2020 to provide interested parties an additional 14 days following the webinar to prepare and submit comments. DOE will consider any comments received by this date, to be timely submitted.
See section IV, “Public Participation,” of the NOPD for additional information on submitting written comments.
The time and date of the webinar are listed in the
Additionally, you may request an in-person meeting to be held prior to the close of the request period provided in the
Please note that foreign nationals participating in the public meeting are subject to advance security screening procedures which require advance notice prior to attendance at the public meeting. If a foreign national wishes to participate in the public meeting, please inform DOE of this fact as soon as possible by contacting Ms. Regina Washington at (202) 586–1214 or by email:
Any person who has plans to present a prepared general statement may request that copies of his or her statement be made available at the public meeting. Such persons may submit requests, along with an advance electronic copy of their statement in PDF (preferred), Microsoft Word or Excel, WordPerfect, or text (ASCII) file format, by email to:
A transcript of the public meeting will be included in the docket, which can be viewed as described in the
This document of the Department of Energy was signed on August 31, 2020, by Alexander N. Fitzsimmons, Deputy Assistant Secretary for Energy Efficiency, Energy Efficiency and Renewable Energy, pursuant to delegated authority from the Secretary of Energy. That document with the original signature and date is maintained by DOE. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, the undersigned DOE
Federal Energy Regulatory Commission, DOE.
Petition for rulemaking.
Take notice that on August 19, 2020, pursuant to the Federal Energy Regulatory Commission's (Commission) Rules of Practice and Procedure, Bloom Energy Corporation submitted a petition for rulemaking requesting that the Commission clarify that the thermal energy output produced by a topping-cycle facility's solid oxide fuel cell system when used to reform methane and produce hydrogen for fuel for electricity generation by that facility is useful thermal energy output that would enable the facility powered by such fuel cells to be certified as a qualifying cogeneration facility, all as more fully explained in the petition.
Comments due 5 p.m. Eastern time on September 8, 2020.
The Commission strongly encourages electronic filing of comments in lieu of paper using the eFile link at
Lawrence Greenfield, Office of the General Counsel, Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC 20426, (202) 502–6415,
Any person desiring to intervene or to protest this filing must file in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211, 385.214). Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceeding. Any person wishing to become a party must file a notice of intervention or motion to intervene, as appropriate. Such notices, motions, or protests must be filed on or before the comment date. Anyone filing a motion to intervene or protest must serve a copy of that document on the Petitioner.
In addition to publishing the full text of this document in the
Food and Drug Administration, HHS.
Proposed amendment; proposed order; request for comments.
The Food and Drug Administration (FDA or the Agency) is proposing to reclassify cytomegalovirus (CMV) deoxyribonucleic acid (DNA) quantitative assay devices intended for transplant patient management, a postamendments class III device (product code PAB) into class II (general controls and special controls), subject to premarket notification. FDA is also proposing a new device classification
Submit either electronic or written comments on the proposed order by November 17, 2020. Please see section XII of this document for the proposed effective date when the new requirements apply and for the proposed effective date of a final order based on this proposed order.
You may submit comments as follows. Please note that late, untimely filed comments will not be considered. Electronic comments must be submitted on or before November 17, 2020. The
Submit electronic comments in the following way:
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• If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed below (see “Written/Paper Submissions” and “Instructions”).
Submit written/paper submissions as follows:
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• For written/paper comments submitted to the Dockets Management Staff, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”
• Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.” The Agency will review this copy, including the claimed confidential information, in its consideration of comments. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on
Silke Schlottmann, Center for Devices and Radiological Health, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 66, Rm. 3258, Silver Spring, MD 20993–0002, 301–796–9551,
The Federal Food, Drug, and Cosmetic Act (the FD&C Act), as amended, establishes a comprehensive system for the regulation of medical devices intended for human use. Section 513 of the FD&C Act (21 U.S.C. 360c) established three classes of devices, reflecting the regulatory controls needed to provide reasonable assurance of their safety and effectiveness. The three classes of devices are class I (general controls), class II (general controls and special controls), and class III (general controls and premarket approval).
Devices that were not in commercial distribution prior to May 28, 1976 (generally referred to as postamendments devices) are automatically classified by section 513(f)(1) of the FD&C Act into class III without any FDA rulemaking process. Those devices remain in class III and require premarket approval, unless and until: (1) FDA reclassifies the device into class I or class II or (2) FDA issues an order finding the device to be substantially equivalent, in accordance with section 513(i) of the FD&C Act, to a predicate device that does not require premarket approval. FDA determines whether new devices are substantially equivalent to predicate devices by means of premarket notification procedures in section 510(k) of the FD&C Act (21 U.S.C. 360(k)) and part
A postamendments device that has been initially classified in class III under section 513(f)(1) of the FD&C Act may be reclassified into class I or II under section 513(f)(3) of the FD&C Act. Section 513(f)(3) of the FD&C Act provides that FDA, acting by administrative order, can reclassify the device into class I or class II on its own initiative, or in response to a petition from the manufacturer or importer of the device. To change the classification of the device, the proposed new class must have sufficient regulatory controls to provide a reasonable assurance of the safety and effectiveness of the device for its intended use.
FDA relies upon “valid scientific evidence,” as defined in section 513(a)(3) of the FD&C Act and 21 CFR 860.7(c)(2), in the classification process to determine the level of regulation for devices. To be considered in the reclassification process, the “valid scientific evidence” upon which the Agency relies must be publicly available. Publicly available information excludes trade secret and/or confidential commercial information,
In accordance with section 513(f)(3) of the FD&C Act, FDA is issuing this proposed order to reclassify CMV DNA quantitative assay devices intended for transplant patient management, postamendments class III devices, into class II (general controls and special controls), subject to premarket notification because FDA believes the standard in section 513(a)(1)(B) of the FD&C Act is met as there is sufficient information to establish special controls, which in addition to general controls, will provide reasonable assurance of the safety and effectiveness of the device.
Section 510(m) of the FD&C Act provides that a class II device may be exempted from the premarket notification requirements under section 510(k) of the FD&C Act, if the Agency determines that premarket notification is not necessary to reasonably assure the safety and effectiveness of the device. FDA has determined that premarket notification is necessary to reasonably assure the safety and effectiveness of CMV DNA quantitative assay devices intended for transplant patient management. Therefore, the Agency does not intend to exempt these proposed class II devices from premarket notification (510(k)) submission as provided under section 510(m) of the FD&C Act.
In accordance with section 513(f)(1) of the FD&C Act, CMV DNA quantitative assay devices intended for transplant patient management were automatically classified into class III because they were not introduced or delivered for introduction into interstate commerce for commercial distribution before May 28, 1976, and have not been found substantially equivalent to a device placed in commercial distribution after May 28, 1976, which was subsequently classified or reclassified into class II or class I. Therefore, the device is subject to PMA requirements under section 515 of the FD&C Act (21 U.S.C. 360e).
Accordingly, on July 5, 2012, the Center for Devices and Radiological Health approved its first CMV DNA quantitative assay for the quantitative measurement of CMV DNA in human ethylenediaminetetraacetic acid plasma for use as a prescription device as an aid in the management of transplant patients, through its PMA process under section 515 of the FD&C Act. In the January 7, 2013,
Since this first approval order, FDA has approved three additional original PMA applications for CMV DNA quantitative assay devices intended for transplant patient management that are prescription devices intended for use, by a qualified licensed healthcare professional in conjunction with other relevant clinical and laboratory findings, in the detection of CMV and as an aid in the management of transplant patients with active CMV infection or at risk of developing CMV infection by measuring CMV DNA levels in human plasma and/or whole blood using validated specimen processing, amplification, and detection instrumentation (hereafter referred to as “CMV transplant assays.”) These are prescription devices that are assigned the product code PAB. As of the date of this proposed order, the Agency has not received any recalls for these devices and has seen a relatively low incidence of Medical Device Reports (MDRs).
Based on a review of the MDR database, five MDRs have been received for the original Roche Molecular Systems, Inc's COBAS AmpliPrep/COBAS TaqMan CMV Test. These MDRs included one MedWatch report in 2015 describing a high false positive rate during performance verification, one adverse event reported to FDA in May of 2014 for the overquantitation of CMV, and three adverse events reported to FDA between December 2015 and February 2017 for the underquantitation of CMV. Evaluation of the patient samples from the 2015 and 2017 adverse event reports revealed mismatches between the assay primers and patient CMV sequences. Three additional MDRs were received between 2018 to 2019 for the ABBOTT Realtime CMV. All three adverse events were reports of overquantification of CMV viral load and none of these reported adverse events were associated with patient injury.
These adverse events reflect the risks to health FDA identified in section VI, and FDA believes the special controls proposed, in addition to general controls, can effectively mitigate the risks identified in these adverse event reports.
CMV transplant assays are postamendment prescription devices for transplant patient management and are devices classified into class III under section 513(f)(1) of the FD&C Act. These devices are described in FDA SSEDs and in the product code database (assigned product code PAB) as in vitro nucleic acid assays for the quantitative measurement of CMV DNA in human plasma or whole blood. The assay can be used to measure CMV DNA levels serially at baseline and during the course of antiviral treatment to assess virological response to treatment. The test results are to be interpreted within the context of all relevant clinical and laboratory findings.
FDA is proposing to reclassify CMV transplant assays from class III (general controls and premarket approval) to class II (general controls and special controls) and change the device type name to quantitative CMV nucleic acid tests for transplant patient management. FDA believes that the following description most accurately describes this device type and proposes its use for these types of devices. A quantitative CMV nucleic acid test for transplant patient management is tentatively identified as a device intended for prescription use in the detection of
Healthcare professionals managing transplant patients with CMV DNAemia or CMV infection often have substantial clinical experience with quantitation of CMV DNA such that patient risks are reduced when these tests are used for clinical management. Based upon our review experience and consistent with the FD&C Act and FDA's regulations, FDA believes that these devices should be reclassified from class III into class II because there is sufficient information to establish special controls that, along with general controls, can provide reasonable assurance of the devices' safety and effectiveness.
FDA is proposing to reclassify CMV transplant assay devices. On November 9, 2016, the Microbiology Devices Panel (Panel) of the Medical Devices Advisory Committee convened to discuss and make recommendations regarding the reclassification of CMV transplant assays from class III (general controls and premarket approval) into class II (general controls and special controls). Panel members unanimously agreed that special controls, in addition to general controls, are necessary and sufficient to mitigate the risks to the health of transplant patients presented by these devices (Ref. 4).
FDA agrees and believes that at this time, sufficient data and information exist such that the risks identified in section VI can be mitigated by establishing special controls that, together with general controls, can provide a reasonable assurance of the safety and effectiveness of these devices and therefore proposes these devices be reclassified from class III (general controls and premarket approval) to class II (general controls and special controls).
In accordance with section 513(f)(3) of the FD&C Act and 21 CFR part 860, subpart C, FDA is proposing to reclassify postamendments CMV transplant assays to be renamed “quantitative CMV nucleic acid tests for transplant patient management,” from class III into class II. FDA believes, at this time, that there is sufficient data and information available to FDA through FDA's accumulated experience with these devices from review submissions, recommendations provided by professional organizations, and from published literature, as well as the recommendations provided by the Panel, to demonstrate that the proposed special controls, along with general controls, would effectively mitigate the risks to health identified in section VI and provide a reasonable assurance of safety and effectiveness of these devices. Absent the special controls identified in this proposed order, general controls applicable to the device type are insufficient to provide reasonable assurance of the safety and effectiveness of these devices. FDA expects that the reclassification of these devices would enable more manufacturers to develop quantitative CMV nucleic acid tests for transplant patient management such that patients would benefit from increased access to safe and effective tests.
FDA is proposing to create a classification regulation for quantitative CMV nucleic acid tests for transplant patient management that will be reclassified from class III to class II. Under this proposed order, if finalized, quantitative CMV nucleic acid tests for transplant patient management will be identified as a prescription device as these prescription devices require the supervision of a practitioner licensed by law to direct the use of the device in order to ensure accurate interpretation of results and so that these devices will provide a reasonable assurance of safety and effectiveness. As such, the prescription device must satisfy prescription labeling requirements for in vitro diagnostic products (see 21 CFR 809.10(a)(4) and (b)(5)(ii)). In this proposed order, if finalized, the Agency has identified the special controls under section 513(a)(1)(B) of the FD&C Act that, together with general controls, will provide a reasonable assurance of the safety and effectiveness for quantitative CMV nucleic acid tests for transplant patient management devices.
Section 510(m) of the FD&C Act provides that FDA may exempt a class II device from the premarket notification requirements under section 510(k) of the FD&C Act if FDA determines that premarket notification is not necessary to provide reasonable assurance of the safety and effectiveness of the device. For quantitative CMV nucleic acid tests for transplant patient management, FDA has determined that premarket notification is necessary to provide a reasonable assurance of the safety and effectiveness of these devices. Therefore, FDA does not intend to exempt these proposed class II devices from the 510(k) requirements. If this proposed order is finalized, persons who intend to market this type of device must submit a 510(k) to FDA and receive clearance prior to marketing the device.
This proposed order, if finalized, will decrease regulatory burden on industry, as manufacturers will no longer have to submit a PMA application for these types of devices but can instead submit a 510(k) to the Agency for review prior to marketing their device. A 510(k) typically results in a shorter premarket review timeline compared to a PMA application, which ultimately provides more timely access of these types of devices to patients.
In addition, the Agency believes that certain changes could be made to quantitative CMV nucleic acid tests for transplant patient management that could significantly affect the safety and effectiveness of those devices and for which a new 510(k) is likely required.
The incidence of CMV infection among transplant patients is highly variable and is dependent upon multiple factors, most importantly the serostatus of the donor/recipient pair, the type of transplant the patient received, and the recommended course of immunosuppressive therapy. If left untreated, transplant patients with CMV infection have significant risk of developing severe CMV-associated diseases, including gastroenteritis, pneumonia, hepatitis, pancreatitis, and myocarditis. However, the risk of CMV-associated morbidity and mortality has been considerably lowered with effective post-transplant prophylactic and preemptive antiviral treatments, combined with the use of quantitative CMV nucleic acid tests for transplant patient management as part of the current standard monitoring practices.
After consideration of FDA's accumulated experience with these devices from review submissions, the recommendations provided by professional organizations, the recommendations of the Panel for the classification of these devices (Ref. 4), and published literature, FDA has identified the following probable risks to health associated with quantitative CMV nucleic acid tests for transplant patient management:
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FDA believes that quantitative CMV nucleic acid tests for transplant patient management should be reclassified from class III (general controls and premarket approval) into class II (general controls and special controls) because special controls, in addition to general controls, can be established to mitigate the risks to health identified in section VI and provide a reasonable assurance of the safety and effectiveness of these devices. The proposed special controls are identified by FDA in section VII.
Taking into account the probable health benefits of the use of these devices and the nature and known incidence of the risks of the devices, FDA, on its own initiative, is proposing to reclassify these postamendments class III devices into class II. FDA believes that, when used as indicated, quantitative CMV nucleic acid tests for transplant patient management can provide significant benefits to clinicians and patients, including guiding therapeutic intervention in the setting of CMV DNAemia and assessment of virological response to anti-CMV therapy.
FDA's reasons for reclassification are based on the scientific and medical information available regarding the nature, complexity, and risks associated with quantitative CMV nucleic acid tests for transplant patient management. The safety and effectiveness of this device type has become well established since the initial approval of the first CMV transplant assay in 2012. Quantitative CMV nucleic acid tests for transplant patient management have been used for clinical management of transplant patients nationally and internationally for many years. The Transplantation Society International CMV Consensus Group has published recommendations that serve to standardize the clinical practice for CMV viral load measurement in the context of transplant patient management (Ref. 5).
FDA believes that these devices can be classified into class II with the establishment of special controls. FDA believes that the following special controls, together with general controls will provide reasonable assurance of the safety and effectiveness of the device type, table 1 demonstrates how these proposed special controls will mitigate each of the risks to health identified in section VII.
The risk of inaccurate interpretation of test results can be mitigated by special controls requiring certain labeling, including clearly stated warnings and limitations and information on the principles of operation and procedures in performing the test.
The risk of false results (
The risk of decreased test sensitivity and/or increased rates of false negative test reporting can be mitigated by special controls related to certain labeling, design verification and validation activities, failure mode analysis, and performance studies.
Risks associated with test variability in CMV viral load measurement across different devices may influence patient management decisions and could lead to adverse effects on patient health. To mitigate such risks, new devices must be calibrated to an FDA acceptable standardized reference standard material determined by FDA to be an appropriate reference material and must
This reclassification order and the identified special controls, if finalized, would provide sufficient detail regarding FDA's requirements to reasonably assure safety and effectiveness of quantitative CMV nucleic acid tests for transplant patient management.
If this proposed order is finalized, quantitative CMV nucleic acid tests for transplant patient management will be reclassified into class II (general controls and special controls) and would be subject to premarket notification requirements under section 510(k) of the FD&C Act. As discussed below, the intent is for the reclassification to be codified in 21 CFR 866.3180. Firms submitting a premarket notification under section 510(k) of the FD&C Act for quantitative CMV nucleic acid tests for transplant patient management will be required to comply with the particular mitigation measures set forth in the special controls. Adherence to the special controls, in addition to the general controls, is necessary to provide a reasonable assurance of the safety and effectiveness of these devices.
The Agency has determined under 21 CFR 25.34(b) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.
FDA tentatively concludes that this proposed order contains no new collections of information. Therefore, clearance by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501–3521) is not required. However, this proposed order refers to previously approved collections of information. These collections of information are subject to review by OMB under the PRA. The collections of information in 21 CFR part 807, subpart E, have been approved under OMB control number 0910–0120, the collections of information in 21 CFR part 820 have been approved under OMB control number 0910–0073, and the collections of information in 21 CFR parts 801 and 809 have been approved under OMB control number 0910–0485.
Under section 513(f)(3) of the FD&C Act, FDA may issue final orders to reclassify devices. FDA will continue to codify classifications and reclassifications in the Code of Federal Regulations (CFR). Changes resulting from final orders will appear in the CFR as newly codified orders. Therefore, under section 513(f)(3), in the proposed order, we are proposing to codify CMV transplant assays in the new 21 CFR 866.3180 under which CMV transplant assays will be renamed quantitative CMV nucleic acid tests for transplant patient management and would be reclassified from class III into class II.
FDA proposes that any final order based on this proposed order become effective 30 days after its date of publication in the
The following references marked with an asterisk (*) are on display in the Dockets Management Staff (see
Biologics, Laboratories, Medical devices.
Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs, it is proposed that 21 CFR part 866 be amended as follows:
21 U.S.C. 351, 360, 360c, 360e, 360j, 360
(a)
(b)
(1) The labeling required under § 809.10(b) of this chapter must include:
(i) A prominent statement that the device is not intended for use as a donor screening test for the presence of CMV DNA in blood or blood products.
(ii) Limitations, which must be updated to reflect current clinical practice. The limitations must include, but are not limited to, statements that indicate:
(A) Test results are to be interpreted by qualified licensed healthcare professionals in conjunction with clinical signs and symptoms and other relevant laboratory results;
(B) Negative test results do not preclude CMV infection or tissue invasive CMV disease, and that CMV test results must not be the sole basis for patient management decisions.
(iii) A detailed explanation of the interpretation of results and acceptance criteria must be provided and include specific warnings regarding the potential for variability in CMV viral load measurement when samples are measured by different devices. Warnings must include the following statement, where applicable: “Due to the potential for variability in CMV viral load measurements across different CMV assays, it is recommended that the same device be used for the quantitation of CMV viral load when managing CMV infection in individual patients.”
(iv) A detailed explanation of the principles of operation and procedures for assay performance.
(2) Design verification and validation must include the following:
(i) Detailed documentation of the device description, including all parts that make up the device, reagents required for use with the CMV assay but not provided, an explanation of the methodology, design of the primer/probe sequences, rationale for the selected gene target, and specifications for amplicon size, guanine-cytosine content, and degree of nucleic acid sequence conservation. The design and nature of all primary, secondary, and tertiary quantitation standards used for calibration must also be described.
(ii) A detailed description of the impact of any software, including software applications and hardware-based devices that incorporate software, on the device's function.
(iii) Documentation and characterization of all critical reagents (
(iv) Stability data for reagents provided with the device and indicated specimen types, in addition to the basis for the stability acceptance criteria at all time points chosen across the spectrum of the device's indicated life cycle, which must include a time point at the end of shelf life.
(v) All stability protocols, including acceptance criteria.
(vi) Final lot release criteria, along with documentation of an appropriate justification that lots released at the extremes of the specifications will meet the claimed analytical and clinical performance characteristics as well as the stability claims.
(vii) Risk analysis and documentation demonstrating how risk control measures are implemented to address device system hazards, such as Failure Modes Effects Analysis and/or Hazard Analysis. This documentation must include a detailed description of a protocol (including all procedures and methods) for the continuous monitoring, identification, and handling of genetic mutations and/or novel CMV stains (
(viii) Analytical performance testing that includes:
(A) Detailed documentation of the following analytical performance studies: Limit of detection, upper and lower limits of quantitation, inclusivity, precision, reproducibility, interference, cross reactivity, carryover, quality control, specimen stability studies, and additional studies as applicable to specimen type and intended use for the device.
(B) Identification of the CMV strains selected for use in analytical studies, which must be representative of clinically relevant circulating strains.
(C) Inclusivity study results obtained with a variety of CMV genotypes as applicable to the specific assay target and supplemented by in silico analysis.
(D) Reproducibility studies that include the testing of three independent production lots.
(E) Documentation of calibration to a standardized reference material that FDA has determined is appropriate for the quantification of CMV DNA (
(F) Documentation of traceability performed each time a new lot of the standardized reference material to which the device is traceable is released, or when the field transitions to a new standardized reference material.
(ix) Clinical performance testing that includes:
(A) Detailed documentation of device performance data from either a method comparison study with a comparator that FDA has determined is appropriate, or results from a prospective clinical study demonstrating clinical validity of the device.
(B) Data from patient samples, with an acceptable number of the CMV positive samples containing an analyte concentration near the lower limit of quantitation and any clinically relevant decision points.
(C) The method comparison study must include predefined maximum acceptable differences between the test and comparator method across all primary outcome measures in the clinical study protocol.
(D) The final release test results for each lot used in the clinical study.
Internal Revenue Service (IRS), Treasury.
Proposed rule; notification of hearing.
This document provides a notice of public hearing on proposed regulations relating to section 213 of the Internal Revenue Code (Code) regarding the treatment of amounts paid for certain medical care arrangements, including direct primary care arrangements, health care sharing ministries, and certain government sponsored health care programs.
The public hearing is being held on Wednesday, October 7, 2020, at 1:30 p.m. The IRS must receive speakers' outlines of the topics to be discussed at the public hearing by Friday, September 25, 2020. If no outlines are received by September 25, 2020, the public hearing will be cancelled.
The public hearing is being held by teleconference. Individuals who want to testify (by telephone) at the public hearing must send an email to
Concerning the proposed regulations, contact Richard C. Gano IV of the Office of Associate Chief Counsel (Income Tax and Accounting), (202) 317–7011 (not a toll-free call); concerning the preamble discussion of health reimbursement arrangements or health savings accounts, call William Fischer of the Office of Associate Chief Counsel (Employee Benefits, Exempt Organizations, and Employment Taxes), (202) 317–5500 (not a toll-free call); concerning submissions of comments, the hearing, and the access code to attend the hearing by teleconferencing, Regina Johnson at (202) 317–5177 (not toll-free numbers) or
The subject of the public hearing is the notice of proposed rulemaking REG–109755–19 that was published in the
The rules of 26 CFR 601.601(a)(3) apply to the hearing. Persons who wish to present oral comments telephonically at the hearing that submitted written comments by August 10, 2020, must submit an outline of the topics to be addressed and the amount of time to be devoted to each topic by September 25, 2020.
A period of 10 minutes is allotted to each person for presenting oral comments. After the deadline for receiving outlines has passed, the IRS will prepare an agenda containing the schedule of speakers. Copies of the agenda will be made available, on
Individuals who want to attend (by telephone) the public hearing must also send an email to
The telephonic hearing will be made accessible to people with disabilities. To request special assistance during the telephonic hearing please contact the Publications and Regulations Branch of the Office of Associate Chief Counsel (Procedure and Administration) by sending an email to
Any questions regarding speaking at or attending a public hearing may also be emailed to
Internal Revenue Service (IRS), Treasury.
Correction to a notice of proposed rulemaking.
This document contains a correction to a notice of proposed rulemaking (REG–132766–18) that was published in the
Written or electronic comments and requests for a public hearing are still being accepted and must be received by September 14, 2020.
Commenters are strongly encouraged to submit public comments electronically. Submit electronic submissions via the Federal eRulemaking Portal at
Concerning proposed §§ 1.460–1 through 1.460–6, Innessa Glazman, (202) 317–7006; concerning all other proposed regulations in this document, Anna Gleysteen, (202) 317–7007; concerning submissions of comments and requests for a public hearing, Regina L. Johnson, (202) 317–5177 (not toll-free numbers).
The proposed regulations that are the subject of this correction are under sections 263A, 448, 460, and 471 of the Internal Revenue Code.
As published, the notice of proposed regulations (REG–132766–18) contains errors which may prove to be misleading and need to be clarified.
Accordingly, the notice of proposed rulemaking (REG–132766–18) that was the subject of FR Doc. 2020–16364, published at 85 FR 47508 (August 5, 2020), is corrected to read as follows:
1. On page 47513, the second column, the fifth line from the bottom of the first full paragraph under the heading “ii. De Minimis Exception to Look-Back Rules,” the language, “Proposed § 1.460–3(b)(3)” is corrected to read “Proposed § 1.460–6(b)(3)”.
2. On page 47530, the first column, in § 1.460–3, the eighth line of paragraph (b)(3)(ii)(B), the language “receipts the” is corrected to read “receipts of the”.
Departmental Offices, Department of the Treasury.
Proposed rule.
In accordance with the requirements of the Privacy Act of 1974, as amended, the Department of the Treasury, Departmental Offices (DO) gives notice of a proposed exemption for a new system of records entitled “Department of the Treasury, Departmental Offices .227—Committee on Foreign Investment in the United States (CFIUS) Case Management System,” maintained by the Committee on Foreign Investment in the United States from certain provisions of the Privacy Act. The exemption is intended to comply with the legal prohibitions against the disclosure of certain kinds of information and to protect certain information maintained in this system of records.
Written comments must be received by October 19, 2020.
Written comments on this proposal may be submitted electronically through the Federal government eRulemaking portal at
In general, Treasury will post all comments to
For questions about this proposed rule and privacy issues, contact: Deputy Assistant Secretary for Privacy, Transparency, and Records at U.S. Department of the Treasury, 1500 Pennsylvania Avenue NW, Washington, DC 20220; telephone: (202) 622–5710.
As background, in 2018, the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA), Subtitle A of Title XVII of Public Law 115–232, 132 Stat. 2173, was enacted. FIRRMA amends section 721 of the Defense Production Act of 1950, as amended (Section 721), which delineates the authorities and jurisdiction of the Committee on Foreign Investment in the United States (CFIUS). FIRRMA maintains CFIUS's jurisdiction over any transaction that could result in foreign control of any U.S. business, and broadens the authorities of the President and CFIUS under Section 721 to review and take action to address any national security concerns arising from certain non-controlling investments and certain real estate transactions involving foreign persons.
Executive Order 13456, 73 FR 4677 (January 23, 2008), directs the Secretary of the Treasury to issue regulations implementing Section 721. On January 17, 2020, Treasury published two rules broadly implementing FIRRMA, and those rules took effect on February 13, 2020. 85 FR 3112 and 85 FR 3158. Subsequent amendments were made to the regulations in 2020. 85 FR 8747 and 85 FR 45311.
In addition to the exemptions proposed below, pursuant to section 721(c) of the Defense Production Act of 1950, as amended, 50 U.S.C. 4565(c) and subject to certain exceptions provided therein, any information or documentary material filed with CFIUS under Section 721 is exempt from disclosure under the Freedom of Information Act, as amended (FOIA), 5 U.S.C. 552, and no such information or documentary material may be made public.
Treasury is publishing separately the proposed rule of the new system of records to be maintained by CFIUS.
Under 5 U.S.C. 552a(k)(1), the head of a Federal agency may promulgate rules to exempt a system of records from certain provisions of 5 U.S.C. 552a if the system of records is subject to the exemption contained in section 552(b)(1) of this title. (Freedom of Information Act, exemption (b)(1) protects from disclosure information that has been deemed classified “under criteria established by an Executive
Under 5 U.S.C. 552a(k)(2), the head of a Federal agency may promulgate rules to exempt a system of records from certain provisions of 5 U.S.C. 552a if the system of records contains investigatory materials compiled for law enforcement purposes that are not within the scope of subsection (j)(2) of the Privacy Act (which applies to agencies and components thereof that perform as their principal function any activity pertaining to the enforcement of criminal laws).
To the extent that this system of records contains classified information protected by 5 U.S.C. 552a(k)(1) or investigatory materials compiled for law enforcement purposes protected by 5 U.S.C. 552a(k)(2), Treasury proposes to exempt the following system of records from various provisions of the Privacy Act:
Under 5 U.S.C. 552a(k)(1) and (k)(2), Treasury proposes that certain records in the above-referenced system of records be exempt from 5 U.S.C. 552a(c)(3), (d)(1), (2), (3), and (4), (e)(1), (e)(4)(G), (H), and (I), and (f) of the Privacy Act. See 31 CFR 1.36.
The following are the reasons why the classified records and investigatory materials contained in the above-referenced systems of records maintained by CFIUS may be exempted from various provisions of the Privacy Act pursuant to 5 U.S.C. 552a(k)(1) and (k)(2).
(1) From 5 U.S.C. 552a(c)(3) (Accounting for Disclosures) because release of the accounting of disclosures of the records in this system could alert individuals whether they have been identified as a national security threat or the subject of an analysis related to the national security interests of the United States, to the existence of the analysis, and reveal the interest on the part of Treasury or CFIUS as well as the recipient agency. Disclosure of the accounting would present a serious impediment to efforts to protect national security interests by giving individuals an opportunity to learn whether they have been identified as subjects of a national security-related analysis. As further described in the following paragraph, access to such knowledge would impair Treasury's ability to carry out its mission, since individuals could:
(i) Take steps to avoid analysis;
(ii) inform associates that a national security analysis is in progress;
(iii) learn the nature of the national security analysis;
(iv) learn the scope of the national security analysis;
(v) begin, continue, or resume conduct that may pose a threat to national security upon inferring they may not be part of a national security analysis because their records were not disclosed; or
(vi) destroy information relevant to the national security analysis.
(2) From subsection 5 U.S.C. 552a(d)(1), (d)(2), (d)(3), and (d)(4) (Access to Records), because access to a portion of the records contained in this system of records could inform individuals whether they have been identified as a national security threat or the subject of an analysis related to the national security interests of the United States, to the existence of the analysis and reveal the interest on the part of Treasury, CFIUS or another agency. Access to the records would present a serious impediment to efforts to protect national security interests by permitting the individual who is the subject of a record to learn whether they have been identified as subjects of a national security-related analysis. Access to such knowledge would impair Treasury's ability to carry out its mission, since individuals could take steps to impede the analysis and avoid detection, including the steps described in paragraph (1)(i)–(vi) of this section. Amendment of the records would interfere with ongoing analysis and impose an impossible administrative burden given CFIUS's statutory deadlines. The information contained in the system may also include classified information, the release of which would pose a threat to the national security of the United States. In addition, permitting access and amendment to such information could disclose sensitive security information that could be detrimental to Treasury.
(3) From subsection 5 U.S.C. 552a(e)(1) (Relevance and Necessity of Information), because in the course of its operations, CFIUS must be able to review information from a variety of sources. What information is relevant and necessary may not always be apparent until after the evaluation is completed. In the interests of national security, it is appropriate to include a broad range of information that may aid in identifying and assessing the nature and scope of foreign threats to the United States. Additionally, the accuracy of information obtained or introduced occasionally may be unclear, or the information may not be strictly relevant or necessary to a specific analysis. In the interests of national security, it is appropriate to retain all information that may aid in establishing patterns of suspicious foreign investment activity.
(4) From subsection 5 U.S.C. 552a(e)(4)(G), (H), and (I) (Agency Requirements), and 5 U.S.C. 552a(f), because portions of this system are exempt from the access and amendment provisions of subsection (d). The reason for invoking the exemption is to protect material authorized to be kept secret in the interest of national security pursuant to Executive Orders 12968, 13526, successor or prior Executive Orders, and other legal authorities relevant to the intelligence responsibilities of Treasury.
Any information from a system of records for which an exemption is claimed under 5 U.S.C. 552a(k)(1) or 5 U.S.C. 552a(k)(2) which is also included in another system of records retains the same exempt status such information has in the system of records for which such exemption is claimed.
This proposed rule is not a “significant regulatory action” ' under Executive Order 12866.
Pursuant to the requirements of the Regulatory Flexibility Act (RFA), 5 U.S.C. 601–612, it is hereby certified that this proposed rule will not have significant economic impact on a substantial number of small entities. The term “small entity” is defined to have the same meaning as the terms “small business,” “small organization” and “small governmental jurisdiction” as defined in the RFA.
The proposed regulation, issued under sections (k)(1) and (k)(2) of the Privacy Act, is to exempt certain information maintained by Treasury in the above-referenced systems of records from certain Privacy Act requirements in this system of records by individuals who are United States citizens or aliens lawfully admitted for permanent residence. In as much as the Privacy Act rights are personal and apply only to U.S. citizens or an alien lawfully admitted for permanent residence, small entities, as defined in the RFA, are not provided rights under the Privacy Act and are outside the scope of this regulation.
Courts, Freedom of Information, Government Employees, Privacy.
For the reasons stated in the preamble, part 1 of title 31 of the Code of Federal Regulations is proposed to be amended as follows:
5 U.S.C. 301 and 31 U.S.C. 321. Subpart A also issued under 5 U.S.C. 552, as amended. Subpart C also issued under 5 U.S.C. 552a, as amended.
(c) * * *
(1) * * *
(ii) * * *
(g) * * *
(1) * * *
(ii) * * *
Environmental Protection Agency (EPA).
Proposed rule.
The Environmental Protection Agency (EPA) is proposing to partially approve and partially disapprove a revision to the Maricopa County Air Quality Department (MCAQD or County) portion of the Arizona State Implementation Plan (SIP) concerning the MCAQD's demonstration regarding reasonably available control technology (RACT) requirements and negative declarations for the 2008 8-hour ozone National Ambient Air Quality Standards (NAAQS or “standards”) in the portion of the Phoenix-Mesa ozone nonattainment area under the jurisdiction of the MCAQD. We are proposing action on a SIP revision under the Clean Air Act (CAA or the Act). We are taking comments on this proposal and plan to follow with a final action.
Comments must be received on or before October 19, 2020.
Submit your comments, identified by Docket ID No. EPA–R09–OAR–2020–0358 at
Nicole Law, EPA Region IX, 75 Hawthorne St., San Francisco, CA 94105. By phone: (415) 947–4126 or by email at
Throughout this document, “we,” “us,” and “our” refer to the EPA.
Table 1 lists the documents addressed by this proposal with the date that they were adopted by MCAQD and submitted by the Arizona Department of Environmental Quality (ADEQ, or “the State”).
On December 22, 2017, the submittal for the MCAQD RACT SIP and Negative Declarations were deemed by operation of law to meet the completeness criteria in 40 CFR part 51 Appendix V, which must be met before formal EPA review.
There are no previous versions of the RACT SIP and negative declarations in the MCAQD portion of the Arizona SIP for the 2008 ozone NAAQS. The ADEQ previously submitted the RACT SIP and negative declarations in a SIP revision on December 19, 2016. However, this submittal did not include documentation that showed that the entirety of the County's SIP revision had met the public notice requirements required for completeness under 40 CFR part 51 Appendix V. The County's June 22, 2017 submittal was provided in response to this feedback, and the State withdrew the December 19, 2016 submittal on May 17, 2019.
Emissions of volatile organic compounds (VOCs) and oxides of nitrogen (NO
Section III.D of the preamble to the EPA's final rule to implement the 2008 ozone NAAQS discusses RACT requirements.
The EPA's technical support document (TSD) has more information about MCAQD's RACT SIP, negative declarations, and the EPA's evaluations thereof.
Due to its size and complexity, the EPA is acting on the MCAQD 2016 RACT SIP submittal in five separate actions. The other four actions are as follows:
(1) On August 27, 2019 (84 FR 44701), the EPA approved Rule 342 into the SIP, finding that the rule met current RACT. This rulemaking also approved Rule 337, which had been submitted earlier and was not part of the 2016 RACT SIP submittal. Although we approved Rules 337 and 342, and found that they established RACT level controls, we did not in that action approve the 2016 RACT SIP for the associated CTG source categories. We now propose to do so in today's action.
(2) On January 28, 2020 (85 FR 4928), the EPA proposed conditional approval of Rule 336 into the SIP, as well as conditional approval of the associated CTG source categories for the County's 2016 RACT SIP: “Control of Volatile Organic Emissions from Existing Stationary Sources—Volume II: Surface Coating of Cans, Coils, Paper, Fabrics, Automobiles, and Light-Duty Trucks” (EPA–450/2–77–008), “Control of Volatile Organic Emissions from Existing Stationary Sources—Volume III: Surface Coating of Metal Furniture” (EPA–450/2–77–032), “Control of Volatile Organic Emissions from Existing Stationary Sources—Volume V: Surface Coating of Large Appliances” (EPA–450/2–77–034), “Control of Volatile Organic Emissions from Existing Stationary Sources—Volume VI: Surface Coating of Miscellaneous Metal Parts and Products” (EPA–450/2–78–15), “Control Techniques Guidelines for Metal Furniture Coatings” (EPA–453/R–07–005), “Control Techniques Guidelines for Large Appliance Coatings” (EPA–453/R07–004), “Control Techniques Guidelines for Miscellaneous Metal and Plastic Parts Coatings” (EPA–453/R–08–003), and “Control Techniques Guidelines For Paper, Film, and Foil Coatings” (EPA–453/R–07–003). MCAQD has committed to correct the EPA's identified deficiencies, and ADEQ has committed to submit the updated rule within one year of the EPA's final conditional approval. If MCAQD corrects the identified deficiencies and the EPA approves the updated rule, the County will have met its RACT obligation for this rule, and the associated CTGs. We do not propose to act on rule 336 in this action. However, as explained in greater detail in our TSD, in this action, we are proposing to approve negative declarations for some of the source categories covered by Rule 336. If approval of these negative declarations is finalized as proposed, MCAQD will have met its RACT obligation for these source categories.
(3) On February 26, 2020 (85 FR 10986), the EPA conditionally approved Rules 350, 351, 352, and 353 into the SIP, and also conditionally approved the associated CTG source categories for the MCAQD 2016 RACT SIP: “Control of Volatile Organic Emissions from Storage of Petroleum Liquids in Fixed-Roof Tanks” (EPA–450/2–77–036), “Control of Volatile Organic Emissions from Petroleum Liquid Storage in External Floating Roof Tanks” (EPA–450/2–78–047), “Control of Hydrocarbons from Tank Truck Gasoline Loading Terminals” (EPA–450/2–77–026), “Control of Volatile Organic Emissions from Bulk Gasoline Plants” (EPA–450/2–77–035), “Control of Volatile Organic Compound Leaks from Gasoline Tank Trucks and Vapor Collection Systems” (EPA–450/2–78–051), and “Design Criteria for Stage I Vapor Control Systems—Gasoline Service Stations” (EPA–450/R–75–102). MCAQD has committed to correct the EPA's identified deficiencies, and ADEQ has committed to submit the updated rules within one year of the EPA's final conditional approval. If MCAQD corrects the identified deficiencies and the EPA approves the updated rules, MCAQD will have met its RACT obligation for these rules, and the associated CTGs. We do not propose to act on rules 350, 351, 352, and 353, or the associated CTG categories in the MCAQD's 2016 RACT SIP in this action.
(4) On July 20, 2020 (85 FR 43692), the EPA conditionally approved Rules 323 and 324 into the SIP and
Today's proposed action addresses the remainder of the 2016 RACT SIP submission. Additional details about the submission and the EPA's different actions are available in the TSD.
SIP rules must require RACT for each category of sources covered by a CTG document and for each major source of VOCs or NO
States should also submit for SIP approval negative declarations for those source categories for which they have not adopted RACT-level regulations (because they have no sources above the CTG-recommended applicability threshold) regardless of whether such negative declarations were made for an earlier SIP.
The County's analysis must demonstrate that each major source of VOCs or NO
1. “State Implementation Plans; General Preamble for the Implementation of Title I of the Clean Air Act Amendments of 1990,” 57 FR 13498 (April 16, 1992); 57 FR 18070 (April 28, 1992).
2. EPA Office of Air Quality Planning and Standards, “Issues Relating to VOC Regulation Cutpoints, Deficiencies, and Deviations,” May 25, 1988 (“the Bluebook,” revised January 11, 1990).
3. EPA Region IX, “Guidance Document for Correcting Common VOC & Other Rule Deficiencies,” August 21, 2001 (“the Little Bluebook”).
4. “State Implementation Plans; Nitrogen Oxides Supplement to the General Preamble; Clean Air Act Amendments of 1990 Implementation of Title I; Proposed Rule,” (the NO
5. Memorandum dated May 18, 2006, from William T. Harnett, Director, Air Quality Policy Division, to Regional Air Division Directors, Subject: “RACT Qs & As—Reasonably Available Control Technology (RACT): Questions and Answers.”
6. “Final Rule to Implement the 8-hour Ozone National Ambient Air Quality Standard—Phase 2,” 70 FR 71612 (November 29, 2005).
7. “Implementation of the 2008 National Ambient Air Quality Standards for Ozone: State Implementation Plan Requirements,” 80 FR 12264 (March 6, 2015).
MCAQD's 2016 RACT SIP provides the County's demonstration that the applicable SIP for the MCAQD satisfies CAA section 182 RACT requirements for the 2008 8-hour ozone NAAQS. This conclusion is based on MCAQD's analysis of SIP-approved requirements that apply to the following: (1) Source categories for which a CTG has been issued, and (2) major non-CTG stationary sources of VOC or NO
With respect to CTG source categories, MCAQD evaluated rules as establishing RACT-level controls for the CTGs covering solvent metal cleaning, industrial cleaning solvents, miscellaneous metal and plastic parts coating, can coating, fabric coating, film and foil coating, rotogravure and flexography, lithographic printing and letter press printing, wood furniture manufacturing operations, storage of petroleum liquids, tank truck gasoline loading terminals, bulk gasoline plants, gasoline tank trucks and vapor collection systems, and gasoline service stations. Some of these categories have existing SIP-approved rules that implement RACT: Rule 331 Solvent Cleaning and Rule 337 Graphic Arts. MCAQD also submitted for SIP approval several rules to implement RACT for some of these categories: Rule 336 Surface Coating Operations, Rule 342 Coating Wood Furniture and Fixtures, Rule 350 Storage and Transfer of Organic (Non-Gasoline) at an Organic Liquid Distribution Facility, Rule 351 Storage and Loading of Gasoline at Bulk Gasoline Plants and Bulk Gasoline Terminals, Rule 352 Gasoline Cargo Tank Testing and Use, and Rule 353 Storage and Loading of Gasoline at Gasoline Dispensing Facilities. As discussed in section I.D of this notice, we have evaluated these rule submittals, and finalized or proposed action in separate rulemaking actions. Those actions and their TSDs have more information about our evaluation of Rules 336, 337, 342, 350, 351, 352, and 352.
In this rulemaking, we propose to find that Rules 331, 337, and 342 establish RACT-level controls for the sources within the following CTG source categories: “Control of Volatile Organic Emissions from Solvent Metal Cleaning” (EPA–450/2–77–022), “Control Techniques Guidelines: Industrial Cleaning Solvents” (EPA–453/R–06–001), “Control of Volatile Organic Emissions from Existing Stationary Sources—Volume VIII: Graphic Arts—Rotogravure and Flexography” (EPA–430/2–78–033) and “Offset Lithographic Printing and Letterpress Printing” (EPA–453/R06–002), and “Control of Volatile Organic Compound Emissions from Wood Furniture Manufacturing Operations” (EPA–453/R–96–007). Our TSD has additional information about our evaluation of these rules.
Where there are no existing sources covered by a particular CTG document, or no major non-CTG sources of NO
In addition, MCAQD determined it had sources exceeding the 100 tpy major source threshold for both VOC and NO
We reviewed MCAQD's list of major source facilities and list of negative declarations in the 2016 RACT SIP and associated appendices. We also searched the EPA's National Emissions Inventory for 2011 and 2014 and Maricopa's list of title V permit sources to verify MCAQD's conclusion that it has identified all major sources of VOC and NO
The following provisions do not satisfy the requirements of section 110 and part D of title I of the Act and prevent full approval of the submitted 2016 RACT SIP.
1. Negative Declarations were incorrectly made for Aerospace Coating and Industrial Adhesives because there are applicable sources in MCAQD.
2. The requirement for RACT for major sources of NO
Our TSD has additional information on the deficiencies in the RACT SIP.
On May 24, 2018, July 3, 2018, July 6, 2018, July 18, 2018, October 24, 2018, July 1, 2019, and August 30, 2019, the EPA provided comments to MCAQD on the approvability issues for the various submitted rules. In addition to the approvability issues, these comment letters included rule revisions that we recommend for the next time the local agency modifies the rules.
For reasons discussed above and explained more fully in our TSD, the EPA proposes to partially approve and partially disapprove the ADEQ's June 22, 2017 submittal of the MCAQD 2016 RACT SIP and negative declarations as a revision to the Arizona SIP.
As authorized in section 110(k)(3) of the Act, we are proposing to approve the 2016 RACT SIP for the following source
In addition, we are proposing to approve negative declarations for the CTG source categories listed in Table 2, with the exception of the categories marked with an asterisk. These negative declarations, if finalized, will satisfy MCAQD's RACT obligation for these source categories.
Also under CAA section 110(k)(3), we propose to disapprove the 2016 RACT SIP as it pertains to major NO
The EPA is committed to working with the ADEQ and MCAQD to resolve the identified RACT deficiencies. However, should we finalize the proposed partial disapproval of the above-enumerated elements of the 2016 RACT SIP, section 110(c) would require the EPA to promulgate a federal implementation plan within 24 months unless we approve subsequent SIP revisions that correct the deficiencies identified in the final approval. In addition, final disapproval would trigger the offset sanction in CAA section 179(b)(2) 18 months after the effective date of a final disapproval, and the highway funding sanction in CAA section 179(b)(1) six months after the offset sanction is imposed. A sanction will not be imposed if the EPA determines that a subsequent SIP submission corrects the deficiencies identified in our final action before the applicable deadline.
We will accept comments from the public on the proposed partial approval and partial disapproval for the next 30 days. If finalized, this action would incorporate the approved portions of the 2016 RACT SIP and negative declarations into the SIP.
Additional information about these statutes and Executive Orders can be found at
This action is not a significant regulatory action and was therefore not submitted to the Office of Management and Budget (OMB) for review.
This action is not expected to be an Executive Order 13771 regulatory action because this action is not significant under Executive Order 12866.
This action does not impose an information collection burden under the PRA because this action does not impose additional requirements beyond those imposed by state law.
I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. This action will not impose any requirements on small entities beyond those imposed by state law.
This action does not contain any unfunded mandate as described in UMRA, 2 U.S.C. 1531–1538, and does not significantly or uniquely affect small governments. This action does not impose additional requirements beyond those imposed by state law. Accordingly, no additional costs to state, local, or tribal governments, or to the private sector, will result from this action.
This action does not have federalism implications. It will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government.
This action does not have tribal implications, as specified in Executive Order 13175, because the SIP is not approved to apply on any Indian reservation land or in any other area where the EPA or an Indian tribe has demonstrated that a tribe has jurisdiction, and will not impose substantial direct costs on tribal governments or preempt tribal law. Thus, Executive Order 13175 does not apply to this action.
The EPA interprets Executive Order 13045 as applying only to those regulatory actions that concern environmental health or safety risks that the EPA has reason to believe may disproportionately affect children, per the definition of “covered regulatory action” in section 2–202 of the Executive Order. This action is not subject to Executive Order 13045 because it does not impose additional requirements beyond those imposed by state law.
This action is not subject to Executive Order 13211, because it is not a significant regulatory action under Executive Order 12866.
Section 12(d) of the NTTAA directs the EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. The EPA believes that this action is not subject to the requirements of section 12(d) of the NTTAA because application of those requirements would be inconsistent with the CAA.
The EPA lacks the discretionary authority to address environmental justice in this rulemaking.
Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Nitrogen dioxide, Ozone, Reporting and recordkeeping requirements, Volatile organic compounds.
42 U.S.C. 7401
Environmental Protection Agency (EPA).
Proposed rule.
The Environmental Protection Agency (EPA) is proposing to partially approve and partially disapprove a revision to the Michigan State Implementation Plan (SIP) for attaining the 2010 1-hour primary sulfur dioxide (SO
Comments must be received on or before October 19, 2020.
Submit your comments, identified by Docket ID No. EPA–R05–OAR–2016–0321 at
Sarah Arra, Environmental Scientist, Attainment Planning and Maintenance Section, Air Programs Branch (AR–18J), Environmental Protection Agency, Region 5, 77 West Jackson Boulevard, Chicago, Illinois 60604, (312) 886–9401,
Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA.
On June 22, 2010, EPA promulgated a new 1-hour primary SO
In response to the requirement for SO
For a number of NAAs, including the Detroit area, EPA published an action on March 18, 2016, effective April 18, 2016, finding that Michigan and other pertinent states had failed to submit the required SO
For reasons described in the following sections, EPA is proposing to disapprove portions of the Detroit attainment plan. Finalization of this action will start a new sanctions clock which can be stopped only if the conditions of EPA's regulations at 40 CFR 52.31 are met. Only a full SIP approval or EPA's promulgation of a FIP can stop FIP clocks, so this action does not have any effect on the FIP clock that started April 18, 2016.
The remainder of this preamble describes the requirements that nonattainment plans must meet in order to obtain EPA approval, provides a review of the Detroit SO
Nonattainment plans for SO
For EPA to fully approve a SIP revision as meeting the requirements of CAA sections 110, 172, 191, and 192, and EPA's regulations at 40 CFR part 51, the plan for an affected area must demonstrate to EPA's satisfaction that each of the aforementioned requirements has been met. Under CAA section 110(l), EPA may not approve a plan that would interfere with any applicable requirement concerning NAAQS attainment and RFP, or any other applicable requirement. Under CAA section 193, no requirement in effect (or required to be adopted by an order, settlement, agreement, or plan in effect before November 15, 1990) in any area that is nonattainment for any air pollutant may be modified in any manner unless it ensures equivalent or greater emission reductions of such air pollutant.
Sections 172(c)(1) and 172(c)(6) of the CAA direct states with areas designated as nonattainment to demonstrate that the submitted plan and the emissions limitations and control measures in it provide for attainment of the NAAQS. 40 CFR part 51, subpart G further delineates the control strategy requirements that plans must meet, and EPA has long required that all SIPs and control strategies reflect four fundamental principles of quantification, enforceability, replicability, and accountability.
EPA's 2014 SO
Preferred air quality models for use in regulatory applications are described in appendix A of EPA's “Guideline on Air Quality Models” (40 CFR part 51, appendix W (“appendix W”)).
As stated previously, attainment demonstrations for the 2010 1-hour primary SO
The meteorological data used in the analysis should generally be processed with the most recent version of AERMET, which is the meteorological data preprocessor for AERMOD. Estimated concentrations should include ambient background concentrations, follow the form of the standard, and be calculated as described in EPA's August 23, 2010 clarification memorandum.
The majority of Michigan's submittal is a robust modeling demonstration that includes an assessment of the air quality impacts Michigan expected to result from emissions limitations governing the following sources: U.S. Steel Ecorse, U.S. Steel Zug Island, EES Coke, DTE Energy (DTE) River Rouge, DTE Trenton Channel, Carmeuse Lime, DTE Monroe, Severstal Steel, Dearborn Industrial Generation (DIG), and Marathon Refinery. From the base case modeling scenario, Michigan determined that Carmeuse Lime was causing an isolated violation in the model, and that U.S. Steel, DTE River Rouge, and DTE Trenton Channel were all contributing to overlapping violations in locations separate from the Carmeuse Lime violation. No other modeled sources were found to be significantly contributing to the modeled violations. EPA found the modeling to generally follow the modeling guidance and adhere to the requirements in appendix W.
Michigan ran a variety of control scenarios to determine a reduction strategy for the area and submitted emission limitations for Carmeuse Lime, DTE Trenton Channel, DTE River Rouge, and U.S. Steel. Michigan submitted revised construction permits for Charmeuse Lime, DTE Trenton Channel, and DTE River Rouge, each of which had been agreed to by the source.
Michigan was unsuccessful, however, in its efforts to implement more stringent SO
Subsequently, U.S. Steel challenged the legality of Rule 430 in the Michigan Court of Claims, which invalidated Rule 430 on October 4, 2017.
To date, Michigan has not submitted a substitute enforceable emission limitation for the U.S. Steel facility. Because the State's attainment demonstration relies on such a limitation, EPA must disapprove the Detroit SO
As noted above, Michigan submitted revised permits with more stringent emission limitations for three other facilities. Although EPA is not able to approve any of these limitations as part of the state's Detroit SO
For Carmeuse Lime, on March 18, 2016, the State issued Permit to Install 193–14A, which requires the construction of and venting of emissions through a new stack. The permit also establishes a more stringent, permanent, and enforceable SO
Similarly, EPA is proposing to approve as SIP strengthening the DTE Trenton Channel permit (Permit to Install 125–11C).
With regard to the DTE River Rouge permit, Michigan submitted an earlier version of that permit as part of its Detroit SO
Therefore, for the reasons explained above, EPA is proposing to disapprove the attainment demonstration in the Detroit SO
The emissions inventory and source emission rate data for an area serve as the foundation for air quality modeling and other analyses that enable states to estimate the degree to which different sources within a NAA contribute to violations within the affected area and assess the expected improvement in air quality within the NAA due to the adoption and implementation of control measures. The state must develop and submit to EPA a comprehensive, accurate, and current inventory of actual emissions from all sources of SO
The base year inventory establishes a baseline that is used to evaluate emission reductions achieved by the control strategy and to assess RFP requirements. Michigan used 2012 as the base year for emissions inventory preparation. At the time of preparation of the plan, 2012 reflected the most recent emissions data available to the state through its annual emissions reporting requirements during periods with air quality violations. The emissions inventory includes all sources over a 100 tons per year (tpy) of SO
EPA has evaluated Michigan's 2012 base year inventory and finds this inventory and the methodologies used for their development to be consistent with EPA guidance. As a result, EPA is proposing to determine that the Detroit SO
CAA section 172(c)(1) states that nonattainment plans should “provide for the implementation of all reasonably available control measures as expeditiously as practicable (including such reductions in emissions from existing sources in the area as may be obtained through the adoption, at a minimum, of reasonably available control technology) and shall provide for attainment of the national primary ambient air quality standards.” CAA section 172(c)(6) requires plans to “include enforceable emissions limitations, and such other control measures [. . .] as may be necessary or appropriate to provide for attainment of [the NAAQS].” Because the Detroit plan is missing enforceable measures for some major sources of SO
Michigan has a fully approved NNSR Program. The program is set forth in Part 19 of the Michigan SIP (MAC R 336.2901 through R 336.2908). This program was approved by EPA into the SIP on December 16, 2013 (78 FR 76064) and addresses nonattainment permitting requirements for SO
EPA's policy, that RFP for SO
In the Detroit SO
Although we agree that the Michigan SIP establishes a comprehensive enforcement program, allowing for the identification of sources of SO
Generally, as set forth in section 176(c) of the CAA, conformity requires that actions by Federal agencies do not cause new air quality violations, worsen existing violations, or delay timely attainment of the relevant NAAQS. General conformity applies to Federal actions, other than certain highway and transportation projects, if the action takes place in a NAA or maintenance area (
Transportation conformity determinations are not required in SO
EPA is proposing to approve the base year inventory and to affirm that the new source review requirements for the area have been met. EPA is also proposing to approve the DTE Trenton Channel and Carmeuse Lime permits as SIP strengthening. EPA is proposing to disapprove the attainment demonstration, as well as the requirement for meeting RFP toward attainment of the NAAQS, RACM/RACT, contingency measures, the invalidated Rule 430 related to U.S. Steel, and the superseded 2016 permit related to DTE River Rouge. Finalizing the proposed disapproval will start new sanctions clocks for this area under CAA section 179(a)–(b).
In this rule, EPA is proposing to include in a final EPA rule regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, EPA is proposing to incorporate by reference two permits, Permit to Install 193–14A issued March 18, 2016 and Permit to Install 125–11C issued April 29, 2016. EPA has made, and will continue to make, these documents generally available through
Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the CAA and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:
• Is not a significant regulatory action subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);
• Is not an Executive Order 13771 (82 FR 9339, February 2, 2017) regulatory action because it is not a significant regulatory action under Executive Order 12866;
• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104–4);
• Does not have federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);
• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA; and
• Does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).
In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).
Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Reporting and recordkeeping requirements, Sulfur oxides.
Environmental Protection Agency (EPA).
Proposed rule; reopening of public comment period.
The Environmental Protection Agency (EPA) is reopening the comment period until October 5, 2020, for a notice of proposed rulemaking (NPRM) published in the
The comment period for the NPRM published August 4, 2020 (85 FR 47134), is reopened, and comments
Submit your comments, identified by Docket ID No. EPA–R04–OAR–2019–0447, at
Michele Notarianni, Air Regulatory Management Section, Air Planning and Implementation Branch, Air and Radiation Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street SW, Atlanta, Georgia 30303–8960. Ms. Notarianni can be reached via telephone at (404) 562–9031 or electronic mail at
EPA published a proposed rulemaking on August 4, 2020 (85 FR 47134). EPA proposed to approve Mississippi's draft BART SIP and find that it corrects deficiencies that led to a limited approval and limited disapproval of the State's regional haze SIP; withdraw the limited disapproval of Mississippi's regional haze SIP; and fully approve Mississippi's regional haze SIP as meeting all regional haze requirements of the CAA for the first implementation period, replacing the prior limited approval. EPA also proposed to approve Mississippi's October 4, 2018, regional haze Progress Report as meeting the applicable regional haze requirements set forth in 40 CFR 51.308(g) and to approve the State's negative declaration under § 51.308(h).
EPA is reopening the comment period based on a request from Sierra Club for visibility modeling files related to the proposed rulemaking and for a 30-day extension of the comment period until October 5, 2020. A copy of Sierra Club's request is in the docket. After reviewing this request, EPA has decided to reopen the comment period until October 5, 2020.
42 U.S.C. 7401
Environmental Protection Agency (EPA).
Proposed rule.
The Environmental Protection Agency (EPA) is proposing to approve a revision to the Illinois State Implementation Plan (SIP) submitted on January 23, 2020, by the Illinois Environmental Protection Agency (IEPA). The revision removes the variance for coal-fired electrical generating units (EGUs) owned by the Illinois Power Holdings, LLC (IPH) and the AmerenEnergy Medina Valley Cogen, LLC (Medina Valley) from the Illinois SIP, and will reimpose tighter limits on all facilities currently in operation.
Comments must be received on or before October 19, 2020.
Submit your comments, identified by Docket ID No. EPA–R05–OAR–2020–0116 at
Charles Hatten, Environmental Engineer, Control Strategies Section, Air Programs Branch (AR–18J), Environmental Protection Agency, Region 5, 77 West Jackson Boulevard, Chicago, Illinois 60604, (312) 886–6031,
Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA.
On November 21, 2013, the Illinois Pollution Control Board (Board) granted IPH and Medina Valley a variance (PCB 14–10) from the applicable requirements for EGUs in the Ameren MPS Group (MPS Group) of 35 Illinois Administrative Code (IAC) Section 225.233(e)(3)(C)(iii) for a period beginning January 1, 2015, through December 31, 2019, and for EGUs in the MPS Group from 35 IAC Section 225.233(e)(3)(C)(iv) for a period beginning January 1, 2017, through December 31, 2019, subject to certain conditions. The five IPH facilities subject to the variance included: Coffeen Energy Center (Montgomery County), Duck Creek Energy Center (Fulton County), E.D. Edwards Energy Center (Peoria County), Joppa Energy Center (Massac County), and Newton Energy Center (Jasper County). The two Medina Valley facilities subject to the variance were the Meredosia Energy Center (Morgan County) and the Hutsonville Energy Center (Crawford County).
The variance granted by the Board established an overall SO
While the variance was in place, the MPS Group's annual reports provided by IEPA showed that the MPS Group's actual tons of SO
On September 2, 2016, IPH and Medina Valley filed a “Joint Motion to Terminate the Variance” with the Board. On October 27, 2016, the Board granted the “Joint Motion to Terminate the Variance,” and terminated the variance immediately. On January 23, 2020, Illinois submitted a request to EPA to remove the variance from the Illinois SIP.
EPA has analyzed the historical emissions data from the subject facilities and assessed the impacts from the removal of the variance. Absent the variance, SO
EPA has also evaluated the potential air quality impacts of the removal of the variance from the Illinois SIP to ensure that the revision meets section 110(l) of the CAA, 42 U.S.C. 7410. To be approved, a SIP must not interfere with any applicable requirement concerning attainment, RFP, or any other applicable requirement of the CAA. Currently, all the facilities owned by IPH that were subject to the variance are in areas attaining the 2010 SO
EPA is proposing to approve IEPA's January 23, 2020, request to remove PCB 14–10 from the Illinois SIP, for IPH and Medina Valley.
In this document, EPA is proposing to amend regulatory text that includes incorporation by reference. As described in section III of this preamble, EPA is proposing to remove provisions of the EPA-Approved Illinois Source-Specific Requirements from the Illinois SIP, which is incorporated by reference in accordance with the requirements of 1 CFR part 51. EPA has made and will continue to make the Illinois SIP generally available through
Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the CAA and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:
• Is not a significant regulatory action subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);
• Is not an Executive Order 13771 (82 FR 9339, February 2, 2017) regulatory action because SIP approvals are exempted under Executive Order 12866;
• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104–4);
• Does not have federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);
• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA; and
• Does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).
In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).
Environmental protection, Air pollution control, Incorporation by reference, and Sulfur oxides.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Proposed rule; withdrawal.
The National Marine Fisheries Service (NMFS) withdraws the Commerce Trusted Trader Program proposed rule, which published in the
The proposed rule published on January 17, 2018, (83 FR 2412), is withdrawn as of September 18, 2020.
Rachael Confair or Dale Jones, NOAA Fisheries Office of International Affairs and Seafood Inspection, (301) 427–8301.
NMFS published a proposed rule on January 17, 2018 (83 FR 2412) requesting comment on a voluntary Commerce Trusted Trader Program (CTTP), which would offer limited reductions to the burden of compliance in meeting the reporting and recordkeeping requirements of the Seafood Import Monitoring Program (SIMP). Importers electing to participate would submit an application package including a Compliance Plan, and, once approved, would be required to conduct internal product trace backs (at least one trace-back annually for each SIMP species imported) and hire certified third party auditors annually to verify their adherence to their Compliance Plan in order to maintain Commerce Trusted Trader (CTT) status.
In the proposed rule, NMFS estimated that the CTTP would financially benefit the largest 216 of roughly 2,000 importers subject to SIMP reporting and recordkeeping requirements, and would create an annual industry-wide cost savings of approximately $806,810. However, numerous public comments noted that the estimated cost of compliance with the proposed CTTP was unrealistically low, as NMFS's estimate did not include staff time to perform internal product trace backs, review and respond to annual third party audit reports, and update the importer's Compliance Plan regularly. In consideration of these public comments, NMFS prepared revised cost estimates that incorporated these changes. The revised cost estimate resulted in an industry-wide cost to implement the CTTP, rather than a cost savings, when applied to the largest 216 importers of SIMP species. At this revised mid-range estimate, only the 41 importers (of 2,000 total) with the highest quantity of entries subject to SIMP in a given year would realize a cost savings. One commenter estimated that third party trace backs would cost $30,000 ($10,000/species for three trace backs), which far exceeded the proposed rule estimate of $2,240 per species for this annual requirement. NMFS finds the commenter's estimate acceptable as an upper bound. Using a revised $30,000 cost for third party trace backs, only the largest three importers of seafood products subject to reporting and recordkeeping requirements of SIMP would financially benefit from the CTTP, yielding a negligible estimated industry-wide annual cost savings of $15,880.
Reinforcing the limitations of cost savings, several commenters expressed that the CTTP would not offer sufficient relief from SIMP requirements to incentivize participation, noting that companies have already invested substantial resources to comply with the requirements of SIMP, and that it may not be cost effective for these importers to become CTTs as that would entail additional investments to comply with this voluntary program. NMFS agrees, but did not receive suggestions for alternative measures to provide importers relief from SIMP reporting burdens that would not undermine the stated objective of SIMP, which is to prevent illegally harvested or misrepresented seafood from entering U.S. commerce. Therefore, NMFS decided to withdraw the proposed rule.
Several commenters discussed the connection between Illegal, Unreported, and Unregulated (IUU) fishing and forced labor, noting the value of SIMP data in identifying forced labor in seafood supply chains. Commenters are correct in their assessment that SIMP data has applications in enforcing human rights laws; U.S. Customs and Border Protection has successfully used SIMP entry filing data to identify forced labor in seafood supply chains and prevented these products from entering U.S. commerce. While the consideration of impacts to efforts to combat forced labor was not a determining factor in the decision to withdraw this rule, the decision will keep all SIMP entry filing data requirements in place, thereby eliminating the data availability concerns identified by the commenters.
The withdrawal of this proposed rule does not preclude NMFS from reinstituting rulemaking concerning the issue addressed. Should NMFS decide to undertake such rulemaking in the future, we will re-propose the action and provide new opportunities for comment. You may wish to review the SIMP website (
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Proposed rule; request for comments.
NMFS proposes regulatory amendments that would modify Federal permit conditions and impose participation requirements for certain Federally-permitted vessels when fishing for Pacific cod in state waters adjacent to the exclusive economic zone of the Bering Sea and Aleutian Islands during the State of Alaska's parallel Pacific cod fishery. This action is necessary to enhance Federal conservation, management, and catch accounting measures previously adopted by the North Pacific Fishery Management Council (Council) regarding license limitation, sector allocations, and catch reporting. This action is intended to promote the goals and objectives of the Magnuson-Stevens Fishery Conservation and Management Act, the Fishery Management Plan for Groundfish of the Bering Sea and Aleutian Islands Management Area, and other applicable law.
Submit comments on or before October 19, 2020.
You may submit comments, identified by FDMS Docket Number NOAA–NMFS–2020–0081, by any of the following methods:
•
•
Electronic copies of the Categorical Exclusion and the Regulatory Impact Review (RIR) prepared for this action (collectively referred to as the “Analysis”) are available from
Kurt Iverson, 907–586–7210.
NMFS manages the groundfish fisheries in the U.S. exclusive economic zone (EEZ) of the Bering Sea and Aleutian Islands (BSAI) under the Fishery Management Plan for Groundfish of the BSAI Management Area (FMP). The Council prepared, and NMFS approved, the FMP under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (MSA), 16 U.S.C. 1801
NMFS proposes regulatory amendments that would modify Federal permit conditions and impose participation requirements for certain Federally-permitted vessels when fishing for Pacific cod in state waters adjacent to the EEZ of the Bering Sea and Aleutian Islands (BSAI) during the State of Alaska's Pacific cod fishery that runs concurrent with the Federal Pacific cod fishery, commonly known as the Pacific cod parallel fishery. Specifically, this proposed rule would prohibit (1) a hook-and-line, pot, or trawl gear vessel named on an Federal Fisheries Permit (FFP) or License Limitation Program (LLP) license from being used to catch and retain BSAI Pacific cod in State of Alaska (State) waters adjacent to the BSAI during the State's parallel Pacific cod fishery unless the vessel is named on an FFP and LLP license that have the required endorsements; (2) a hook-and-line, pot, or trawl gear vessel named on an FFP or LLP license from catching and retaining BSAI Pacific cod in state waters adjacent to the BSAI EEZ during the State's parallel fishery when NMFS has closed the EEZ to directed fishing for Pacific cod by the sector to which the vessel belongs; (3) the holder of an FFP with certain endorsements from modifying those endorsements during the effective period of the FFP; and (4) the reissuance of a surrendered FFP with certain endorsements for the remainder of the three-year term, or cycle, of FFPs.
Each year, NMFS establishes a Total Allowable Catch (TAC) limit and allocations to specific fishery sectors for Pacific cod in the BSAI. Catch of Pacific cod in Federal waters (that is, in the EEZ), as well as in the waters of the State of Alaska (state waters) under specific regulations adopted by the State, is deducted from this TAC limit and the fishery sector allocations. Note that throughout this preamble, “state waters” refers to the maritime waters from 0 to 3 nautical miles off Alaska, and “EEZ” and “Federal waters” are used interchangeably, and refer to the maritime waters from 3 to 200 nautical miles off Alaska. In addition, “parallel fisheries” in this preamble refers to the state waters Pacific cod parallel fisheries in the State of Alaska Bering Sea-Aleutian Islands Area, presently that is in the Dutch Harbor Subdistrict of the Bering Sea and within the Aleutian Islands Subdistrict of the Aleutian Islands, respectively.
During the Federal Pacific cod TAC fisheries, the State of Alaska creates parallel Pacific cod fisheries by generally adopting NMFS management actions in state waters. The State has management authority for groundfish resources within state waters, and the Commissioner of the Alaska Department of Fish and Game (ADF&G) opens parallel fisheries through emergency order under the Parallel Groundfish Fishery Emergency Order Authority at 5 AAC 28.086. These emergency orders establish parallel fisheries that allow vessels to fish for groundfish, including Pacific cod, within state waters during the concurrent Federal seasons. In addition, the Commissioner is authorized to open or close the fisheries under emergency order to adapt to unanticipated openings or closures of the Federal fisheries. Because the State's parallel Pacific cod fisheries closely follow the Federal Pacific cod fishery, NMFS deducts all catch of Pacific cod caught in Federal waters and in state waters during the parallel fisheries from the Federal Pacific cod TAC and the fishery sector allocations. This allows a vessel to fish seamlessly between Federal and state waters, provided the vessel meets participation requirements. There are no limits on the proportion of the Pacific cod TAC that may be harvested in state waters.
This action would require trawl, hook-and-line, and pot gear vessels that have Federal Fishing Permits (FFPs) or License Limitation Program (LLP) licenses and that fish in the BSAI state waters Pacific cod parallel fisheries to have a properly endorsed FFP and LLP license and to adhere to BSAI Pacific cod fishery sector closures in Federal waters when fishing in the State's parallel Pacific cod fishery. The following sections describe the Federal BSAI Pacific cod fishery, the BSAI state waters Pacific cod fisheries, the need for this action, and the proposed rule and its effects.
Pacific cod (Gadus macrocephalus) is one of the most abundant and valuable groundfish species harvested in the BSAI. Vessels harvest Pacific cod using trawl and non-trawl gear. Non-trawl gear includes hook-and-line, jig, and pot gear. Vessels harvesting BSAI Pacific cod operate as catcher vessels (CVs) that harvest and deliver the fish for processing, or as catcher processors (C/Ps) that harvest and process the catch on board.
The FMP and its implementing regulations at § 679.20(c) establish a process where NMFS, after consultation with the Council, annually specifies an overfishing level (OFL), an acceptable biological catch (ABC), and a TAC for each target species or species group of groundfish, including Pacific cod. The OFL is the level above which overfishing is occurring for a species or species group. The ABC is the level of a species' or species group's annual catch that accounts for the scientific uncertainty in the estimate of OFL, and any other scientific uncertainty. Under the FMP, the ABC is set below the OFL.
In the case of Pacific cod, separate OFLs, ABCs, and TACs are established for the Bering Sea subarea and the Aleutian Islands subarea. The TACs for the Bering Sea and Aleutian Islands subareas are set after deducting from the ABCs any harvest allocations for guideline harvest level (GHL) fisheries managed by the State and occurring only within state waters. A detailed description of the annual harvest specification process for BSAI Pacific cod is provided in the final 2020 harvest specifications for groundfish of the BSAI (83 FR 13553, March 9, 2020) and in section 2.7.1 of the Analysis. A more detailed description of the State GHL fisheries is found in this preamble below.
Once the Bering Sea and Aleutian Islands TACs are established, regulations at § 679.20(a)(7)(i) allocate 10.7 percent of the Bering Sea Pacific cod TAC and 10.7 percent of the Aleutian Islands Pacific cod TAC to the Community Development Quota (CDQ) Program for the exclusive harvest by Western Alaska CDQ groups. Section 305(i) of the Magnuson-Stevens Act specifies the methods for allocating these harvest privileges. Once allocated, CDQ groups must ensure that they do not exceed their allocations.
The portion that remains after subtraction of the CDQ allocation from each TAC is the initial TAC, or ITAC, for the Bering Sea and Aleutian Islands. NMFS combines the Bering Sea ITAC and the Aleutian Islands ITAC into one, BSAI non-CDQ Pacific cod TAC. This combined BSAI non-CDQ Pacific cod TAC is then allocated among, and available for harvest by, nine non-CDQ fishery sectors. Regulations at § 679.20(a)(7)(ii)(A) define the nine non-CDQ fishery sectors and specify the percentage of the BSAI non-CDQ Pacific cod TAC allocated to each. The non-CDQ fishery sectors are defined by a combination of gear type (
NMFS manages each of the fishery sectors in Table 1 to ensure harvest of Pacific cod does not exceed the sector's annual allocation. NMFS monitors harvests that occur by vessels being used to conduct directed fishing for Pacific cod (that is, participants are specifically targeting and retaining Pacific cod above specific threshold levels) and harvests that occur by vessels being used to conduct directed fishing for other species and incidentally catching Pacific cod (
Allocations of Pacific cod to the CDQ Program and to the non-CDQ fishery sectors are further apportioned by season dates established at § 679.23(e)(5). In general, regulations apportion CDQ and non-CDQ fishery sector allocations among three seasons that correspond to the early (A-season), middle (B-season), and late (C-season) portions of the year. The specific season dates established for the CDQ Program and each of the non-CDQ fishery sectors are provided in the final 2020 and 2021 harvest specifications for groundfish of the BSAI (83 FR 13553, March 9, 2020). Depending on the specific CDQ Program or non-CDQ fishery sector allocation, between 40 percent and 70 percent of the Pacific cod allocations are apportioned to the A-season, historically the most lucrative fishing season due to the presence of valuable roe in the fish and the good quality of the flesh during that time of year.
The allocation of Pacific cod among the CDQ Program and the nine non-CDQ fishery sectors, as well as the seasonal apportionment of those allocations, create a large number of distinct sector and season allocations. To help ensure the efficient management of these allocations, regulations allow NMFS to reallocate (rollover) any unused portion of a seasonal apportionment from any non-CDQ fishery sector (except the jig sector) to that sector's next season during the current fishing year, unless the Regional Administrator determines a non-CDQ fishery sector will not be able to harvest its allocation (see § 679.20(a)(7)(iv)(B)).
To monitor compliance with harvest catch limits, prohibited species (non-retained) catch limits, and sideboard regulations that limit participation in other fisheries, NMFS requires various permits that authorize or restrict access to the groundfish fisheries in the Federal waters of the BSAI. The two most relevant permits for this proposed action are Federal Fisheries Permits (FFP) and License Limitation Program (LLP) licenses.
All vessels that retain BSAI Pacific cod in the EEZ are required to have an FFP on board the vessel at all times (§ 679.4(b)(1)). An FFP authorizes a vessel owner to deploy a vessel to conduct fishing operations in the EEZ of the BSAI in accordance with the endorsements on the FFP. An FFP includes many endorsements, such as type of gear (
The operators of harvesting vessels that possess an FFP are required to comply with NMFS observer coverage requirements (§ 679.50(a)). In addition, FFP holders participating in a pollock, Atka mackerel, or Pacific cod fishery in the BSAI are required to have on board the vessel a transmitting vessel monitoring system (VMS), as described at § 679.28(f)(6). A VMS consists of a NMFS-approved transmitter that automatically determines a vessel's position and transmits that information to NMFS. While Pacific cod directed fisheries are open, all harvesting vessels with an FFP endorsed with a hook-and-line, pot, or trawl Pacific cod endorsement are required to have an operational VMS, regardless of where the vessel is fishing at the time or what the vessel is targeting, as described at § 679.28(f)(6). Thus, a VMS is required of all vessels with an FFP endorsed for Pacific cod hook-and-line, pot, or trawl gear while fishing in state waters (0 to 3 nm) adjacent to the BSAI. However, because these Federal requirements apply as a condition of being issued an FFP, operators of vessels that have not been issued an FFP and that fish exclusively in state waters are not required to possess an FFP or have an FFP on board the vessel, and the operator of such a vessel is not subject to Federal observer, VMS, or recordkeeping and reporting requirements unless specified by the State.
FFPs are valid for three years and, unless revoked, suspended, or surrendered, are in effect from the date of issuance through the end of the three-year cycle. The current cycle of FFPs issued for vessels that operate in Alaska waters is January 1, 2018, through December 31, 2020. A vessel operator with an FFP can surrender the permit at any time and have NMFS reissue the FFP any number of times within the three-year cycle.
While any vessel owner can apply for an FFP with any combination of vessel operation, area, gear, or species endorsements, an FFP, by itself, does not necessarily authorize the FFP holder or the vessel named on the FFP to participate in the Federal Pacific cod fisheries. Most of the vessels that are used to participate in the Federal Pacific cod fisheries in the BSAI are also are required to have a groundfish LLP license.
A groundfish LLP license authorizes a vessel to be used in a directed fishery for groundfish in the BSAI in accordance with the specific area and species endorsements, the vessel and gear designations, the maximum length overall (MLOA) specified on the license, and any exemption from the MLOA specified on the license. Most vessel operators fishing for groundfish in the BSAI must have an LLP license on board at all times when the vessel is engaged in fishing activities (§ 679.4(k)). LLP licenses are issued by NMFS to qualified persons. Exemptions to the LLP license requirement in the BSAI are listed at § 679.4(k)(2), including an exemption for any vessel that does not exceed 32 feet length overall (LOA), and an exemption for jig vessels less than or equal to 60 feet (18.3 m) LOA that use a maximum of 5 jig machines, one line per jig machine, and a maximum of 15 hooks per line.
In order to participate in the BSAI Pacific cod fisheries, several endorsements are required to be specified on an LLP license, such as vessel operation type, area, gear designation, and maximum length overall (MLOA). The endorsements for operation type on LLP licenses are either catcher vessel or catcher/processor. A catcher vessel endorsement allows a vessel to harvest but not process fish on board. A catcher/processor endorsement allows both harvesting and onboard processing, and also allows a vessel to deliver the catch to a separate processor. Area endorsements on BSAI groundfish LLP licenses authorize a vessel to fish in either the Bering Sea, the Aleutian Islands, or both areas. Gear endorsements for BSAI groundfish LLP licenses are either for trawl, non-trawl, or both gear types. For groundfish vessels with non-trawl endorsed licenses, NMFS implemented regulations in 2002 that require a Pacific cod endorsement for hook-and-line and pot gear LLP licenses on catcher/processor vessels and catcher vessels that are 60 feet LOA or greater and that are used to participate in the BSAI Pacific cod fisheries (67 FR 18130, April 15, 2002). Catcher vessels less than 60 feet are exempt from the required Pacific cod endorsement on their LLP license.
Groundfish LLP licenses also identify whether the license is associated with the Amendment 80, American Fisheries Act, or Gulf of Alaska Rockfish license limitation programs. BSAI groundfish LLP licenses further specify whether the license is restricted by regulatory sideboards from being used in other fisheries.
Unlike the FFP, the endorsements on an LLP license are not generally severable from the license. An LLP license, with its associated endorsements, can be reassigned to a different vessel only once per year. In general, a vessel is authorized to only use gear consistent with the gear designation on the LLP license. Like FFPs, because these Federal requirements apply as a condition of holding an LLP license, operators of vessels that have not been issued an LLP license and that fish exclusively in state waters fisheries are not required to comply with Federal requirements for LLP licenses.
The Bering Sea ABC and the Aleutian Islands ABC are apportioned between the State's GHL Pacific cod fisheries and the Federal fisheries, which includes catch of Pacific cod in the State's
During the Federal BSAI Pacific cod fisheries in the EEZ, the State creates concurrent, or parallel, Pacific cod fisheries in state waters by generally adopting NMFS management actions for state waters. The initial Federal BSAI Pacific cod season (“A-Season”) opens January 1 for vessels using hook-and-line, pot, and jig gear, and January 20 for vessels using trawl gear. Unless specifically prohibited by State regulation, (
Although the State adopts many of the management measures applicable to vessels participating in the Federal BSAI Pacific cod fisheries in the EEZ, the State does not require vessels that participate in the State's parallel Pacific cod fisheries to possess an FFP or an LLP license. Effective as of January 1, 2012, NMFS implemented regulations at § 679.7 that prohibit Federally-permitted catcher/processor pot and catcher/processor hook-and-line vessels from being used to catch and retain Pacific cod in state waters during the State's parallel fisheries unless the vessel is designated on an FFP and an LLP license that have the required endorsements (76 FR 73513, November 29, 2011). Additionally, regulations at § 679.7 require Federal permit holders who operate vessels in these two catcher/processor sectors to adhere to the Federal BSAI Pacific cod opening and closing periods when they participate in the State's parallel fisheries. At this time, vessels in other non-CDQ fishery sectors may participate in the State's Pacific cod parallel fisheries without having an FFP, an LLP license, and endorsements necessary to participate in the Federal fishery.
As mentioned above, Pacific cod harvested during the State's parallel fishery accrue toward the Federal Pacific cod TAC. The State closes its parallel Pacific cod fishery by gear sector when NMFS determines the TAC for Federal fishery sectors using that gear type has been reached or when incidental species allowances are met.
Section 2.7 of the Analysis provides specific details on the number of vessels that have participated in the State's BSAI Pacific cod parallel fisheries, by vessel sector, over the 2010–2019 period. For all sectors combined, the total number of participating vessels in the BSAI Pacific cod parallel fisheries has ranged from 13 to 39 vessels per year. The proportion of Pacific cod that these vessels have caught in state waters during the concurrent BSAI Federal waters Pacific cod fishery and State parallel fisheries over that period has ranged from 2 percent to 5 percent those sectors' BSAI Pacific cod catch.
Between 1 and 11 jig vessels have participated annually in the State's Pacific cod parallel fisheries over the 2010–2018 period. Among all of the nine non-CDQ fishery sectors, jig vessels appear to be the most dependent on Pacific cod harvested in state waters during the concurrent Federal fishery and Pacific cod parallel fisheries; however, to protect confidential information, all but three years of the harvest data for jig vessels cannot be published in the analysis. It was the Council's intent that all jig vessels currently and historically fishing in Federal or state waters during the parallel fishery would not be subject to the provisions of this proposed rule. As mentioned previously, jig vessels less than 60 feet (18.3) LOA are exempt from LLP license requirements in the BSAI.
The hook-and-line and pot catcher vessels less than 60 ft (HAL/pot < 60) sector was the next most dependent on the State's Pacific cod parallel fisheries. On an annual basis from 2010 through 2018, between 9 and 18 vessels from this sector recorded landings in the parallel fisheries, with harvests that ranged from 18 percent to 43 percent of the sector's total annual Pacific cod catch from the Federal and State parallel fisheries. Trawl catcher vessels were the next most numerous participants in the State's parallel fisheries, with annual vessel participation that ranged from 3 to 15 vessels. The proportion of the Pacific cod trawl catcher vessel harvest taken from the parallel fisheries appears to be small, however, ranging from less than 1 percent to 4 percent of this sector's overall targeted Federal and State parallel Pacific cod harvest. The other fishery sectors potentially affected by this proposed rule include pot catcher vessels greater than or equal to 60 feet LOA, hook-and-line catcher vessels greater than 60 feet LOA, and Amendment 80 vessels. Each of these sectors has very limited participation in the State's parallel fisheries during the period analyzed. Additional details on participation and harvests can be found in Tables 2–6 and 2–7 of the analysis.
State GHL fisheries for Pacific cod are also prosecuted in state waters, but occur when fishing by specific Pacific cod sectors in the Federal and parallel fisheries is closed. The State currently manages GHL fisheries in state waters adjacent to both the Bering Sea and Aleutian Islands subareas.
The Alaska Board of Fisheries (BOF) established the Dutch Harbor Subdistrict state waters Pacific cod GHL fishery in 2013 (5 AAC 28.648). Vessels in the state waters Dutch Harbor Subdistrict GHL fishery may not exceed 58 feet LOA unless modified by ADF&G after October 1. Pot and jig gear are the only legal gear types.
Current State regulations set the pot gear harvest at 8 to 15 percent of the Bering Sea Pacific cod ABC, with annual step-up increments of an additional 1 percent of the Bering Sea ABC if the GHL is harvested in the previous year. At present, the 2020 GHL allocation is 9 percent of the Bering Sea Pacific cod ABC. In 2018, the BOF also adopted regulations for a separate and additional allocation of 100,000 pounds of Pacific cod for the jig fishery in the Dutch Harbor Subdistrict. This allocation went into effect in 2019.
By State regulations, the GHL fishery for pot gear in the Dutch Harbor Subdistrict opens seven days after NMFS closes the initial BSAI Federal season to directed fishing for Pacific cod by hook-and-line and pot vessels less than 60 feet long. For vessels fishing jig gear, the State GHL fishery opens May 1. The GHL fisheries may re-open and close as needed to coordinate with Federal fishery openings.
The State manages the Aleutian Islands Subdistrict GHL fishery (5 AAC 28.647) similar to the DHS fishery. Under current State regulations, the Aleutian Islands Subdistrict GHL is 31 percent of the Aleutian Islands ABC, with annual step-up provisions in 4
Regulations limit the length overall of vessels that can participate in the GHL fisheries in the AIS. Pot vessels are restricted to a maximum of 125 feet; trawl vessels to a maximum of 100 feet; and longline and jig vessels to a maximum of 58 feet.
More information on Pacific cod harvests and participation in the GHL fisheries in the Dutch Harbor and Aleutian Islands Subdistricts can be found in Section 2.6 of the Analysis.
This proposed rule would prohibit some Federally-permitted vessels from fishing for Pacific cod in the State of Alaska's parallel fishery. Under current regulations, Federal FFPs and LLP licenses are only required for fishing activity in the EEZ. As a result, some vessels without an FFP or LLP license, or other vessels that have an FFP and LLP license but the LLP license is not endorsed for Pacific cod fishing in the adjacent BSAI Federal waters, have participated in the State's parallel fisheries. Additionally, the State is legally constrained from allocating resources within a single fishery, and as a result does not recognize sector allocations based on operation types, such as catcher vessel versus catcher/processor designations. This circumstance has inadvertently allowed fishing in the State parallel fisheries by catcher vessels even when the Federal fishery sector for those vessels has fully achieved its Federal Pacific cod allocation. This has been most common among hook-and-line vessels. The Council determined, and NMFS agrees, that this fishing activity has negative effects on the Federal management regime for BSAI Pacific cod and must be curtailed to maintain the conservation and management benefits intended by the Council and implemented by NMFS.
For example, the Federal Pacific cod seasons for the hook-and-line catcher/processor sector typically remain open to directed fishing for much of the year, whereas the seasons for hook-and-line catcher vessel sectors, which fish under much smaller allocations, normally close earlier in the year. Because the State does not recognize sector allocations based on operation types, the State parallel Pacific cod fishery remains open for much of the year, so long as the catcher/processor hook-and-line season is open. Therefore, when the catcher vessel hook-and-line allocation has been achieved, and NMFS closes that sector's season in Federal waters, some of those vessels have continued to fish for Pacific cod in state waters. When this has occurred, NMFS has been obligated to reallocate Pacific cod from other sectors to prevent overharvest of the area TAC. The Council determined that this complicates Federal conservation and management measures that are intended to hold sectors to their allocations. It also undermines the intent of previous Council decisions regarding license limitation, sector allocations, and catch reporting. The proposed regulations would address these issues.
When evaluating these issues, the Council also considered the terms under which FFPs are issued. Under current regulations, an FFP is issued in a three-year cycle, but within that period, a vessel operator can surrender the FFP at any time, then reapply for a reissuance of the permit any number of times within the three-year cycle. This would provide an opportunity for vessel operators to avoid the prohibitions proposed in this rule. Lengthening the amount of time that must pass between the period when a person surrenders an FFP and later reapplies for a new FFP would create a disincentive for vessel owners to circumvent Federal regulations by temporarily surrendering the FFP. Similar concerns apply to FFP amendments.
These proposed regulations are similar to regulations implemented by NMFS in 2011 as part of Amendment 83 to the Fishery Management Plan for Groundfish of the Gulf of Alaska (76 FR 74670, December 1, 2011), and also similar to regulations that apply to pot and hook-and-line catcher/processors in the BSAI (76 FR 73513, November 29, 2011).
This proposed rule would prohibit a trawl, hook-and-line, or pot gear vessel that is named on an FFP or LLP license to catch and retain BSAI Pacific cod in state waters during the State's parallel Pacific cod fishery unless the vessel is named on an FFP and LLP license that have the required endorsements. In addition, the proposed rule would prohibit a Federally-permitted hook-and-line, pot, or trawl gear vessel from catching and retaining BSAI Pacific cod in state waters during the State's parallel fishery when NMFS has closed the EEZ to directed fishing for Pacific cod by the sector to which the vessel belongs. Through this permit condition, Federally-permitted vessels would be required to adhere to Federal seasonal Pacific cod closures and other management measures for their fishery sector when participating in the State's parallel fisheries.
Additionally, the proposed regulations would limit the number of times in which a vessel owner may relinquish an FFP and then reapply for a new FFP. Specifically, if an FFP is issued to a pot or hook-and-line catcher vessel with a Bering Sea or Aleutian Islands Pacific cod endorsement, or to a trawl vessel with a Bering Sea or Aleutian Islands endorsement, and if the FFP for the vessel is surrendered, then the vessel will not be eligible to receive a new FFP until after the expiration date of the surrendered FFP.
As noted above, the Council intended the regulatory amendments included in this proposed rule to expand upon rules already in place for BSAI catcher/processor vessels that fish for Pacific cod with pot or hook-and-line gear. Federal regulations currently require these two catcher/processor sectors to have an FFP and LLP license with correct Federal Pacific cod endorsements in order to fish in the parallel fisheries (76 FR 73513, November 29, 2011). These two Pacific cod catcher/processor sectors are also subject to the FFP relinquish and reapply rules mentioned above.
The Council did not intend, and NMFS does not propose, to modify regulatory requirements for vessels using jig gear in the BSAI under this proposed rule. Additionally, this proposed rule does not limit participation in the state waters GHL fisheries.
Section 2.7.6 of the Analysis provides details on the number and type of vessels that would potentially be affected by the regulations proposed in this rule. Over the 2010 to 2019 period, 138 vessels participated in the BSAI Pacific cod parallel fisheries. Among this group, 30 vessels are expected to be directly impacted by this proposed rule and might choose to adjust their permit and license holdings. Twenty-six of these vessels are hook-and-line/pot catcher vessels < 60 ft., three are pot catcher vessels ≥ 60 ft., and one is a trawl catcher vessel.
The Analysis indicates that 5 of the 30 vessels are potentially affected because they have participated in the State's parallel fisheries and they each have an LLP license that is valid for their sector in BSAI Federal waters, but they do not have an FFP. If they do not acquire an FFP they could continue to participate only in the parallel fishery as a state vessel, and not in Federal waters. However, if these vessels obtain an FFP they would be permitted to fish seamlessly in both Federal and state waters during the concurrent Federal waters and Pacific cod parallel fisheries. NMFS issues FFPs free of charge; however, among other things, the FFP stipulates the use of fishery observers and observer fee obligations, along with some recordkeeping requirements. To these vessels, the added flexibility and potential gains in revenue associated with an FFP are expected to outweigh the costs.
The remaining affected vessels have FFPs, but they either: (1) Do not have an LLP license assigned to them; or, (2) have an LLP license but the LLP license does not have the correct endorsements; or, (3) they have an LLP license with the correct endorsements but they have a history of Pacific cod fishing in the State's parallel fishery when their sector is closed to Pacific cod fishing in the adjacent Federal waters. The Analysis indicates there are 8 vessels in the first group (assigned to an FFP but no LLP license). Each of these vessels has a history of participation in the halibut IFQ fishery, as well as participation in the BSAI Pacific cod parallel fishery during the 2010–2019 period. The Analysis indicates that for these vessels, Pacific cod is retained as an incidental species during the targeted halibut and/or sablefish fisheries. Under this proposed rule, these 8 vessels would need to acquire a properly endorsed LLP license in order to continue to retain Pacific cod in the parallel fisheries. The remaining vessels in the groups described above are assigned to FFPs and LLPs, and have fished for Pacific cod in state waters during the parallel fisheries at times when they were prohibited from Pacific cod fishing in Federal waters. Fifteen of these vessels are hook-and-line catcher vessels < 60 ft., and have a history of fishing in the parallel fisheries in the scenario described previously: When their catcher vessel sector was closed in Federal waters, they continued to fish in the parallel fishery because the catcher/processor hook-and-line sector remained open. Under this proposed rule, these catcher vessels could continue to fish for Pacific cod in the parallel fishery, but they would be required to adhere to the seasonal closures and other management measures that apply to their LLP sector in Federal waters.
The regulations proposed in this rule would also prohibit amendment of an FFP during its effective period and would create a disincentive for a vessel operator to surrender, or relinquish, the FFP during its effective period. Under current regulations, an FFP holder could avoid Federal FFP and LLP license, vessel observer, and catch reporting requirements by amending or surrendering the FFP to fish in the Pacific cod parallel fishery, and then requesting that NMFS amend or reissue the FFP so that the vessel can be used to resume fishing in the EEZ. Amending or surrendering an FFP may degrade the quality of information available to NMFS to manage the Pacific cod fishery and provide an opportunity to undermine the intent of this proposed rule. As noted above, FFPs are currently issued on a three-year cycle; however, a vessel operator with an FFP can amend or surrender the permit at any time and have the FFP reissued any number of times within the three-year cycle. Prohibiting amendment of an issued FFP during the three-year cycle and lengthening the amount of time that must pass before a person can reapply for a surrendered FFP would make it more difficult for FFP holders to circumvent the proposed regulations by temporarily amending or surrendering the FFP. These proposed provisions for FFPs would address situations where a vessel owner could choose to amend or surrender the FFP before fishing in the State parallel or GHL fisheries to avoid NMFS observer or recordkeeping and reporting requirements, and then seek to amend or reissue the FFP for the opening of the Federal waters fishery.
This proposed rule would amend paragraphs (b)(3)(ii)(B) and (b)(3)(iii)(B) in 50 CFR 679.4 by expanding the scope of the applicable FFP vessel operation types to include both catcher/processors and catcher vessels. The proposed revisions would also specify that the applicable FFP gear types include trawl, pot, and hook-and-line gears. Note this proposed rule explicitly excludes vessels using jig gear from the suggested regulatory actions.
This proposed rule would also amend paragraphs (c)(3) and (4) in 50 CFR 679.7 to expand the scope vessels that would be prohibited from participating in the BSAI parallel fisheries without properly endorsed LLP licenses. The current regulations that restrict fishing in the Pacific cod parallel fisheries apply only to catcher/processor vessels fishing pot or hook-and-line gear in the parallel waters of the BSAI. The proposed action would change these regulations to identify both catcher/processor and catcher vessel operation types, and to include vessels using trawl, pot, and hook-and-line gear types in the regulations.
Modifying the regulations currently at § 679.7(c)(4)(i) to include trawl, pot, and hook-and-line gear types would provide an opportunity to simplify the regulations by deleting paragraph (c)(4)(ii) in § 679.7.
Finally, this proposed rule would amend paragraph (b)(3)(i) in 50 CFR 679.4 to specifically reference the three-year cycle NMFS uses for issuance of FFPs. Regulations at § 679.4(b) govern issuance of FFPs, and for many years specifically referenced the three-year cycle followed by NMFS for issuing FFPs. NMFS proposed to maintain the three-year cycle when it published a proposed rule to modify recordkeeping and reporting regulations in 2007 (72 FR 35747; June 29, 2007). However, the specific reference to the three-year cycle was inadvertently omitted in the supplemental proposed rule (73 FR 55368; September 24, 2008) and not included in the final rule (73 FR 76136; December 15, 2008). NMFS has continued to use a three-year cycle for issuing FFPs and this proposed rule would reinsert the specific reference to this cycle.
Pursuant to Section 304(b)(1)(A) of the Magnuson-Stevens Act, the NMFS Assistant Administrator has determined that this proposed rule is consistent with the BSAI FMP, other provisions of the Magnuson-Stevens Act, and other applicable law, subject to further consideration of comments received during the public comment period.
This proposed rule has been determined to be not significant for purposes of Executive Order 12866.
This proposed rule is not an Executive Order 13771 regulatory action because this rule is not significant under Executive Order 12866.
An RIR was prepared to assess the costs and benefits of available regulatory alternatives. A copy of this analysis is available from NMFS (see
This Initial Regulatory Flexibility Analysis (IRFA) was prepared for this action, as required by Section 603 of the Regulatory Flexibility Act (RFA) to describe the economic impact this proposed rule, if adopted, would have on small entities. This IRFA describes the action; the reasons why this action is proposed; the objectives and legal basis for this proposed rule; the number and description of directly regulated small entities to which this proposed rule would apply; the recordkeeping, reporting, and other compliance requirements of this proposed rule; and the relevant Federal rules that may duplicate, overlap, or conflict with this proposed rule. This IRFA also describes significant alternatives to this proposed rule that would accomplish the stated objectives of the Magnuson-Stevens Act, and any other applicable statutes, and that would minimize any significant economic impact of this proposed rule on small entities. The description of the proposed action, its purpose, and the legal basis are explained in the preamble and in the Analysis and are not repeated here.
For RFA purposes only, NMFS has established a small business size standard for businesses, including their affiliates, whose primary industry is commercial fishing (see 50 CFR 200.2). A business primarily engaged in commercial fishing (NAICS code 11411) is classified as a small business if it is independently owned and operated, is not dominant in its field of operation (including its affiliates), and has combined annual receipts not in excess of $11 million for all its affiliated operations worldwide.
This proposed rule would directly regulate individuals and entities that participate, or would seek to participate, in the BSAI Pacific cod parallel fisheries with vessels using trawl, hook-and-line, and pot gear. As noted above, 192 vessels have a history of participation in the Pacific cod parallel fisheries over the 2010 through 2019 period. Based upon the estimated ex-vessel earnings of these vessels, the Analysis indicates 71 vessels are considered small entities. Of the 30 vessels that would be directly impacted by the proposed regulations in this rule, 29 are considered small entities, based on SBA criteria.
The proposed rule, which would prohibit certain Federally-permitted vessels from catching and retaining Pacific cod in the parallel fishery unless the vessel has the required permits, licenses, and endorsements, is intended to reflect the intent of previous recommendations by the Council regarding license limitation, vessel sector allocations of Pacific cod, and catch reporting. Additionally, the proposed rule is expected to enhance the conservation and management of the fisheries by holding vessel sectors to their allocations and to promote the goals and objectives of the BSAI FMP for the Federal Pacific cod fishery. In 2011, NMFS implemented provisions similar to this proposed rule as part of Amendment 83 to the Fishery Management Plan for Groundfish of the Gulf of Alaska. Similarly, these proposed regulations for the BSAI would add hook-and-line catcher vessels, pot catcher vessels, and trawl gear vessels to existing BSAI Pacific cod fishing regulations, which currently regulate catcher processor hook-and-line and pot gear vessels in a similar fashion as the suggested regulations in this proposed rule.
The majority of the 30 vessel owners who would be directly impacted by this proposed rule currently have LLP licenses that would allow them to participate in the parallel fisheries under this proposed rule. Five of the 30 vessels currently do not have FFPs, which prevents them from fishing in Federal waters. Under the proposed rule, these vessels could continue to fish as they do now, solely in state waters. However, if the vessel owners choose to obtain an FFP, their vessels would have the flexibility to fish in both state and Federal waters during the directed Federal Pacific cod fishery for their sector. Also among the 30 directly impacted vessels, 15 other vessels are currently associated with FFPs and are linked to LLP licenses that would allow them to continue to fish for Pacific cod in both Federal and state waters during the concurrent Federal and parallel fisheries; however, in previous years, an incremental portion of their participation has occurred in the parallel fishery when their sector was closed to fishing in Federal waters. Under this proposed rule, these vessels would no longer be able to circumvent seasonal closures for their sector by participating in the parallel fishery after their Federal sector has been closed. This would ensure that their Pacific cod harvests would be attributed to the appropriate sector, as designated on their LLP license.
Vessel owners most likely to be impacted by this proposed rule are those whose vessels have an FFP and participate in the parallel fishery, but who do not have the appropriate LLP license to fish for Pacific cod in the BSAI Federal waters. These vessels could either exit the parallel fishery and therefore the BSAI Pacific cod fishery entirely, or they could forfeit their FFP (and therefore fish solely in state waters, but also forfeit Federal fishing opportunities associated with their FFP), or they could obtain a valid LLP license that would allow them the flexibility to participate in both the Federal and parallel Pacific cod fisheries. Because LLP licenses are a transferable and marketable asset, the owners' decisions would likely be influenced by the cost and availability of an LLP license.
Alaska, Fisheries, Reporting and recordkeeping requirements.
For the reasons set out in the preamble, NMFS proposes to amend 50 CFR part 679 as follows:
16 U.S.C. 773
(b) * * *
(3) * * *
(i)
(ii) * * *
(B) For the BSAI, NMFS will not reissue a surrendered FFP to the owner or authorized representative of a vessel named on an FFP that has been issued with endorsements for catcher/processor or catcher vessel operation
(iii) * * *
(B) In the BSAI, NMFS will not approve an application to amend an FFP to remove a catcher/processor or catcher vessel operation type endorsement, trawl gear type endorsement, pot gear type endorsement, hook-and-line gear type endorsement, or BSAI area endorsement from an FFP that has been issued with endorsements for catcher/processor or catcher vessel operation type, trawl, pot, or hook-and-line gear type, and the BSAI area.
(c) * * *
(3)
(i) That non-trawl vessel is designated on both:
(A) An LLP license issued under § 679.4(k), unless that vessel is using jig gear and exempt from the LLP license requirement under § 679.4(k)(2)(iii). Each vessel required to have an LLP license must be designated with the following endorsements:
(
(
(B) An FFP issued under § 679.4(b) with the following endorsements:
(
(
(
(ii) Or, that trawl vessel is designated on both:
(A) An LLP license issued under § 679.4(k) endorsed for trawl gear with the BSAI area endorsement for the BSAI area adjacent to the parallel fishery where the harvest occurred; and
(B) An FFP issued under § 679.4(b) with the following endorsements:
(
(
(
(
(4)
The Department of Agriculture has submitted the following information collection requirement(s) to OMB for review and clearance under the Paperwork Reduction Act of 1995, Public Law 104–13. Comments are required regarding; whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; the accuracy of the agency's estimate of burden including the validity of the methodology and assumptions used; ways to enhance the quality, utility and clarity of the information to be collected; and ways to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology.
Comments regarding this information collection received by October 19, 2020 will be considered. Written comments and recommendations for the proposed information collection should be submitted within 30 days of the publication of this notice on the following website
An agency may not conduct or sponsor a collection of information unless the collection of information displays a currently valid OMB control number and the agency informs potential persons who are to respond to the collection of information that such persons are not required to respond to the collection of information unless it displays a currently valid OMB control number.
Office of Inspector General (OIG), USDA.
Notice.
On June 24, 2020, pursuant to the Federal Vacancies Reform Act of 1998 and the Inspector General Act of 1978, as amended, U.S. Department of Agriculture (USDA) Inspector General (IG) Phyllis K. Fong issued C–20–001–1313, Revision of Succession Order and Delegation of Authority. The bulletin revised the succession order and delegation authorities described in IG–1313, Change 8, Succession, Delegations of Authority, and Signature Authorities, which provides guidance on the transfer of functions and duties of the IG, as well as other OIG central management functions, regardless of what events necessitate such transfer. This publication supersedes the USDA OIG's prior notice of succession order.
The revised bulletin referenced in this notice was issued on June 24, 2020.
Christy A. Slamowitz, Counsel to the Inspector General, U.S. Department of Agriculture, 1400 Independence Avenue SW, Room 441–E, Washington, DC 20250–2308, Telephone: (202) 720–9110.
USDA OIG is issuing this notice to publish an updated line of succession and delegations of authority within USDA OIG. This publication supersedes the prior notice of succession order for USDA OIG published at 81 FR 87531 (December 5, 2016). Accordingly, pursuant to the Federal Vacancies Reform Act of 1998 (5 U.S.C. 3345–3349d) and the Inspector General Act of 1978, as amended (5 U.S.C. app. 3), the IG has designated the detailed sequence of succession as follows:
I. During any period in which the USDA IG, dies, resigns, or is otherwise unable to perform the functions and duties of the office, and unless the President shall designate another officer to perform the functions and duties of the position, the Deputy IG, as the designated first assistant to the IG, shall temporarily perform the IG's functions and duties in an acting capacity, pursuant to and subject to the Federal Vacancies Reform Act (5 U.S.C. 3345–3349d). However, the Deputy IG does not become the acting IG if, during the 365-day period preceding the IG's death, resignation, or the beginning of the period in which the IG is unable to serve, the Deputy IG served as Deputy IG for less than 90 days and the President has nominated that Deputy IG as the new IG. In the absence of the IG and Deputy IG, the officials designated below, in the order listed, shall become the acting Deputy IG and so shall temporarily perform the functions and duties of the IG. This order may be changed by a delegation in writing from the IG, or by the Deputy IG while acting in the absence of the IG:
1. Assistant IG for Audit (AIG/A);
2. Assistant IG for Investigations (AIG/I);
3. Assistant IG for Analytics and Innovation (AIG/AI);
4. Assistant IG for Management (AIG/M);
5. Counsel to the IG;
6. Deputy Assistant IG for Audit (DAIG/A), by seniority;
7. Deputy Assistant IG for Investigations (DAIG/I);
8. Deputy Assistant IG for Analytics and Innovation (DAIG/AI); The following officials for the listed locations in the following order:
9. Audit Directors, by seniority, then Investigations Director, Technical Crimes Division—Kansas City, Missouri;
10. Special Agent-in-Charge (SAC)—Temple, Texas;
11. Audit Director—Beltsville, Maryland;
12. SAC—New York, New York;
13. Audit Director, then SAC—Oakland, California;
14. Audit Director, then SAC—Atlanta, Georgia;
15. Audit Director, then SAC—Chicago, Illinois;
16. Director, Office of Compliance and Integrity;
17. Director, Office of Diversity and Conflict Resolution.
II. For purposes of this order of succession, a designated official is a person holding a permanent appointment to the position. Persons filling positions in an acting capacity do not substitute for officials holding a permanent appointment to a position. If a position is vacant or an official occupying the position on a permanent basis is absent or unavailable, authority passes to the next available official occupying a position in the order of succession.
III. This delegation is not in derogation of any authority residing in the above officials relating to the operation of their respective programs, nor does it affect the validity of any delegations currently in force and effect and not specifically cited as revoked or revised herein.
IV. The authorities delegated herein may not be re-delegated.
5 U.S.C. 3345–3349d; 5 U.S.C. app. 3.
U.S. Commission on Civil Rights.
Announcement of meeting.
Notice is hereby given, pursuant to the provisions of the rules and regulations of the U.S. Commission on Civil Rights (Commission) and the Federal Advisory Committee Act (FACA) that a teleconference meeting of the Hawai'i Advisory Committee (Committee) to the Commission will be held at 11:00 a.m. on Friday, September 28, 2020 (Hawai'i Time). The purpose of the meeting will be to begin planning for their hearing on COVID–19 and Pacific Islander communities.
The meeting will be held on Friday, September 28, 2020 at 11:00 a.m. HST.
Ana Victoria Fortes, Designated Federal Officer (DFO) at
This meeting is available to the public through the following toll-free call-in number: 800–367–2403, conference ID number: 9745833. Any interested member of the public may call this number and listen to the meeting. Callers can expect to incur charges for calls they initiate over wireless lines, and the Commission will not refund any incurred charges. Callers will incur no charge for calls they initiate over land-line connections to the toll-free telephone number. Persons with hearing impairments may also follow the proceedings by first calling the Federal Relay Service at 1–800–877–8339 and providing the Service with the conference call number and conference ID number.
Members of the public are entitled to make comments during the open period at the end of the meeting. Members of the public may also submit written comments; the comments must be received in the Regional Programs Unit within 30 days following the meeting. Written comments may be mailed to the Western Regional Office, U.S. Commission on Civil Rights, 300 North Los Angeles Street, Suite 2010, Los Angeles, CA 90012 or email Ana Victoria Fortes at
Records and documents discussed during the meeting will be available for public viewing prior to and after the meeting at
Economic Development Administration, U.S. Department of Commerce.
Notice and opportunity for public comment.
The Economic Development Administration (EDA) has received petitions for certification of eligibility to apply for Trade Adjustment Assistance from the firms listed below. Accordingly, EDA has initiated investigations to determine whether increased imports into the United States of articles like or directly competitive with those produced by each of the firms contributed importantly to the total or partial separation of the firms' workers, or threat thereof, and to a decrease in sales or production of each petitioning firm.
Any party having a substantial interest in these proceedings may request a public hearing on the matter. A written request for a hearing must be submitted to the Trade Adjustment Assistance Division, Room 71030, Economic Development Administration, U.S. Department of Commerce, Washington, DC 20230, no later than ten (10) calendar days following publication of this notice. These petitions are received pursuant to section 251 of the Trade Act of 1974, as amended.
Please follow the requirements set forth in EDA's regulations at 13 CFR 315.9 for procedures to request a public hearing. The Catalog of Federal Domestic Assistance official number and title for the program under which these petitions are submitted is 11.313, Trade Adjustment Assistance for Firms.
On June 8, 2020, the Executive Secretary of the Foreign-Trade Zones (FTZ) Board docketed an application submitted by the City of Birmingham Alabama, grantee of FTZ 98, requesting subzone status subject to the existing activation limit of FTZ 98, on behalf of Signature Express Transport, LLC, in Fairfield, Alabama.
The application was processed in accordance with the FTZ Act and Regulations, including notice in the
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (Commerce) determines that certain glass containers (glass containers) from the People's Republic of China (China) are being, or are likely to be, sold in the United States at less than fair value (LTFV).
Applicable September 18, 2020.
Lilit Astvatsatrian or Aleksandras Nakutis, AD/CVD Operations, Office IV, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482–6412 or (202) 482–3147, respectively.
Commerce published the
The period of investigation (POI) is January 1, 2019 through June 30, 2019.
The products covered by this investigation are certain glass containers from China. For a complete description of the scope of this investigation,
Commerce already addressed all scope comments and rebuttal comments in a memorandum dated May 11, 2020.
All issues raised in the case and rebuttal briefs that were submitted by parties in this investigation are addressed in the Issues and Decision Memorandum. A list of the issues addressed in the Issues and Decision Memorandum is attached to this notice at Appendix II. The Issues and Decision Memorandum is a public document and is on file electronically via Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (ACCESS). ACCESS is available to registered users at
Based on our review and analysis of the comments received from parties, we made certain changes to our calculations of the dumping margins for Huaxing and Qixia Changyu. As a result of these changes, the dumping margin for separate rate companies has also changed. For a discussion of these changes,
Commerce normally verifies information relied upon in making its final determination, pursuant to section 782(i) of the Tariff Act of 1930, as amended (the Act). However, during the course of this investigation, a Level 4 travel advisory was imposed for all of China, preventing Commerce personnel from traveling to China to conduct verification. Due to this, as well as the impending statutory deadline for the completion of the final determination, Commerce was unable to conduct verifications in this case. Therefore, on June 19, 2020, Commerce cancelled its verifications of the information submitted by the mandatory respondents Guangdong Huaxing Glass Co., Ltd. (Huaxing) and Qixia Changyu Glass Co., Ltd. (Qixia Changyu).
Pursuant to section 776(a)(2)(D) of the Act, in situations where information has been provided but the information cannot be verified, Commerce may use “facts otherwise available” in reaching the applicable determination. Since we were unable to conduct verifications in this investigation, as facts available we relied upon the record information used in reaching our preliminary determination in reaching our final determination.
We continue to find that the use of facts available is warranted in determining the rate of the China-wide entity pursuant to sections 776(a)(1) and (a)(2)(A)–(C) of the Act. Further, use of adverse facts available (AFA) is warranted because the China-wide entity did not cooperate to the best of its ability to comply with our requests for information and, accordingly, we applied adverse inferences in selecting from the facts available, pursuant to section 776(b) of the Act and 19 CFR 351.308(a). As AFA, we are assigning the China-wide entity a dumping margin of 255.68 percent, which is the highest petition rate.
In addition to the mandatory respondents Huaxing and Qixia Changyu, we have continued to grant certain non-individually examined respondents a separate rate. Also, we have continued to deny certain respondents a separate rate.
In calculating the rate for non-individually examined separate rate respondents in a non-market economy AD investigation, Commerce normally looks to section 735(c)(5)(A) of the Act, which pertains to the calculation of the all-others rate in a market economy AD investigation. Pursuant to section 735(c)(5)(A) of the Act, normally this rate shall be an amount equal to the weighted average of the estimated antidumping duty (AD) rates established for those companies individually examined, excluding zero and
Consistent with the
Commerce determines that the following weighted-average dumping margins exist:
Commerce intends to disclose its calculations and analysis performed to interested parties in this final determination within five days of any public announcement or, if there is no public announcement, within five days of the date of publication of this notice in accordance with 19 CFR 351.224(b).
In accordance with section 735(c)(1)(B) of the Act, Commerce will instruct U.S. Customs and Border Protection (CBP) to continue to suspend liquidation of all appropriate entries of certain glass containers from China, as described in the scope in Appendix I of this notice, entered, or withdrawn from warehouse, for consumption on or after April 29, 2020, the date of publication of the
Pursuant to section 735(c)(1)(B)(ii) of the Act, upon the publication of this notice, Commerce will instruct CBP to require a cash deposit equal to the weighted-average amount by which the normal value exceeds U.S. price as follows: (1) The cash deposit rate for the exporter/producer combinations listed in the table above will be the rate identified in the table; (2) for all combinations of Chinese exporters/producers of subject merchandise that have not received their own separate rate, the cash deposit rate will be the cash deposit rate established for the China-wide entity; and (3) for all non-Chinese exporters of subject merchandise which have not received their own separate rate, the cash deposit rate will be the cash deposit rate applicable to the Chinese exporter/producer combination that supplied that non-Chinese exporter. These suspension of liquidation instructions will remain in effect until further notice.
Although Commerce normally adjusts the estimated weighted-average dumping margins by the amount of domestic subsidy pass-through and export subsidies determined in a companion countervailing duty (CVD) proceeding when CVD provisional measures are in effect, in this case, the International Trade Commission (ITC) reached a negative determination in the companion CVD proceeding.
In accordance with section 735(d) of the Act, Commerce will notify the ITC of its final affirmative determination of sales at LTFV. Commerce will allow the ITC access to all privileged and business proprietary information in our files, provided the ITC confirms that it will not disclose such information, either publicly or under an administrative protective order (APO), without the written consent of the Assistant Secretary for Enforcement and Compliance. Because Commerce's final determination is affirmative, in accordance with section 735(b)(2) of the Act, the ITC will make its final determination as to whether the domestic industry in the United States is materially injured, or threatened with
This notice will serve as a final reminder to the parties subject to an APO of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305. Timely written notification of return or destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and the terms of an APO is a sanctionable violation.
This determination is issued and published in accordance with sections 735(d) and 777(i)(1) of the Act and 19 CFR 351.210(c).
The merchandise covered by this investigation is certain glass containers with a nominal capacity of 0.059 liters (2.0 fluid ounces) up to and including 4.0 liters (135.256 fluid ounces) and an opening or mouth with a nominal outer diameter of 14 millimeters up to and including 120 millimeters. The scope includes glass jars, bottles, flasks and similar containers; with or without their closures; whether clear or colored; and with or without design or functional enhancements (including, but not limited to, handles, embossing, labeling, or etching).
Excluded from the scope of the investigation are: (1) Glass containers made of borosilicate glass, meeting United States Pharmacopeia requirements for Type 1 pharmaceutical containers; (2) glass containers without “mold seams,” “joint marks,” or “parting lines;” and (3) glass containers without a “finish” (
Glass containers subject to the investigation are specified within the Harmonized Tariff Schedule of the United States (HTSUS) under subheadings 7010.90.5005, 7010.90.5009, 7010.90.5015, 7010.90.5019, 7010.90.5025, 7010.90.5029, 7010.90.5035, 7010.90.5039, 7010.90.5045, 7010.90.5049, and 7010.90.5055. The HTSUS subheadings are provided for convenience and customs purposes only. The written description of the scope of the investigation is dispositive.
National Institute of Standards and Technology, Department of Commerce.
Notice; request for comments.
The National Institute of Standards and Technology (NIST) seeks comments on the Draft NIST Framework and Roadmap for Smart Grid Interoperability Standards, Release 4.0. This document is available online at:
Comments must be received on or before 5:00 p.m. Eastern Time on November 2, 2020. Written comments in response to this Request for Comments (RFC) should be submitted according to the instructions in the
Written comments may be sent to the Smart Grid and Cyber Physical Systems Program Office, National Institute of Standards and Technology, 100 Bureau Drive, Mail Stop 8200, Gaithersburg, MD 20899–8200 or by email at
All submissions, including attachments and other supporting materials, will become part of the public record and subject to public disclosure. NIST reserves the right to publish relevant comments, unedited and in their entirety. All relevant comments received in response to the RFC will be made publicly available at
Mr. Cuong Nguyen, Smart Grid and Cyber-Physical Systems Program Office, National Institute of Standards and Technology, 100 Bureau Drive, Mail Stop 8200, Gaithersburg, MD 20899–8200; telephone 301–975–2254, fax 301–948–5668; or via email at
Section 1305 of the Energy Independence and Security Act (EISA) of 2007 (Pub. L. 110–140) directs NIST “to coordinate the development of a framework that includes protocols and model standards for information management to achieve interoperability of smart grid devices and systems.” To meet these statutory goals, in January 2010, NIST published the NIST Framework and Roadmap for
NIST now announces publication of the Draft NIST Framework and Roadmap for Smart Grid Interoperability Standards, Release 4.0 (Draft Release 4.0) for public review and comment. Draft Release 4.0 is available online at:
Draft Release 4.0 is a substantial revision of previous releases to address structural changes and increasing system complexity in the grid. This release includes a description of communications scenarios inspired by different grid architectures, which are used to more closely examine unique interoperability requirements. The interoperability implications of expanding grid communications in four key areas—grid cybersecurity, operations, economics, and associated requirements for testing and certification—are also explored.
Draft Release 4.0 reflects changes taking place in the grid, including the accelerating pace of technological change, rapidly falling prices for modern energy technologies such as solar photovoltaic (PV) and other distributed energy resources (DER), increased proliferation of low-cost sensors and network enabled devices, and the resulting surge in granularity and amount of data being generated. The issues surrounding empowered consumers, the coordination of tens of thousands of devices operating across the system, and multi-directional power flows are also considered.
NIST seeks comments on the Draft NIST Framework and Roadmap for Smart Grid Interoperability Standards, Release 4.0. In particular, the agency requests that comments be categorized as (1) technical; (2) editorial; or (3) general. If a comment is not a general comment, please identify the relevant page, line number, and section of Draft Release 4.0 that is addressed by the comment. NIST will also accept proposed solutions along with the comments. Comments should be submitted in accordance with instructions in the
Section 1305 of the Energy Independence and Security Act (EISA) of 2007 (Pub. L. 110–140)
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of public meeting.
The New England Fishery Management Council (Council) is scheduling a public meeting affecting New England fisheries in the exclusive economic zone (EEZ). Recommendations from this group will be brought to the full Council for formal consideration and action, if appropriate.
This webinar will be held on Monday, October 5, 2020 at 4 p.m. Webinar registration URL information:
The meeting will be held via webinar.
Thomas A. Nies, Executive Director, New England Fishery Management Council; telephone: (978) 465–0492.
The New England Fishery Management Council will host a public meeting on Monday, October 5, 2020, from 4 p.m.–6 p.m., focusing on the recreational Northeast Multispecies (groundfish) fishery. The purpose of the meeting is for Tidal Bay Consulting, LLC to announce the development of a “strawman” for a potential limited entry program for party/charter vessels participating in the recreational groundfish fishery and solicit feedback from the public. There will be an opportunity for the public to ask questions and solicit feedback on a draft limited entry template. The draft template is based on stakeholder feedback received at listening sessions held by the Council in April and May of 2019, and input from the Recreational Advisory Panel.
Although non-emergency issues not contained in this agenda may come before this group for discussion, those issues may not be the subject of formal action during this meeting. Action will be restricted to those issues specifically listed in this notice and any issues arising after publication of this notice that require emergency action under section 305(c) of the Magnuson-Stevens Act, provided the public has been notified of the Council's intent to take final action to address the emergency
This meeting is physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Thomas A. Nies, Executive Director, at (978) 465–0492, at least 5 days prior to the meeting date. This meeting will be recorded. Consistent with 16 U.S.C. 1852, a copy of the recording is available upon request.
16 U.S.C. 1801
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of availability, request for comments.
NMFS announces the availability of the “Draft Supplemental Programmatic Environmental Assessment (SPEA) for Fisheries Research Conducted and Funded by the Northeast Fisheries Science Center.” Publication of this notice begins the official public comment period for this SPEA. The purpose of this Draft SPEA
Comments and information must be received no later than October 19, 2020.
Comments on the Draft SPEA should be addressed to Victor A. Nordahl Jr, Environmental Compliance Specialist, 166 Water St. Woods Hole, MA 02543.
The mailbox address for providing email comments is:
A copy of the Draft SPEA may be obtained by writing to the address specified above, telephoning the contact listed below (see
Victor A. Nordahl Jr., email:
The NEFSC is the research arm of NMFS in the Northeast Region. The purpose of NEFSC fisheries research is to produce scientific information necessary for the management and conservation of living marine resources along the U.S. East Coast Exclusive Economic Zone (EEZ) Federal waters from North Carolina to Nova Scotia, Canada. NEFSC's research is needed to promote both the long-term sustainability of the resource and the recovery of certain species, while generating social and economic opportunities and benefits from their use. Primary research activities include: seasonal bottom trawl surveys to support assessments of ground fish; a summer bottom trawl survey to support the assessment of Northern Shrimp; seasonal mid-water pelagic surveys to support the assessment of semi-pelagic fish species; summer dredge and optical surveys to support the assessment of Deep-sea scallops; summer hydraulic dredge surveys to support assessment of surf clams and ocean quahogs; bottom longline surveys for ground fish in the Gulf of Maine; bottom and pelagic Apex Predator long line surveys; opportunistic trawl comparison studies; ecosystem based plankton surveys; inshore Penobscot Bay trawl and acoustic surveys; and Fisheries Observer Training trips (all gears) in the EEZ.
NMFS has prepared the Draft SPEA under NEPA to evaluate two alternatives for conducting and funding fisheries and ecosystem research activities as the primary Federal action. Additionally in the Draft SPEA, NMFS evaluates a related action—also called a “connected action” under 40 CFR 1508.25 of the Council on Environmental Quality's regulations for implementing the procedural provisions of NEPA (42 U.S.C. 4321
The following (2) alternatives are currently evaluated in the Draft SPEA.
• Alternative 1—Continue current fisheries and ecosystem research (Status Quo/no action) as described in the 2016 NEFSC PEA.
• Alternative 2—Conduct current research with some modifications as well as new research activities that are planned for the future (
The alternatives include a program of fisheries and ecosystem research projects conducted or funded by the NEFSC as the primary Federal action. Because this primary action is connected to a secondary Federal action, to consider authorizing incidental take of marine mammals under the MMPA, NMFS must identify as part of this evaluation the means of effecting the least practicable adverse impact on the species or stock and its habitat. (Section 101(a)(5)(A) of the MMPA;16 U.S.C. 1361
Potential direct and indirect effects on the environment are evaluated under each alternative in the Draft SPEA. The environmental effects on the following resources are considered: Physical environment, special resource areas, fish, marine mammals, birds, sea turtles, invertebrates, and the social and economic environment. Cumulative effects of external actions and the contribution of fisheries research activities to the overall cumulative impact on the aforementioned resources is also evaluated in the Draft SPEA for the geographic regions in which NEFSC surveys are conducted.
NMFS requests comments on the Draft SPEA for Fisheries Research Conducted and Funded by the National Marine Fisheries Service, Northeast Fisheries Science Center. Please include, with your comments, any supporting data or literature citations that may be informative in substantiating your comment.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; receipt of application.
Notice is hereby given that the Alliance of Marine Mammal Parks and Aquariums, 218 N. Lee Street, Suite 200, Alexandria, Virginia 22314
Written, telefaxed, or email comments must be received on or before October 19, 2020.
The application and related documents are available for review by selecting “Records Open for Public Comment” from the “Features” box on the Applications and Permits for Protected Species (APPS) home page,
Written comments on this application should be submitted via email to
Those individuals requesting a public hearing should submit a written request via email to
Jennifer Skidmore or Courtney Smith, (301) 427–8401.
The subject permit is requested under the authority of the Marine Mammal Protection Act of 1972, as amended (MMPA; 16 U.S.C. 1361
The applicant proposes to receive, import, and export marine mammal parts (unlimited samples from up to 700 individual cetaceans and 400 individual pinnipeds [excluding walrus]) to study and enhance the health and biology of both wild marine mammals and those in public display, research, and stranding facilities. Research topics include diseases of marine mammals, pathology, health diagnostics, endocrinology, effects of environmental contaminants, immunology, toxicology, stock structure, distribution, age determination, reproduction, sperm preservation, artificial insemination, feeding habits and nutrition. Specimens and parts will come from the following U. S. or foreign sources: Animals in captivity (samples taken during routine husbandry procedures or under separate authorization); animals in foreign countries stranded alive or dead or that died during rehabilitation; animals killed during legal subsistence harvests; animals killed incidental to legal commercial fishing operations; or samples from other authorized persons or collections. It is expected that the majority of samples would be exchanged between designated Alliance of Marine Mammal Parks and Aquariums members (from captive animals) and their collaborators. The proposed action will not result in additional takes of individual animals. The applicant has requested a 5-year permit.
In compliance with the National Environmental Policy Act of 1969 (42 U.S.C. 4321
Concurrent with the publication of this notice in the
National Telecommunications and Information Administration, U.S. Department of Commerce.
Notice.
The National Telecommunications and Information Administration (NTIA) issues this Notice on behalf of the First Responder Network Authority (FirstNet Authority) to initiate the annual process to seek expressions of interest from individuals who would like to serve on the FirstNet Authority Board (Board). The terms of four of the 12 non-permanent members to the FirstNet Authority Board will expire in January 2021.
To be considered for a January 2021 appointment, expressions of interest must be electronically transmitted on or before October 19, 2020.
Applicants should submit expressions of interest as described below to: Michael Dame, Deputy Associate Administrator, Office of Public Safety Communications, National Telecommunications and Information Administration, by email to
Michael Dame, Deputy Associate Administrator, Office of Public Safety Communications, National Telecommunications and Information Administration; telephone: (202) 482–1181; email:
The Middle Class Tax Relief and Job Creation Act of 2012 (Act) created the First Responder Network Authority (FirstNet Authority) as an independent authority within NTIA. The Act charged FirstNet Authority with ensuring the building, deployment, and operation of a nationwide, interoperable public safety broadband network, based on a single, national network architecture.
The FirstNet Authority Board is composed of 15 voting members. The Act names the Secretary of the Department of Homeland Security, the Attorney General of the United States, and the Director of the Office of Management and Budget as permanent members of the FirstNet Authority Board. The Secretary of Commerce (Secretary) appoints the 12 non-permanent members of the FirstNet Authority Board.
The Act requires each Board member to have experience or expertise in at least one of the following substantive areas: public safety, network, technical, and/or financial.
• Robert Tipton Osterthaler, Board Chair, Business/technology executive, network (Term expires: January 2021)
• Matt Slinkard, Executive Assistant Chief of Police, City of Houston Police Department (Term expires: January 2021)
• David Zolet, CEO, CentralSquare (Term expires: January 2021)
• Vacant, vice former Sheriff Richard W. Stanek, resigned August 2020 (Term expires: January 2021)
• Richard Carrizzo, Board Vice Chair, Fire Chief, Southern Platte Fire Protection District, MO (Term expires: August 2021)
• Neil E. Cox, Telecommunications/technology executive (Term expires: August 2021)
• Brian Crawford, SVP and Chief Administrative Officer for Willis Knighton Health System/former Fire Chief and municipal government executive (Term expires: August 2021)
• Billy Hewes, Mayor of Gulfport, MS (Term expires: August 2021)
• Edward Horowitz, Venture capital/technology executive (Term expires: August 2021)
• Paul Patrick, Division Director, Family Health and Preparedness, Utah Department of Health (Term expires: August 2021)
• Brigadier General Welton Chase, Retired, U. S. Army, Army Information Technology (Term expires: September 2021)
• Karima Holmes, Director, Office of Unified Communications, District of Columbia (Term expires: August 2022)
Board members will be appointed for a term of three years. Board members may not serve more than two consecutive full three-year terms.
FirstNet Authority Board members are appointed as special government employees. FirstNet Authority Board members are compensated at the daily rate of basic pay for level IV of the Executive Schedule (approximately $170,800 per year) for each day worked on the FirstNet Authority Board.
FirstNet Authority Board members must comply with certain federal conflict of interest statutes and ethics regulations, including some financial disclosure requirements. A FirstNet Authority Board member will generally be prohibited from participating on any particular FirstNet Authority matter that will have a direct and predictable effect on his or her personal financial interests or on the interests of the appointee's spouse, minor children, or non-federal employer.
At the direction of the Secretary, NTIA will conduct outreach to the public safety community, state and local organizations, and industry to solicit nominations for candidates to the Board who satisfy the statutory requirements for membership. In addition, the Secretary, through NTIA, will accept expressions of interest from any individual, or from any organization proposing a candidate who satisfies the statutory requirements for membership on the FirstNet Authority Board. To be considered for a January 2021 appointment, expressions of interest must be electronically transmitted on or before October 19, 2020.
All parties submitting an expression of interest should submit the candidate's (i) full name, address, telephone number, email address; (ii) current resume; (iii) statement of qualifications that references how the candidate satisfies the Act's expertise, representational, and geographic requirements for FirstNet Authority Board membership, as described in this Notice; and (iv) a statement describing why the candidate wants to serve on the FirstNet Authority Board, affirming their ability and availability to take a regular and active role in the Board's work.
The Secretary will select FirstNet Authority Board candidates based on the eligibility requirements in the Act and recommendations submitted by NTIA. NTIA will recommend candidates based on an assessment of qualifications as well as demonstrated ability to work in a collaborative way to achieve the goals and objectives of the FirstNet Authority as set forth in the Act. NTIA may consult with FirstNet Authority Board members or executives in making its recommendation. Board candidates will be vetted through the Department of Commerce and are subject to an appropriate background check for security clearance.
First Responder Network Authority (FirstNet Authority), National Telecommunications and Information Administration (NTIA), U.S. Department of Commerce.
Announcement of meeting.
The FirstNet Authority Board will convene an open public meeting of the Board and Board Committees.
September 30, 2020; 11:00 a.m. to 1:00 p.m. Eastern Standard Time (EST); WebEx.
The public meeting will be conducted via teleconference and WebEx only. Members of the public may listen to the meeting by dialing toll-free: 1–800–369–1723 and enter participant code 2081846#. If you experience technical difficulty, please contact the Conferencing Center Customer Service at: 1–866–900–1011. To view the slide presentation, the public may visit the URL:
Committee for Purchase From People Who Are Blind or Severely Disabled.
Additions to from the Procurement List.
This action adds services to the Procurement List that will be furnished by nonprofit agencies employing persons who are blind or have other severe disabilities.
Committee for Purchase From People Who Are Blind or Severely Disabled, 1401 S. Clark Street, Suite 715, Arlington, Virginia 22202–4149.
Michael R. Jurkowski, Telephone: (703) 603–2117, Fax: (703) 603–0655, or email
On 5/22/2020, the Committee for Purchase From People Who Are Blind or Severely Disabled published notice of proposed additions to the Procurement List. This notice is published pursuant to 41 U.S.C. 8503 (a)(2) and 41 CFR 51–2.3.
After consideration of the material presented to it concerning capability of qualified nonprofit agencies to provide the service and impact of the additions on the current or most recent contractors, the Committee has determined that the service listed below are suitable for procurement by the Federal Government under 41 U.S.C. 8501–8506 and 41 CFR 51–2.4.
I certify that the following action will not have a significant impact on a substantial number of small entities. The major factors considered for this certification were:
1. The action will not result in any additional reporting, recordkeeping or other compliance requirements for small entities other than the small organizations that will furnish the service to the Government.
2. The action will result in authorizing small entities to furnish the service to the Government.
3. There are no known regulatory alternatives which would accomplish the objectives of the Javits-Wagner-O'Day Act (41 U.S.C. 8501–8506) in connection with the service proposed for addition to the Procurement List.
Accordingly, the following service is added to the Procurement List:
The Committee finds good cause to dispense with the 30-day delay in the effective date normally required by the Administrative Procedure Act. See 5 U.S.C. 553(d). This addition to the Committee's Procurement List is effectuated because of the expiration of the current U.S. Army National Guard contract. The Federal customer contacted, and has worked diligently with the AbilityOne Program to fulfill this service need under the AbilityOne Program. To avoid performance disruption, and the possibility that the U.S. Army National Guard will refer its business elsewhere, this addition must be effective on September 28, 2020, ensuring timely execution for a September 28, 2020, start date while still allowing 10 days for comment. Pursuant to its own regulation 41 CFR 51–2.4, the Committee conducted an impact analysis on the current contractor and found that there was not severe adverse impact on the current contractor. The Committee also published a notice of proposed Procurement List addition in the
Corporation for National and Community Service.
Notice; response to comments.
The Corporation for National and Community Service (CNCS) published a document in the
Amy Borgstrom, Associate Director of Policy, 202–422–2781.
A 60-day Notice requesting public comment was published in the
Over a decade of national trend data indicates relatively little variation in the national rates of civic behaviors, including demographic variations. As such the volunteer research program has been expanded to include more local examinations of civic behaviors and to explore the use of alternative data sources. Keeping the instrument relatively stable for a third administration of the combined supplement will help ensure data quality moving forward.
In addition to these comments, there were requests to move the order of the survey items, combine questions, remove questions, and expand upon questions. Two requests for adding COVID–19 related questions and two requests for adding questions specific to disasters were received. The items in their current order and structure have been tested and used for the 2017 and 2019 administrations of the survey.
The agency's goal is to maintain relative stability in the instrument for a third administration to maintain the integrity and comparability of the data. Two new questions were added,
Finally, two additional types of comments were received. One category of comments references the importance of including volunteer engagement practitioners in agency decision-making about this national survey. The other type of comment references the importance of considering the full continuum of volunteering and civic behaviors and not just the more formal types of civic engagement behaviors measured in this supplement.
The agency remains committed to being responsive to the expertise and information needs of all public stakeholders. The agency's statutorily mandated volunteer research program will continue to evolve. The goal is continuous learning and improvement and this supplement is a key component of our overall volunteer research program.
The CEV, however, comes with constraints in terms of number of survey items and time demands we can ask of respondents. Addressing the wide range of important questions about volunteering and civic engagement of interest to practitioners, researchers, and policymakers will require a comprehensive, multi-faceted strategy. The agency has begun designing and implementing this multi-dimensional approach and looks forward to building upon progress made to date in partnership with all interested stakeholders.
Department of the Navy, Defense (DoD).
Notice; corrections.
The Department of the Navy published a document in the
Andréa M. Von Burg Hall, Navy PHNSY DD/WPF EIS Project Manager, by telephone (808–472–1425) or email (
In the
1. On page 57195, in the first column, correct the
The Navy is initiating a 35-day public scoping process beginning on September 15, 2020 and extending through October 19, 2020. The purpose of the public scoping process is to identify community interests and to receive comments on the scope of the EIS and the project's potential to affect historic properties pursuant to Section 106 of the National Historic Preservation Act of 1966, including identification of potential alternatives, information, and analyses relevant to the proposed action. This public scoping process starts with the publication of this Notice of Intent. The Navy is providing two web-based platforms for the public to learn about the Proposed Action and provide scoping comments. All comments are due by October 19, 2020. The Navy intends to publish the Draft EIS in July of 2021, the Final EIS in April 2022 with a Record of Decision signed in September 2022.
2. On page 57195, in the first column, correct the second sentence in paragraph 1. of the
3. On page 57195, in the second column, correct
The purpose of the Proposed Action is to provide appropriate DD capacity at PHNSY & IMF to meet depot maintenance requirements and to provide a properly sized and configured WPF to enable efficient submarine maintenance.
The Navy proposes DD replacement at PHNSY & IMF capable of performing depot‐level maintenance on current and future fast-attack submarines. To meet the purpose and need, the Navy's Proposed Action is to construct and operate a graving DD replacement and WPF at PHNSY & IMF, including permanent ancillary facilities such as new power and utilities. A graving or excavated DD is one that is constructed on land near the shore, using concrete. Other construction‐related actions would include dredging, upgrade or replacement of new in-water structures, demolition of existing upland structures, and construction of new upland facilities.
The Navy has identified four preliminary action alternatives to carry forward for analysis in the EIS along with the No Action alternative. These alternatives will be further refined based on input received from the public and resource agencies during scoping.
Alternative 1 (No Action Alternative) would be no change from the status quo. A submarine DD replacement and WPF would not be built, and PHNSY & IMF would continue to service submarines using its existing infrastructure. Following the phasing out of the Los Angeles Class submarine in 2022, DD 3 would no longer be capable of servicing any active submarines due to size limitations.
Alternative 2 would consist of a covered graving DD replacement and bridge crane. A new WPF would be located east of the DD, servicing both the replacement DD and DD #2.
Alternative 3 would consist of a covered graving DD replacement and bridge crane. A new WPF would be located west of the DD and would service only the replacement DD.
Alternative 4 would consist of an uncovered graving DD replacement,
Alternative 5 would consist of an uncovered graving DD replacement, operated using a portal or gantry crane. A new WPF would be located west of the DD and would service only the DD replacement.
Environmental issues and resource areas to be examined in the EIS include, but are not limited to the following: Cultural Resources, Visual Resources, Public Health and Safety, Land Use, Socioeconomics, Environmental Justice, Soils, Water Quality, Topography and Geology, Air Quality, Terrestrial Biology, Marine Biology, Traffic, Marine Navigation, Noise, Utilities, and Hazardous Materials. Based on a preliminary evaluation of these resources, the Navy expects impacts on marine and cultural resources due to construction of the DD replacement and WPF. Additionally, temporary traffic impacts could result from construction activity. The EIS will also analyze measures that would avoid, minimize, or mitigate environmental effects.
Additionally, the Navy will conduct all coordination, consultation, and permitting activities required by the National Historic Preservation Act, the Endangered Species Act, the Magnuson‐Stevens Fishery Conservation and Management Act, the Clean Water Act, the Coastal Zone Management Act, and other laws and regulations determined to be applicable to the project.
The Navy encourages federal, state, and local agencies, and interested persons to provide comments concerning the alternatives proposed for study and environmental issues for analysis in the EIS, as well as to identify specific environmental resources that the Navy should consider when developing the Draft EIS. The Navy will prepare the Draft EIS, including analysis of potential effects to those resources, which the Navy and the commenting public has identified. All comments received during the public scoping period will receive consideration during EIS preparation.
Written comments on the scope of the EIS or the project's potential to affect historic properties pursuant to Section 106 of the National Historic Preservation Act of 1966 can be mailed or submitted electronically via the virtual Open House. To receive consideration, comments submitted by mail must be postmarked no later than October 19, 2020. Comments may be mailed to the following address: Naval Facilities Engineering Command Pacific, Attn: PHNSY DD/WPF EIS Project Manager, 258 Makalapa Drive, Suite 100, Joint Base Pearl Harbor-Hickam, HI 96860–3134.
Comments may also be submitted electronically through the EIS website at
Office of Fossil Energy, Department of Energy.
Notice of open meeting.
This notice announces a meeting of the National Coal Council (NCC). The Federal Advisory Committee Act requires that public notice of these meetings be announced in the
Friday, October 23, 2020; 1:00 to 3:15 p.m. (EST)
This will be a virtual meeting conducted through WebEx. If you wish to join the meeting you must register by close of business (5:00 p.m. EST) on Tuesday, October 20, 2020, by using the form available at the following URL:
Thomas Sarkus, U.S. Department of Energy, National Energy Technology Laboratory, Mail Stop 920–125, P.O. Box 10940, Pittsburgh, PA 15236–0940; Telephone: (412) 386–5981; email:
1. Call to order and opening remarks by Steven Winberg, NCC Designated Federal Officer & Assistant Secretary for Fossil Energy, U.S. Department of Energy;
2. Keynote remarks by U.S. Department of Energy representative—To Be Determined;
3. Keynote remarks by Jeffrey C. Grossman, Department Head, Department of Materials Science & Engineering, Massachusetts Institute of Technology on developments in coal-to-products technology development;
4. Presentation by Shannan Banaga, Esq., Managing Director Strategic Communications and Ken Ditzel, Managing Director Economic Consulting with FTI Consulting on the future outlook for the energy sector;
5. Public Comment Period;
6. Other Business—Election of NCC Chair and Vice Chair for 2020–2021; and
7. Adjourn.
All attendees are requested to register in advance for the meeting at:
Office of Fossil Energy, Department of Energy.
Notice of application.
The Office of Fossil Energy (FE) of the Department of Energy (DOE) gives notice (Notice) of receipt of an Application for Limited Amendment (Application), filed on August 14, 2020, by Golden Pass LNG Terminal, LLC (Golden Pass LNG). Previously, in DOE/FE Order No. 3978, DOE/FE authorized Golden Pass LNG to export domestically produced liquefied natural gas (LNG) from the proposed Golden Pass LNG Terminal to any country with which the United States does not have a free trade agreement (FTA) requiring national treatment for trade in natural gas, and with which trade is not prohibited by U.S. law or policy (non-FTA countries). The Application requests a limited amendment of Order No. 3978 to increase the approved non-FTA export volume from 808 billion cubic feet per year (Bcf/yr) to 937 Bcf/yr of natural gas—an increase of 129 Bcf/yr. Golden Pass LNG filed the Application under section 3 of the Natural Gas Act (NGA).
Protests, motions to intervene, or notices of intervention, as applicable, requests for additional procedures, and written comments are to be filed using procedures detailed in the Public Comment Procedures section no later than 4:30 p.m., Eastern time, November 17, 2020.
Benjamin Nussdorf or Amy Sweeney, U.S. Department of Energy (FE–34), Office of Regulation, Analysis, and Engagement, Office of Fossil Energy, Forrestal Building, Room 3E–042, 1000 Independence Avenue SW, Washington, DC 20585, (202) 586–7893 or (202) 586–2627,
Cassandra Bernstein, U.S. Department of Energy (GC–76), Office of the Assistant General Counsel for Electricity and Fossil Energy, Forrestal Building, 1000 Independence Avenue SW, Washington, DC 20585, (202) 586–9793,
Golden Pass LNG states that, on May 21, 2020, it filed an application with the Federal Energy Regulatory Commission (FERC) requesting to amend its existing FERC order for the proposed Golden Pass LNG Terminal—to be located in Jefferson County, Texas—to increase the Terminal's authorized maximum LNG production capacity. Golden Pass LNG states that, in the Application filed in this proceeding, it seeks to align its authorized LNG export quantity based on the maximum LNG production capacity requested in its pending FERC application. Specifically, Golden Pass LNG asks DOE/FE to increase its approved non-FTA exports in DOE/FE Order No. 3978
Additional details can be found in Golden Pass LNG's Application, posted on the DOE/FE website at:
In reviewing Golden Pass LNG's Application, DOE will consider any issues required by law or policy. DOE will consider domestic need for the natural gas, as well as any other issues determined to be appropriate, including whether the arrangement is consistent with DOE's policy of promoting competition in the marketplace by allowing commercial parties to freely negotiate their own trade arrangements. As part of this analysis, DOE will consider the study entitled,
Additionally, DOE will consider the following environmental documents:
•
•
•
Parties that may oppose this Application should address these issues and documents in their comments and protests, as well as other issues deemed relevant to the Application.
The National Environmental Policy Act (NEPA), 42 U.S.C. 4321
In response to this Notice, any person may file a protest, comments, or a motion to intervene or notice of intervention, as applicable. Interested parties will be provided 60 days from the date of publication of this Notice in which to submit comments, protests, motions to intervene, or notices of intervention.
Any person wishing to become a party to the proceeding must file a motion to intervene or notice of intervention. The filing of comments or a protest with respect to the Application will not serve to make the commenter or protestant a party to the proceeding, although protests and comments received from persons who are not parties will be considered in determining the appropriate action to be taken on the Application. All protests, comments, motions to intervene, or notices of intervention must meet the requirements specified by the regulations in 10 CFR part 590.
Filings may be submitted using one of the following methods: (1) Emailing the filing to
A decisional record on the Application will be developed through responses to this Notice by parties, including the parties' written comments and replies thereto. Additional procedures will be used as necessary to achieve a complete understanding of the facts and issues. If an additional procedure is scheduled, notice will be provided to all parties. If no party requests additional procedures, a final Opinion and Order may be issued based on the official record, including the Application and responses filed by parties pursuant to this Notice, in accordance with 10 CFR 590.316.
The Application is available for inspection and copying in the Office of Regulation, Analysis, and Engagement docket room, Room 3E–042, 1000 Independence Avenue SW, Washington, DC 20585. The docket room is open between the hours of 8:00 a.m. and 4:30 p.m., Monday through Friday, except Federal holidays. The Application and any filed protests, motions to intervene, notices of interventions, and comments will also be available electronically by going to the following DOE/FE Web address:
This is a supplemental notice in the above-referenced 64NB 8me LLC's application for market-based rate authority, with an accompanying rate tariff, noting that such application includes a request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability.
Any person desiring to intervene or to protest should file with the Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC 20426, in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone filing a motion to intervene or protest must serve a copy of that document on the Applicant.
Notice is hereby given that the deadline for filing protests with regard to the applicant's request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability, is October 5, 2020.
The Commission encourages electronic submission of protests and interventions in lieu of paper, using the FERC Online links at
Persons unable to file electronically may mail similar pleadings to the Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC 20426. Hand delivered submissions in docketed proceedings should be delivered to Health and Human Services, 12225 Wilkins Avenue, Rockville, Maryland 20852.
In addition to publishing the full text of this document in the
Take notice that the Commission received the following electric corporate filings:
Take notice that the Commission received the following electric rate filings:
The filings are accessible in the Commission's eLibrary system (
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
This is a supplemental notice in the above-referenced 91MC 8me, LLC's application for market-based rate authority, with an accompanying rate tariff, noting that such application includes a request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability.
Any person desiring to intervene or to protest should file with the Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC 20426, in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone filing a motion to intervene or protest must serve a copy of that document on the Applicant.
Notice is hereby given that the deadline for filing protests with regard to the applicant's request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability, is October 5, 2020.
The Commission encourages electronic submission of protests and interventions in lieu of paper, using the FERC Online links at
Persons unable to file electronically may mail similar pleadings to the Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC 20426. Hand delivered submissions in docketed proceedings should be delivered to Health and Human Services, 12225 Wilkins Avenue, Rockville, Maryland 20852.
In addition to publishing the full text of this document in the
Environmental Protection Agency (EPA).
Notice.
The Environmental Protection Agency (EPA) is amending its Environmental Impact Statement (EIS) Filing System Guidance. The purpose of the EPA EIS Filing System Guidelines is to provide guidance to Federal agencies on filing EISs, including draft, final, and supplemental EISs.
The amended EIS Filing System Guidance is available on the date of publication of this notice.
The amended EIS Filing System Guidance is available via the internet at
Julie Roemele, NEPA Compliance Division, Office of Federal Activities, Mail Code 2203A, Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460; telephone number: 202–564–5632; fax number: 202–564–0070; email address:
On October 7, 1977, the Council of Environmental Quality (CEQ) and the Environmental Protection Agency (EPA) signed a Memorandum of Agreement (MOA) that allocated the responsibilities of the two agencies for assuring the government-wide implementation of the National Environmental Policy Act of 1969 (NEPA). Specifically, the MOA transferred to EPA the administrative aspects of the environmental impact statement (ElS) filing process. Within EPA, the Office of Federal Activities has been designated the official recipient in EPA of all EISs. These responsibilities have been codified in CEQ's NEPA Implementing Regulations (40 CFR parts 1500–1508), and are totally separate from the substantive EPA reviews performed pursuant to both NEPA and Section 309 of the Clean Air Act.
Under 40 CFR 1506.10, EPA can issue guidelines to implement its EIS filing responsibilities. The purpose of the EPA Filing System Guidelines is to provide guidance to Federal agencies on filing EISs, including draft, final, and supplemental EISs. Information is provided on: (1) How to file EISs; (2) the steps to follow when a Federal agency is adopting an EIS, or when an EIS is withdrawn, delayed or reopened; (3) public review periods; (4) issuance of notices of availability in the
The guidelines published today update the previous guidelines, which were first published in the
Pursuant to 40 CFR 1506.10 and 1506.11, EPA is responsible for administering the EIS filing process, and can issue guidelines to implement those responsibilities. The process of EIS filing includes the following: (1) Receiving and recording of the EISs, so that information in them can be incorporated into EPA's electronic EIS database; (2) establishing the beginning and ending dates for comment and review periods for draft and final EISs, respectively; (3) publishing these dates in a weekly Notice of Availability (NOA) in the
Federal agencies are required to prepare EISs in accordance with 40 CFR part 1502, and to file the EISs with EPA as specified in 40 CFR 1506.10.
As of October 1, 2012, Federal agencies file an EIS by submitting the complete EIS, including appendices, to EPA through the e-NEPA electronic filing system.
Please note that if a Federal agency prepares an abbreviated Final EIS (as described in 40 CFR 1503.4(c)), it should include a new cover sheet on the Draft EIS when filing it as the Final EIS. To sign up for e-NEPA, register for an account at
Once received by EPA, each EIS is assigned an official filing date and checked for completeness and compliance with 40 CFR 1502.10. If the EIS is not “complete” (
The EIS submittal deadline is on Mondays at 10:00 a.m. Eastern Time for publication that same week in Friday's
The EISs must be filed no earlier than they are transmitted to participating agencies and made available to the public (40 CFR 1506.10). This will assure that the EIS is received by all interested parties by the time EPA's NOA appears in the
EPA must be notified when a Federal agency adopts an EIS in order to commence the appropriate comment or review period. If a Federal agency chooses to adopt an EIS written by another agency, and it was not a cooperating agency in the preparation of the original EIS, the EIS must be republished and filed with EPA according to the requirements set forth in 40 CFR 1506.3(b)(1). In turn, EPA will publish a NOA in the
When an agency adopts an EIS on which it served as a cooperating agency (40 CFR 1506.3(b)(2)), the document does not need to be republished for public comment or review; it is not necessary to file the EIS again with EPA.
EPA should also be notified of all situations where an agency has decided to withdraw, delay, or reopen a comment or review period on an EIS. Notifications can be sent by email to:
EPA will prepare a weekly report of all EISs filed during the preceding week for publication each Friday under an NOA in the
The minimum time periods set forth in 40 CFR 1506.11 (b), (c), and (d) are calculated from the date EPA publishes the NOA in the
Comment periods for draft EISs, draft supplements, and revised draft EISs will end 45 calendar days after publication of the NOA in the
If the lead agency extends the comment or review period after the publication of EPA's NOA, it must notify EPA of the extended comment or review period by submitting an official notification to EPA Office of Federal Activities. Official notification may be a signed letter on agency letterhead by an appropriate approving official or a copy of the agency's published
Agencies often publish (either in their EISs or individual notices to the public) a date by which all comments on an EIS are to be received; such actions are encouraged. However, agencies should ensure that the date they use is based on the date of publication of EPA's NOA in the
It should be noted that 40 CFR 1506.11(c) allows for an exception to the rules of timing. An exception may be made in the case of an agency decision which is subject to a formal internal appeal. Agencies should assure that EPA is informed when the agency determines to run the period for appeal of the decision concurrent with the 30-day review period so that it can be coordinated with EPA's NOA publication in the
Moreover, under 40 CFR 1506.11(e), EPA has the authority to extend or reduce the time periods on draft and final EISs based on a demonstration of “compelling reasons of national policy.” A lead agency request to EPA to reduce comment or review periods or another Federal agency (not the lead agency) request to formally extend a time period should be submitted in writing to the Director, Office of Federal Activities, and outline the reasons for the request. These requests can be submitted by email to:
Filed EISs are retained in the EPA EIS database and made available to the public through EPA's website. After a total of fifteen (15) years the EISs are transferred to the National Archives Records Administration. The retention schedule does not affect the availability of these electronic copies.
Environmental Protection Agency (EPA).
Notice.
Public notice is hereby given that the state of Utah has revised its Public Water System Supervision (PWSS) Program by establishing Administrative Penalty Authority that applies to its drinking water program. EPA has reviewed Utah's submittal, and determined that the Administrative Penalty Authority is no less stringent than the federal regulations. EPA is proposing to approve the Administrative Penalty Authority requirements for Utah. This approval action does not extend to public water systems in Indian country. Please see
Any interested parties may request a public hearing on this determination by October 19, 2020. Please see
Requests for a public hearing should be addressed to: Robert Clement by email at
Robert Clement, Drinking Water B Section, EPA Region 8, Denver, Colorado by email at
In accordance with the provisions of section 1413 of the Safe Drinking Water Act (SDWA), 42 U.S.C. 300g–2, and 40 CFR 142.13, public notice is hereby given that the state of Utah has revised its PWSS program by adopting federal regulations for the Penalty Authority Rule that correspond to the NPDWR in 40 CFR parts 141 and 142. EPA has reviewed Utah's regulations and determined they are no less stringent than the federal regulations. EPA is proposing to approve Utah's primacy revision for the Penalty Authority rule. This approval action does not extend to public water systems in Indian country as defined in 18 U.S.C. 1151. Please see
States with primary PWSS enforcement authority must comply with the requirements of 40 CFR part 142 to maintain primacy. They must adopt regulations that are at least as stringent as the NPDWRs at 40 CFR parts 141 and 142, as well as adopt all new and revised NPDWRs in order to retain primacy (40 CFR 142.12(a)).
EPA's approval of Utah's revised PWSS program does not extend to Indian country as defined in 18 U.S.C. 1151. Indian country in Utah generally includes (1) lands within the exterior boundaries of the following Indian reservations located within Utah, in part or in full: the Goshute Reservation, the Navajo Indian Reservation, the reservation lands of the Paiute Indian Tribe of Utah (Cedar Band of Paiutes, Kanosh Band of Paiutes, Koosharem Band of Paiutes, Indian Peaks Band of Paiutes and Shivwits Band of Paiutes), the Skull Valley Indian Reservation, the Uintah and Ouray Reservation (subject to federal court decisions removing certain lands from Indian country status within the Uintah and Ouray Reservation), and the Washakie Reservation; (2) any land held in trust by the United States for an Indian tribe; and (3) any other areas which are “Indian country” within the meaning of 18 U.S.C. 1151. EPA or eligible Indian tribes, as appropriate, will retain PWSS program responsibilities over public water systems in Indian country.
Any interested party may request a hearing on this determination within thirty (30) days of this notice. All requests shall include the following information: Name, address, and telephone number of the individual, organization, or other entity requesting a hearing; a brief statement of interest and information to be submitted at the hearing; and a signature of the interested individual or responsible official, if made on behalf of an organization or other entity. Frivolous or insubstantial requests for a hearing may be denied by the RA.
Notice of any hearing shall be given not less than fifteen (15) days prior to the time scheduled for the hearing and will be made by the RA in the
Please bring this notice to the attention of any persons known by you to have an interest in this determination.
Environmental Protection Agency (EPA).
Notice; request for comment.
As part of EPA's commitment to implementing Clean Water Act (CWA) objectives in a sustainable manner, EPA continues to enhance our understanding of the issues surrounding financial capability assessments (FCA) and seeks ways to move past the 1997 FCA Guidance and the 2014 FCA Framework. Consistent themes have emerged during discussions with stakeholders, such as the benefit of expanding on the flexibility available under the existing 1997 FCA Guidance and ensuring a consistent approach for implementing these flexibilities. The proposed 2020 FCA embraces these stakeholder priorities and provides tools to more easily articulate local financial circumstances, while advancing the mutual goal to protect clean water. The 2020 FCA directly incorporates relevant portions of the 1997 FCA Guidance and the 2014 FCA Framework as Appendices. When finalized, EPA expects to use the 2020 FCA to support negotiations of schedules for implementing CWA requirements for municipalities and local authorities. EPA is requesting comment on approaches for assessing financial capability of communities to meet CWA obligations.
Comments must be received on or before October 19, 2020.
You may send comments, identified by Docket ID No. EPA–HQ–OW–2020–0426, by the following method:
•
Sonia Brubaker, Office of Wastewater Management, Water Infrastructure Division (MC4204M), Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460; telephone number: (202) 564–0120; email address:
Water infrastructure is essential for healthy communities and the success of our local and national economies. Ensuring that adequate drinking water, wastewater, and stormwater infrastructure (collectively referred to as water infrastructure) is in place is critical for all communities to thrive. Additionally, as communities grow, they must spend capital to increase capacity of their water infrastructure, thus further complicating investment in aging infrastructure. Too often, the toughest infrastructure challenges are found in low-income and resource constrained communities that lack enough investment in water infrastructure. Collaborating with local decision makers to help ensure the proper collection and treatment of domestic sewage and wastewater is vital to public health and clean water, which is a key part of our mission at the EPA. EPA engages with local, state, and national stakeholders to understand the challenges and successes that communities experience in maintaining, replacing, and increasing the capacity of their water infrastructure.
Communities are facing substantial needs to invest in water infrastructure renewal, repair, and replacement. These investments are necessary to keep pace with the aging of critical water infrastructure, much of which is approaching or is already well past the end of its service life. Challenges associated with aging infrastructure can be exacerbated in economically stressed communities. A community may be relatively strong economically on the whole but have a significant number of low-income households, which further complicates matters. Overall, there is considerable variation across communities in terms of water infrastructure needs as well as the technical, managerial, and financial ability to make investments and meet public health and environmental regulatory obligations.
EPA recognizes that a single customer, or ratepayer, pays for both drinking water and wastewater services and often sees these costs reflected on one bill. Costs for stormwater services also impact customers in many communities. EPA acknowledges that critical infrastructure investment needs, including Clean Water Act (CWA) obligations, impact many communities at the same time, making investment in infrastructure challenging in many areas across the country. To address these challenges, EPA is requesting comment on a proposed 2020 Financial Capability Assessment (2020 FCA), which would expand the metrics EPA uses to consider a community's financial capability to fund its water obligations. Specific questions for public comment are identified throughout the proposed 2020 FCA and are summarized in Section IV of this
The proposed 2020 FCA is intended to provide flexibility to communities and offer templates and calculations that local authorities can use in assessing their financial capability to implement control measures needed to meet CWA obligations. The 2020 FCA incorporates aspects of EPA's 1997 Combined Sewer Overflows—Guidance for Financial Capability Assessment and Schedule Development (1997 FCA Guidance) and EPA's 2014 Financial Capability Assessment Framework for Municipal Clean Water Act Requirements (2014 FCA Framework). Once finalized, EPA intends to use the 2020 FCA to evaluate the affordability of CWA control measures applicable to municipalities in both the permitting and enforcement context, including upgrades to publicly owned treatment works; control measures to address combined sewer overflows (CSOs), sanitary sewer overflows (SSOs), stormwater, and total maximum daily loads; and integrated planning. EPA does not intend to use this guidance to evaluate the affordability of the public health protections required by the Safe Drinking Water Act (SDWA), although EPA does employ compliance schedules in that context as well, where appropriate and consistent with protecting public health.
In addition, the 1997 FCA Guidance is substantively identical to the public sector sections of the 1995 Interim Economic Guidance for Water Quality Standards (1995 WQS Guidance)
EPA is requesting public comment on the proposed 2020 Financial Capability Assessment. The proposed 2020 FCA implements a range of ideas generated from recent stakeholder engagement to better support affordability of water services in our nation's communities. This proposal explores how a customer's ability to pay for services impacts the affordability of capital
This proposal references the financial capability indicators described in EPA's 1997 FCA Guidance. In addition to the 1997 FCA Guidance, this proposal also references the 2014 FCA Framework, developed in support of EPA's Integrated Planning Framework,
EPA is committed to working with state, tribal, local, and non-government partners to assist communities in meeting CWA obligations in a manner that recognizes unique local financial challenges. The proposed 2020 FCA sets forth two alternatives for assessing financial capability that a community may choose to employ. The first alternative adopts the residential indicator approach from the 1997 FCA Guidance, but adds elements to address how the lowest household incomes and other poverty indicators in a service area can be considered in addition to metrics from the 1997 FCA Guidance, such as a community's median household income (MHI). Additional information, such as a community's total water costs (
EPA seeks public comment on the proposed 2020 FCA, the metrics considered, and the thresholds for selected metrics. See Section IV of this
1.
• Identify the guidance by docket number and other identifying information (subject heading,
• Follow directions—the agency may ask you to respond to specific questions or organize comments by referencing a Code of Federal Regulations (CFR) part or section number.
• Explain why you agree or disagree; suggest alternatives and substitute language for your requested changes.
• Describe any assumptions and provide any technical information and/or data that you used.
• Provide specific examples to illustrate your concerns and suggest alternatives.
• Explain your views as clearly as possible.
• Make sure to submit your comments by the comment period deadline identified.
2.
The EPA is temporarily suspending its Docket Center and Reading Room for public visitors, with limited exceptions, to reduce the risk of transmitting COVID–19. Our Docket Center staff will continue to provide remote customer service via email, phone, and webform. We encourage the public to submit comments via
The EPA continues to carefully and continuously monitor information from the Centers for Disease Control and Prevention (CDC), local area health departments, and our Federal partners so that we can respond rapidly as conditions change regarding COVID–19.
EPA's 1997 FCA Guidance sets forth a two-phased approach for evaluating a National Pollutant Discharge Elimination System (NPDES) permittee's financial capability to implement CWA NPDES projects. In the first phase, the Residential Indicator (RI) calculates the cost per household as a percentage of MHI for the service area of the permittee using data collected by the U.S. Census Bureau. In the second phase, the Financial Capability Indicator (FCI) evaluates the municipality or wastewater utility's overall fiscal health and local demographics relative to national norms. The RI and FCI results are brought together in a matrix that evaluates the burden a proposed CWA program imposes on the municipality or utility (high, medium, or low). This two-phased approach is referred to as the Financial Capability Assessment (FCA). Though developed for use in assessing the affordability of CSO controls, EPA also has used the 1997 FCA Guidance when negotiating schedules to implement SSO controls.
The 2014 FCA Framework was developed to encourage the use of the flexibility available under the 1997 FCA Guidance. Both the 1997 FCA Guidance and the 2014 FCA Framework were developed with extensive public input and are based on factors for consideration of financial capability
Communities, in consultation with regulators and the public, are responsible for evaluating and selecting controls that will meet CWA requirements. After controls have been selected, an FCA is used to aid in assessing a community's financial capability as a part of negotiating implementation schedules under both permits and enforcement agreements. EPA has used both the 1997 FCA Guidance and the 2014 FCA Framework to support consent decree negotiations with over 100 wastewater utilities throughout the United States and U.S. territories. The results of the FCA analyses provide an important benchmark for EPA decision-makers to consider in CWA permitting and enforcement actions to support consistency across the country.
EPA does not view or use the 1997 FCA as a rigid metric that points to a given schedule length or threshold over which the costs are unaffordable. It is a common misconception that the FCA can be used to cap spending on CWA programs or projects at a percentage of MHI. The FCA does not remove obligations to comply with the CWA nor does it reduce regulatory requirements.
As part of the 2016 Appropriation, Congress directed EPA to contract with the National Academy of Public Administration (NAPA)
NAPA issued its report, “Developing a New Framework for Community
• Recommendations regarding EPA's 1997 FCA Guidance and the 2014 FCA Framework:
○ Recommendation to improve the RI and the FCI metrics in the 1997 FCA Guidance; the metrics used should meet the following criteria:
Readily available from publicly available data sources;
Clearly defined and understood;
Simple, direct, and consistent;
Valid and reliable measures, according to conventional research standards; and
Applicable for comparative analyses among permittees.
○ Recommendation to include all water costs (Clean Water Act and Safe Drinking Water Act) and to focus on the income of the low-income users rather than MHI when considering burdens to communities of the costs of CSO control measures.
○ Recommendation to expand the socioeconomic components affecting the community's market conditions to include trends in population, relative wealth, economic growth, and other economic structural problems in the community.
• Recommendations regarding EPA's Integrated Planning Framework:
○ Recommendation to provide additional technical assistance to municipalities seeking to develop integrated plans.
○ Recommendation to allow municipalities to develop an integrated plan as a primary step for addressing regulatory requirements with “formalized agreements” between the municipality, the state, and EPA.
• Recommendations on EPA's cost/benefit analysis and financing for water infrastructure.
In response to NAPA's report, EPA reviewed current guidances that address household and community financial capability within EPA's water program. Three guidance documents were reviewed:
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In addition, EPA researched affordability at both the household and community level for essential services such as drinking water, wastewater, stormwater, housing, energy, and others.
The National Association of Counties, the National League of Cities, and the U.S. Conference of Mayors have expressed concerns regarding “EPA's reliance on 2% Median Household Income to determine a community's financial capability.” The groups are concerned that the MHI metric puts an “unfair and oppressive financial burden on low- and middle-income citizens.”
In April 2019, AWWA, NACWA, and the Water Environment Federation (WEF) jointly submitted a report to EPA titled “Developing a New Framework for Household Affordability and Financial Capability Assessment in the Water Sector.”
• All water sector costs (drinking water, wastewater, and stormwater);
• Utility revenue and customer bills rather than the cost of CSO control measures;
• Lowest Quintile Income (LQI) and Federal Poverty Levels (FPL); and
• Forward-looking analysis/long-term cash flow forecasting.
Individual utilities have met with EPA to discuss concerns surrounding affordability of providing drinking water, wastewater, and stormwater services. The utilities identified household affordability challenges in paying bills for these services as well as in the utility's ability to pay for infrastructure renewal along with costs of regular operation and maintenance and workforce needs.
The proposed 2020 FCA advances the ability of communities to more accurately demonstrate the financial burdens they face and increases the transparency of EPA's considerations as it endeavors to consistently apply FCA methodologies across the country. With the proposed 2020 FCA, EPA intends to allow communities to easily submit information that may indicate the entire community's capability to fund CWA projects/programs. Specifically, the proposed 2020 FCA includes templates and calculations that communities can use when submitting information for consideration regarding LQI, drinking water costs, financial models or studies, and other relevant areas. The templates and calculations include references that direct the community to the applicable publicly available data sources.
The proposed 2020 FCA sets forth two alternative general approaches for assessing a community's financial capability to carry out CWA control measures. The first alternative is the existing 1997 FCA methodology with expanded consideration of costs, poverty, and impacts on the population in the service area with incomes in the lowest quintile. The first alternative may be employed by the community or by EPA for the community, as it involves use of publicly available information. Communities with lower cost control measures or an ability to self-finance the cost of CWA controls may wish to employ the first alternative due to its simplicity.
The second alternative is the development of a dynamic financial and rate model that looks at the impacts of rate increases over time on utility customers, including those with incomes in the lowest quintile. Communities with more expensive CWA obligations may choose to employ the second alternative, given its more sophisticated evaluation of affordability over time. However, if a community chooses the second alternative, it must conduct the analysis itself as it involves information known only to the community.
For use in the first alternative, relevant portions of the 1997 FCA Guidance and the 2014 FCA Framework are included as Appendices to the FCA Supplement. While the structure of the
Based on stakeholder feedback, EPA is basing its LQI metric on data that is available in the ACS. The ACS is conducted every year by the U.S. Census Bureau to provide up-to-date information about the social and economic conditions of communities. The annual updates include key socio-demographic information and can be provided to a fine level of geographic granularity with historic continuity. The ACS can produce data showing the quintiles of household income (each quintile defines the household income range for 20% of a community's households). Use of LQI as an FCA metric meets the following criteria proposed by NAPA:
• Readily available from publicly available data sources;
• Clearly defined and understood;
• Simple, direct, and consistent;
• Valid and reliable measures, according to conventional research standards; and
• Applicable for comparative analyses among permittees.
The proposed 2020 FCA can help to ensure that local challenges related to low-income households are better reflected in CWA implementation schedules. The types of data provided in Alternative 1 of the 2020 FCA are not exhaustive; and consistent with previous policy, EPA will consider any relevant financial or demographic information presented that illustrates the unique or atypical circumstances faced by a community.
Consideration of affordability requires certain information. Alternative 1 of the proposed 2020 FCA recommends analyzing both the first phase (RI) and the second phase (FCI) of the two-phased approach in the 1997 FCA Guidance as critical metrics and adds two new critical metrics: The Lowest Quintile Residential Indicator (LQRI) and the Poverty Indicator (PI). These four critical metrics would be calculated by EPA or the community and would be considered equally. It should be emphasized that these four recommended critical metrics might not present the most complete picture of a community's financial capability to fund its CWA requirements. However, these metrics do provide a common basis for financial burden discussions among the community, the state or tribe, and EPA. Since flexibility is an important aspect of the CWA, communities are encouraged to submit any additional documentation (other metrics) for consideration that would create a more accurate and complete picture of their financial capability. Alternative 2 of the proposed 2020 FCA recommends analyzing a financial and rate model in addition to calculating the Poverty Indicator Score.
The proposed 2020 FCA also includes Other Metrics with Standardized Instructions, as well as Other Metrics with Submission of Information to be Determined by the Community. Significant consideration will be given to drinking water costs as well as the cost of meeting CWA obligations. Consideration of other metrics is permitted under either Alternative 1 or 2 and may support an implementation schedule that goes beyond the schedule benchmarks applicable to Alternative 1 in Exhibit 6. However, EPA does not anticipate establishing implementation schedules that would exceed the useful life of the community's water infrastructure assets.
• Residential Indicator—cost per household as a percentage of MHI
• Financial Capability Indicator—six socioeconomic, debt, and financial indicators used to benchmark a community's financial strength
• Lowest Quintile Residential Indicator—cost per low-income household as a percentage of the lowest quintile income
• Poverty Indicator—five poverty indicators used to benchmark the prevalence of poverty throughout the service area
• Financial and Rate Models
• Poverty Indicator
• Drinking Water Costs
• Potential Bill Impact Relative to Household Size
• Customer Assistance Programs
• Asset Management Costs
• Stormwater Management Costs
Schedule Development
The proposed 2020 FCA is available at:
EPA requests public comment on the proposed 2020 FCA. Specifically, EPA is requesting comments on the following:
1. Should EPA's previous FCA documents be consolidated into the 2020 FCA, as proposed, or should EPA continue to use the 1997 FCA Guidance as the controlling guidance with the 2020 revisions serving as a supplement?
2. In addition to the data sets that are discussed in this document, what other data sets are you aware of that meet NAPA's criteria as identified in the October 2017 report, “Developing a New Framework for Community Affordability of Clean Water Services”?
3. What additional resources are publicly available that can be used to assess financial capability (
4. What additional examples, calculations, or templates would you like EPA to develop to assist with assessing financial capability?
5. EPA invites comment on the appropriateness of using the four recommended critical metrics to assess financial capability and what their relative importance in considering financial capability should be.
6. What supplemental information is relevant to support implementation schedules that go beyond the proposed benchmarks in Exhibit 6?
7. Is EPA distinguishing appropriately between critical and other metrics?
8. EPA is seeking comment on the proposed methodology for calculating the ratio for lowest quintile household size to median household size.
9. EPA invites public comment on whether adjusting the LQRI based on household size is appropriate or if there are other ways to calculate a residential indicator for LQI households.
10. EPA is seeking comment on whether the same benchmarks for assessing the MHI Residential Indicator should be used for assessing the Lowest Quintile Residential Indicator (LQRI), as proposed, or if different benchmarks should be used.
11. EPA is seeking comment on the list of proposed poverty indicators and on whether the bracketing of the middle 50% is an appropriate method to benchmark the proposed poverty indicators.
12. EPA is seeking public comment on the proposed schedule benchmarks in Exhibit 6.
13. What other resources, in addition to those listed in Section IV of the proposed 2020 FCA (Resources), are available to assist communities related to water infrastructure financing?
14. EPA is seeking comment on whether additional detail can be provided to better understand implementation of Alternative 2.
15. Should drinking water costs be considered as part of scheduling considerations and are there appropriate benchmarks for considering the contribution of drinking water costs to household burdens, such as a specific percentage of income?
16. EPA is also considering how the LQRI, PI, and other metrics and thresholds discussed in this
Section 309(a) of the Clean Air Act requires that EPA make public its comments on EISs issued by other Federal agencies. EPA's comment letters on EISs are available at:
Revision to FR Notice Published 8/7/2020; Extending the Comment Period from 9/21/2020 to 10/5/2020.
Federal Communications Commission.
Notice of public meeting.
In accordance with the Federal Advisory Committee Act, this notice advises interested persons that the Federal Communications Commission's (FCC or Commission) Task Force for Reviewing the Connectivity and Technology Needs of Precision Agriculture in the United States (Task Force) will hold its fourth meeting via live internet link.
October 28, 2020. The meeting will come to order at 9:30 a.m. EDT.
The meeting will be held via conference call and available to the public via live feed from the FCC's web page at
Jesse Jachman, Designated Federal Officer, Federal Communications Commission, Wireline Competition Bureau, (202) 418–2668, or email:
The meeting will be held on October 28, 2020, at 9:30 a.m. EDT and may be viewed live, by the public, at
Open captioning will be provided for this event. Other reasonable accommodations for people with disabilities are available upon request. Requests for such accommodations should be submitted via email to
Tuesday, September 22, 2020 at 10 a.m.
1050 First Street, NE, Washington, DC (This meeting will be a virtual meeting).
This meeting will be closed to the public.
Compliance matters pursuant to 52 U.S.C. 30109. Investigatory records compiled for law enforcement purposes and production would disclose investigative techniques.
Information, the premature disclosure of which would be likely to have a considerable adverse effect on the implementation of a proposed Commission action. Matters concerning participation in civil actions or proceedings or arbitration.
Judith Ingram, Press Officer, Telephone: (202) 694–1220.
The companies listed in this notice have applied to the Board for approval, pursuant to the Home Owners' Loan Act (12 U.S.C. 1461
The public portions of the applications listed below, as well as other related filings required by the Board, if any, are available for immediate inspection at the Federal Reserve Bank(s) indicated below and at the offices of the Board of Governors. This information may also be obtained on an expedited basis, upon request, by contacting the appropriate Federal Reserve Bank and from the Board's Freedom of Information Office at
Comments regarding each of these applications must be received at the Reserve Bank indicated or the offices of the Board of Governors, Ann E. Misback, Secretary of the Board, 20th Street and Constitution Avenue NW, Washington DC 20551–0001, not later than October 19, 2020.
1.
1.
Centers for Medicare & Medicaid Services, Health and Human Services (HHS).
Notice.
The Centers for Medicare & Medicaid Services (CMS) is announcing an opportunity for the public to comment on CMS' intention to collect information from the public. Under the Paperwork Reduction Act of 1995 (the PRA), federal agencies are required to publish notice in the
Comments must be received by November 17, 2020.
When commenting, please reference the document identifier or OMB control number. To be assured consideration, comments and recommendations must be submitted in any one of the following ways:
1.
2.
To obtain copies of a supporting statement and any related forms for the proposed collection(s) summarized in this notice, you may make your request using one of following:
1. Access CMS' website address at website address at
2. Call the Reports Clearance Office at (410) 786–1326.
William N. Parham at (410) 786–4669.
This notice sets out a summary of the use and burden associated with the following information collections. More detailed information can be found in each collection's supporting statement and associated materials (see
Under the PRA (44 U.S.C. 3501–3520), federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. The term “collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) and includes agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA requires federal agencies to publish a 60-day notice in the
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The data will also include the variables on the eight item Kansas City Cardiomyopathy Questionnaire (KCCQ–10) to assess heath status, functioning and quality of life. In the KCCQ, an overall summary score can be derived from the physical function, symptoms (frequency and severity), social function and quality of life domains. For each domain, the validity, reproducibility, responsiveness and interpretability have been independently established. Scores are transformed to a range of 0–100, in which higher scores reflect better health status.
The conduct of the STS/ACC TVT Registry and the KCCQ–10 is in accordance with Section 1142 of the Social Security Act (the Act) that describes the authority of the Agency for Healthcare Research and Quality (AHRQ). Under section 1142, research may be conducted and supported on the outcomes, effectiveness, and appropriateness of health care services and procedures to identify the manner in which disease, disorders, and other health conditions can be prevented, diagnosed, treated, and managed clinically. Section 1862(a)(1)(E) of the Act allows Medicare to cover under coverage with evidence development (CED) certain items or services for which the evidence is not adequate to support coverage under section 1862(a)(1)(A) and where additional data gathered in the context of a clinical setting would further clarify the impact of these items and services on the health of beneficiaries.
The data collected and analyzed in the TVT Registry will be used by CMS to determine if the TAVR is reasonable and necessary (
2.
MSP is generally divided into “pre-payment” and “post-payment” activities. Pre-payment activities are generally designed to stop mistaken primary payments in situations where Medicare should be secondary. Medicare post-payment activities are designed to recover mistaken payments or conditional payments made by Medicare where there is a contested liability insurance (including self-insurance), no-fault insurance, or workers' compensation which has resulted in a settlement, judgment, award, or other payment. CMS specialty contractors perform most of the MSP activity.
The information is collected from applicable reporting entities for the purpose of coordination of benefits and the recovery of mistaken and conditional payments. Section 111 mandates the reporting of information in the form and manner specified by the Secretary, DHHS. Data the Secretary collects is necessary for both pre-payment and post-payment coordination of benefit purposes, including necessary recovery actions.
Both GHP and NGHP entities have had and continue to have the responsibility for determining when they are primary to Medicare and to pay appropriately, even without the mandatory Section 111 process, Insurers should always collect the NGHP, GHP and GHP prescription drug information that CMS requires in connection with Section 111 of the MMSEA.
3.
This information collection assists CMS, pharmacists, Part D plans, and other payers coordinate prescription drug benefits at the point-of-sale and track beneficiary True out-of-pocket (TrOOP) expenditures using the Part D Transaction Facilitator (PDTF).
The collected information will be used by Part D plans, other health insurers or payers, pharmacies and CMS to coordinate prescription drug benefits provided to the Medicare beneficiary. Part D plans share data with each other and with CMS. The types of data collected for sharing include enrollment data, other health insurance information, TrOOP and Gross drug spending and supplemental payer data.
4.
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing that a proposed collection of information has been submitted to the Office of Management and Budget (OMB) for review and clearance under the Paperwork Reduction Act of 1995.
Submit written comments (including recommendations) on the collection of information by October 19, 2020.
To ensure that comments on the information collection are received, OMB recommends that written comments be submitted to
Ila S. Mizrachi, Office of Operations, Food and Drug Administration, Three White Flint North, 10A–12M, 11601 Landsdown St., North Bethesda, MD 20852, 301–796–7726,
In compliance with 44 U.S.C. 3507, FDA has submitted the following proposed collection of information to OMB for review and clearance.
Section 1701(a)(4) of the Public Health Service Act (42 U.S.C. 300u(a)(4)) authorizes FDA to conduct research relating to health information. Section 1003(d)(2)(C) of the Federal Food, Drug, and Cosmetic Act (FD&C Act) (21 U.S.C. 393(d)(2)(C)) authorizes FDA to conduct research relating to drugs and other FDA regulated products in carrying out the provisions of the FD&C Act.
The Office of Prescription Drug Promotion's (OPDP) mission is to protect the public health, in part, by helping to ensure that prescription drug promotional material is truthful, balanced, and accurately communicated, so that patients and health care providers can make informed decisions about treatment options. OPDP's research program provides scientific evidence to help ensure that our policies related to prescription drug promotion will have the greatest benefit to public health. Toward that end, we have consistently conducted research to evaluate the aspects of prescription drug promotion that are most central to our mission. Our research focuses in particular on three main topic areas: Advertising features, including content and format; target populations; and research quality. Through the evaluation of advertising features, we assess how elements such as graphics, format, and disease and product characteristics impact the communication and understanding of prescription drug risks and benefits. Focusing on target populations allows us to evaluate how understanding of prescription drug risks and benefits may vary as a function of audience, and our focus on research quality aims at maximizing the quality of our research data through analytical methodology development and investigation of sampling and response issues. This study will inform all three topic areas.
Because we recognize that the strength of data and the confidence in the robust nature of the findings is improved by utilizing the results of multiple converging studies, we continue to develop evidence to inform our thinking. We evaluate the results from our studies within the broader context of research and findings from other sources, and this larger body of knowledge collectively informs our policies as well as our research program. Our research is documented on our homepage, which can be found at:
The present research involves assessment of how consumers and primary care physicians (PCPs) interpret terms and phrases commonly used in prescription drug promotion, as well as those used to describe prescription drugs and prescription drug promotion more generally. This includes both what these terms and phrases mean to each population (
We plan to conduct this research in two phases. First, we will conduct formative semi-structured interviews with 30 members of each population (general population consumers and PCPs). Second, we will conduct nationally representative, probability-based surveys of more than 1,000 members of each population on the same topic.
Participation is estimated to take 1 hour. Participants will be recruited by email through itracks and its partner panels. All participants will be 18 years of age or older and must not have participated in a focus group or interview during the previous 3 months. Additionally, for the consumer sample, we will exclude individuals who work in healthcare or marketing settings because their knowledge and experiences may not reflect those of the average consumer. For the PCP sample, we will exclude individuals who spend less than 50 percent of their time on patient care. Department of Health and Human Services employees and RTI International employees will be excluded from both respondent groups.
We will start data collection with a soft launch of three interviews per segment (10 percent) to ensure that all processes are working well. Although we do not intend on making major changes to the interview guides as a result of these soft launch interviews, they will provide an opportunity to make minor changes (
We also plan to embed an experiment in the PCP mail survey. Research has shown that including a pen in the survey package can help to increase response rates and time to response, even potentially reducing the number of reminders required (Refs. 1 and 2). However, the shipping of pens can be costly and often pens are damaged in the mail (
We set our sample requirements to a 95 percent confidence interval and a 3 percent margin of error assuming an underlying proportion of 0.50 in the population (which is the most conservative estimate and overestimates the sample size relative to alternate proportions). These parameters are commonly used in quantitative survey research (Refs. 3 to 6) and offer balance between precision and cost. Thus, assuming a total U.S. population of roughly 250 million adults aged 18 or older (Ref. 7), we estimate the number of completed surveys to be 1,067 for the general population survey. Assuming a total population of 209,000 PCPs (Ref. 8), with the same 95 percent confidence interval and ± 3 percent margin of error, we estimate the number of completed surveys for the provider survey to be 1,062. These sample sizes would also allow us to detect a mean difference between ± 0.15 and 0.30 points (Ref. 6).
In the
(Comment 1) Some comments supported the proposed research as an important step towards addressing current issues with U.S. prescription drug advertisement practices.
(Response) FDA agrees with these comments to the extent they relate to this study.
(Comment 2) A few comments suggested the proposed research methodology could be improved by providing the general population with the option to complete the survey in writing or over the phone. These comments asserted that elderly consumers are highly susceptible to false and misleading advertisements of prescription drugs, and that elderly consumers use prescription drugs at rates higher than any other age group. The comments also indicated that elderly populations may face barriers to accessing a web-based platform to complete the survey.
(Response) While we agree that web panel surveys can sometimes have less than ideal coverage of populations like older adults, the survey proposed here would not be sampling from a web panel, but would instead use a probability sample selected from an address-based sample frame to ensure a nationally-representative sample. This helps to ensure better coverage of older adults, who may be less likely to be part of an existing opt-in survey panel or less likely to answer a web-based ad to complete a survey than to respond to a mailed survey invitation. Pew research finds that 73 percent of people aged 65+ have access to the internet in their home compared to 90 percent for the overall U.S. population (Ref. 9). To address this coverage concern, responses from older adults will be weighted to the full U.S. population.
Our recent experience suggests we will be able to adequately represent this group. As an example, in a survey conducted by RTI on the Residential Energy Consumption Survey National Pilot, an analysis of representativeness among survey protocols found that for the older age group, web was less representative than a mixed mode survey allowing for either web-based or paper survey, but was still considered to have “good” agreement with the American Community Survey (considered the gold standard for U.S. demographic data).
(Comment 3) The comment indicated the proposed research methodology could be improved by including behavior-based questions in the surveys.
(Response) We agree about the value of measuring behavioral intentions in general. However, in this particular study, in which we are asking about a variety of terms and phrases used in prescription drug advertising that may or may not be relevant to all members of the sample, behavioral intention questions would not be appropriate. The drugs in question would not be relevant or salient for all consumers in the study. For example, a respondent will be able to answer questions about language used to describe migraine medication (
(Comment 4) The comment suggested that some of the longer contextual-based passages interviewees are presented with should include situations in which viewers/listeners are presented with previously seldom-used or new-to-the-public terms and phrases and an attempt at definition or generation of emotional valence by marketers.
(Response) The purpose of this study is for FDA to test understanding of terms “commonly used in prescription drug promotion.” Thus, those that have been “previously seldom-used” or are “new-to the-public” are outside the scope of the study and are not included in the survey materials.
The idea to study emotional valence is very interesting, but also beyond the scope of the current research.
(Comment 5) The comment included a note on the PCP mail surveys: Rather than focusing on incentivizing response via an object included with the PCP mail surveys, the comment suggested that research funds would be better spent ensuring the surveys are engaging, easily understood by the two target audiences, short to complete, and presented with a clear deadline.
(Response) We believe we have the capacity both to incentivize the response and to ensure the surveys are engaging. For example, we specifically designed the advance mailings (letters that will go to potential participants) to follow best practices for ensuring the study is engaging, such as stating the purpose and likely outcomes of the research in the letter and including a graphic to identify the study on the postcard or envelope.
Token incentives have been shown in the literature to have a real impact on response rates (Refs. 1 and 2), and increased response rates can save costs and potentially reduce nonresponse bias (if reluctant respondents are different from non-reluctant respondents). In fact, the literature has shown that even with short, engaging surveys, these types of token incentives can substantially boost response rates (Refs. 10–12).
(Comment 6) The comment suggested that the study population of healthcare providers should be expanded to include specialists.
(Response) While we understand that some of the topics may be relevant for specialists, and we do often include specialists in our research, our focus in the present research is on PCPs. Specialists are not as numerous as PCPs, which makes them harder to recruit. In 2018, for example, the proportion of specialists representing each specialty area ranged from 2 percent (endocrinologists) to 11 percent (psychiatrists and emergency medicine specialists) (Ref. 13). These data demonstrate that the pool of potentially eligible specialists is limited. Given the large required sample size for this study, we chose to limit the population to PCPs.
(Comment 7) The comment suggested that FDA should use additional context for certain terms to more accurately represent the way in which these terms are conveyed in promotion. Specifically, the comment requested that FDA add context for the following terms:
1. HCP assessment term of “significant (as in statistically significant)”: The comment stated that this term should be accompanied by a 95 percent confidence interval, hazard ratio, and p-value as additional data points.
2. HCP and consumer assessment phrases “manageable safety profile; established safety profile; well-studied safety profile; “well-tolerated”: The comment stated that these phrases should be accompanied by an example, such as a table showing most common adverse events.
(Response) Regarding the term “significant (as in statistically significant)” and the suggestion to add additional data points: Although references to statistical significance in the prescription drug promotion marketplace are sometimes accompanied by other statistical information, at other times they are not. In this assessment, we wish to assess understanding of this phrase on its own.
Regarding “manageable safety profile” and related phrases and the suggestion to add an example such as a table showing most common adverse events: Given the length of the current instruments, we are limited in what can be included. The scope of this study includes terms and phrases and not graphics or numbers. However, we recognize the importance of studying those features as well. Examples of research involving these features can be found on the OPDP research website, linked earlier in this document.
(Comment 8) The comment suggests that the following commonly used terms should be added to the assessment to increase the utility, quality and clarity of the information collected.
For consumers and HCP, the comment suggested adding:
1. “Potent” to assessment term “powerful;” and
2. New assessment term “convenient/straightforward/simple/easy/easy to use.”
For HCPs only, the comment suggested adding “high affinity.”
(Response) Thank you for these suggestions. We added “potent,” “convenient,” “straightforward,” “simple,” “easy”, and “easy to use” to the surveys. For “high affinity,” we have conducted several informal searches, but have not found sufficient examples of the use of this term in promotional materials.
(Comment 9) The comment noted that the surveys take terms and phrases out of context and suggests that FDA should study how consumers and PCPs interpret representative promotional pieces that include appropriate accompanying context.
(Response) This study is one in a program of related research conducted by OPDP. In several related studies, we examine how consumers and PCPs interpret the terms and phrases in representative promotional pieces that include accompanying context. In contrast to this prior research, the proposed research allows for assessment of a large number of terms and phrases—effectively emphasizing breadth over depth, and involving data collection from a nationally representative sample. We believe these various approaches to studying language commonly used in prescription drug promotion complement one another and together contribute to a more comprehensive understanding of the research questions.
(Comment 10) The comment suggested that questions in the surveys may be leading. In describing the proposed research, the 60-day notice stated, “For example, certain terms and
(Response) We agree that some of the probes proposed for use in the Phase 1 research may appear to be leading, so we have rewritten these probes. For example, where it said “safer,” we have altered language to “more” or “less” safe.
In the Phase 2 surveys, the safety and efficacy questions are not leading or one-sided. The questions use bipolar response scales allowing respondents to indicate that the products using that term are less safe/effective, equally as safe/effective, or more safe/effective.
(Comment 11) The comment suggested that the proposed answers in the closed-ended surveys are unbalanced.
(Response) We have reviewed the Phase 2 questions and made some edits to ensure more balance.
It is important to note that the response options shown for many of the questions are just examples. The full list of response options used in the Phase 2 surveys will be developed based on responses to the Phase 1 interviews. As a result, the Phase 2 response options may skew slightly negative or positive depending on what interview respondents say in the Phase 1 interviews. However, we will ensure that there is balance with both negative and positive response options.
(Comment 12) The comment suggested that by asking respondents to compare closely related terms and phrases, the survey may force artificial findings of difference. The comment stated that even if the measured differences are real (and not due to biases in the surveys), it is unclear how the results would have any practical utility because there may not be any objective definitions of the terms with which to compare the results.
(Response) We describe below the process to mitigate the effects of this concern.
• If participants in the Phase 1 research do not articulate differences between certain terms, we will exclude those terms from Phase 2. This will reduce the chance to find artificial differences between terms.
• We can also split question sets into multiple individual questions. We will make decisions surrounding this solution following completion of the Phase 1 interviews.
• For the consumer survey, which will be conducted online only, we will randomize the order in which the terms are presented. This will not eliminate context effects but will randomly distribute any error across terms rather than significantly biasing an individual term.
(Comment 13) The comment opined that the surveys, at least in the past, are unnecessarily duplicative of information otherwise reasonably accessible to FDA (
(Response) We believe the research is not duplicative of that conducted in 2014 by FDA, but instead builds on that research. It is being conducted by the same research team and is part of a coherent program of research that includes formative focus groups, in-depth interviews, a survey, and an experimental study. We used those focus group reports to inform the development of answer options for this study. The very few terms that are repeated in the current survey have been included in the current study because researchers wanted to follow up on previous findings with a larger, nationally representative sample. Furthermore, that study did not collect any quantitative data on the terms.
Literature searches in multiple medical, social science, and linguistics databases, including Pubmed, Web of Science, EBSCO Discovery Service, and Linguistics Database for research on how people quantify or interpret terms like “few” and “many” as we do in the present research did not reveal significant literature on these terms. It is important for FDA to understand how these terms are interpreted in the context of prescription drug promotion, thus we plan to keep them in the current study.
(Comment 14) A comment recommended that FDA remove questions about the terms “off-label” and “prescription drug promotion” as they are not terms used in promotion.
(Response) While “off label” and “prescription drug promotion” are not terms that are typically used in promotion, it is important for FDA to understand how healthcare providers perceive these terms in general. We have revised the description of the scope in the
(Comment 15) A comment recommended that FDA change the framing for the survey from a focus on “words or phrases that are commonly used in prescription drug advertising” to “words or phrases that are commonly used to describe prescription drugs.” The comment suggested that if the survey keeps the former, respondents will view the surveys through whatever biases they have for drug advertising.
(Response) Because it is our intention to examine what participants think in the context of prescription drug advertising, we have retained our original approach to framing the research, while also expanding that framing to reference terms or phrases that are commonly used to describe prescription drug promotion.
FDA estimates the burden of this collection of information as follows:
The following references marked with an asterisk (*) are on display at the Dockets Management Staff (see
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA or Agency) is announcing an opportunity for public comment on the proposed collection of certain information by the Agency. Under the Paperwork Reduction Act of 1995 (PRA), Federal Agencies are required to publish notice in the
Submit either electronic or written comments on the collection of information by November 17, 2020.
You may submit comments as follows. Please note that late, untimely filed comments will not be considered. Electronic comments must be submitted on or before November 17, 2020. The
Submit electronic comments in the following way:
•
• If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).
Submit written/paper submissions as follows:
•
• For written/paper comments submitted to the Dockets Management Staff, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”
• Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.” The Agency will review this copy, including the claimed confidential information, in its consideration of comments. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on
Ila S. Mizrachi, Office of Operations, Food and Drug Administration, Three White Flint North, 10A–12M, 11601 Landsdown St., North Bethesda, MD 20852, 301–796–7726,
Under the PRA (44 U.S.C. 3501–3521), Federal Agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. “Collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) and includes Agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA (44 U.S.C. 3506(c)(2)(A)) requires Federal Agencies to provide a 60-day notice in the
With respect to the following collection of information, FDA invites comments on these topics: (1) Whether the proposed collection of information is necessary for the proper performance of FDA's functions, including whether the information will have practical utility; (2) the accuracy of FDA's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques, when appropriate, and other forms of information technology.
Section 1701(a)(4) of the Public Health Service Act (42 U.S.C. 300u(a)(4)) authorizes the FDA to conduct research relating to health information. Section 1003(d)(2)(C) of the Federal Food, Drug, and Cosmetic Act (the FD&C Act) (21 U.S.C. 393(d)(2)(C)) authorizes FDA to conduct research relating to drugs and other FDA regulated products in carrying out the provisions of the FD&C Act.
The Office of Prescription Drug Promotion's (OPDP) mission is to protect the public health by helping to ensure that prescription drug promotion is truthful, balanced, and accurately communicated. OPDP's research program provides scientific evidence to help ensure that our policies related to prescription drug promotion will have the greatest benefit to public health. Toward that end, we have consistently conducted research to evaluate the
Because we recognize the strength of data and the confidence in the robust nature of the findings is improved through the results of multiple converging studies, we continue to develop evidence to inform our thinking. We evaluate the results from our studies within the broader context of research and findings from other sources, and this larger body of knowledge collectively informs our policies as well as our research program. Our research is documented on our homepage, which can be found at:
The current study focuses on understanding the landscape of healthcare provider (HCP)-directed promotion of prescription drugs at medical conferences in general and, more specifically, how elements of pharmaceutical booths in medical conference exhibit halls impact HCP attendees' perceptions of the drugs that are promoted at those booths. We will first ask attendees, who are prescribers within different disciplines (primary care physicians, specialists, nurse practitioners, and physician assistants), general questions about their attendance at medical conferences, including: (1) Questions about their motivations for attending, (2) activities they participate in (
The second part of our study will allow us to get more detailed information about interactions in medical conference exhibit halls. A 2006 study found that at least 80 percent of physicians attended at least 1 medical conference each year and spent an average of 7 hours on the exhibit hall floor at each event (Ref. 1). The length of time spent at each booth—between 12 and 21 minutes (Ref. 1)—was comparatively longer than detailing visits in HCP offices, which range from 5 to 10 minutes on average (Refs. 2 and 3). Thus, medical conference exhibit booths provide opportunities for pharmaceutical companies to market to large numbers of HCPs and potentially engage in more lengthy interactions.
Promotional booths for prescription drugs and the promotional materials disseminated at those booths fall within the regulatory purview of OPDP. As with other promotional materials for prescription drugs, pharmaceutical companies may voluntarily submit draft versions of their exhibit panels and exhibit materials for FDA review (Ref. 4). This study is designed to provide insights to inform the advisory comments that OPDP provides to pharmaceutical companies that voluntarily seek FDA review. OPDP also monitors prescription drug promotional booths and materials as part of its surveillance program. Recent compliance letters issued by OPDP described booth or panel displays that communicated misleading information regarding drug efficacy and safety, provided insufficient information on drug risks, and omitted ”material facts” about the promoted drug (Ref. 5). A primary reason that physicians and other medical professionals report visiting specific exhibitors at conferences is to obtain product information (Ref. 1), and it is important that the information provided by exhibitors to HCPs regarding the risks and efficacy of prescription medications not be misleading. Thus, investigating the impact of pharmaceutical booth promotions among medical conference attendees has valuable practical implications for the public health.
As part of our specific exhibit booth research, we will simulate interactions that HCPs may have at medical conference booths promoting prescription drugs, so that FDA can examine the effects of the booth representative's background (scientist/medical professional versus business professional) and disclosure of data limitations (present versus absent). In a recent survey, HCP conference attendees reported that interacting with company representatives was the most important element of their booth visits, followed by the availability and quality of clinical information (Ref. 4). Thus, the perceived credibility of the booth representative and the availability of information on data limitations could ultimately inform HCPs' perceptions of the risks and benefits of drugs presented at exhibit booths and their decisions to prescribe drugs to patients.
Indeed, literature suggests that credibility and disclosures are relevant elements to study in the context of prescription drug conference booths. Credibility is linked to extrinsic (physical attractiveness, power) and intrinsic (delivery factors, linguistic cues) factors. For example, one extrinsic feature of source credibility is similarity between the source and recipient. Research on the effects of source similarity has been mixed, but a classic field experiment by Brock in 1965 found that customers buying paint were more likely to follow recommendations of a salesperson they perceived as having painting experiences similar to their own (Ref. 6). More recent studies have examined the effects of endorsers with professional expertise versus those with product experience on attitudes toward the brand and promotion (Refs. 7 and 8). These past studies are relevant to our manipulations of booth representative background in this study given that representatives with a medical/science background may reflect professional expertise, whereas representatives with a business background may reflect product experience.
There is little empirical evidence on the impact of disclosing data limitations during promotional detailing or other sales promotion. On one hand, providing important information (
With this background in mind, we plan to address the issue of how firms communicate about prescription drugs from the perspective of medical conference/exhibit hall attendees. Specifically, we will ask for attendees' general observations of:
1. Disclosures or disclaimers accompanying exhibit hall presentations and/or symposia (about data limitations, contrary data, FDA approval status, financial/affiliation sponsorship, etc.);
2. publications or references accompanying the presentation of information (PI for approved indications, contrary data references, etc.);
3. what type of studies are being reported (real world evidence, pharmacokinetic/pharmacodynamic studies, meta-analyses, etc.).
4. who makes the presentations (field of study, training); and
5. where the presentations are made (poster session, scientific floor, exhibit hall).
We will also address exhibit hall pharmaceutical booth interactions, specifically:
1. How does the presence or absence of information about the limitations of data influence perceptions of the promoted product?
2. How does the background of the booth representative influence perceptions of the promoted product?
3. Do these two variables interact?
To complete this research, we will recruit attendees of large medical conferences in the United States over the course of 1 year. These conferences will represent a variety of specialties to reflect medical areas that have prescription treatments that may be promoted to HCPs. Specifically, we will enroll HCPs who attended one of 12 selected medical conferences into an online survey within 7 days of conference attendance. Exhibit 1 summarizes our approach to: (1) Determining the conference sampling frame; (2) determining the attendee sampling frame; and (3) recruiting and enrolling the target sample in the online survey.
In the first step, we will select conferences that focused on therapeutic areas that have the following attributes:
• High number of currently promoted branded medications;
• high volume of prescriptions written;
• large patient population; and
• high amount of new drug development and promotional spending.
Table 1 shows the final criterion for conference inclusion. Conferences that meet these criteria will be selected based on an environmental scan.
Following conference selection, medical conference attendees at each conference will be randomly selected, invited to participate, and screened to ensure they are HCPs with prescribing authority who responded to the survey invitation within 7 days of attending the target conference. HCPs will be limited to physicians, nurse practitioners, and physician assistants who spend 20 percent or more time in direct patient care, are able to read and speak English, are not currently employed by the Federal government or a pharmaceutical company (not including occasional consulting), and have not participated in another wave of the project.
The online survey will be broken into two main parts: (1) A cross-sectional survey designed to capture HCP observations from the medical conference and (2) an experimental study designed to assess how data disclosures and exhibit booth representative background influence HCP perceptions of promoted prescription drugs. The cross-sectional part of the survey will contain a series of close- and open-ended questions. The experimental study part of the survey will ask participants to view a brief video simulating a conference exhibit hall interaction between an HCP attendee and a booth employee and then answer questions about a fictitious prescription drug featured in the video. Table 2 shows our proposed study design and sample size across 12 conferences.
FDA estimates the burden of this collection of information as follows:
The following references marked with an asterisk (*) are on display at the Dockets Management Staff (see
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA or Agency) is announcing an opportunity for public comment on the proposed collection of certain information by the Agency. Under the Paperwork Reduction Act of 1995 (PRA), Federal Agencies are required to publish notice in the
Submit either electronic or written comments on the collection of information by November 17, 2020.
You may submit comments as follows. Please note that late, untimely filed comments will not be considered. Electronic comments must be submitted on or before November 17, 2020. The
Submit electronic comments in the following way:
•
• If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).
Submit written/paper submissions as follows:
•
• For written/paper comments submitted to the Dockets Management Staff, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”
• Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.” The Agency will review this copy, including the claimed confidential information, in its consideration of comments. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on
Ila S. Mizrachi, Office of Operations, Food and Drug Administration, Three White Flint North, 10A–12M, 11601 Landsdown St., North Bethesda, MD 20852, 301–796–7726,
Under the PRA (44 U.S.C. 3501–3521), Federal Agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. “Collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) and includes Agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA (44 U.S.C. 3506(c)(2)(A)) requires Federal Agencies to provide a 60-day notice in the
With respect to the following collection of information, FDA invites comments on these topics: (1) Whether the proposed collection of information is necessary for the proper performance of FDA's functions, including whether the information will have practical utility; (2) the accuracy of FDA's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques, when appropriate, and other forms of information technology.
FDA has the responsibility to regulate the safety, as well as the efficacy and quality, of drugs in the United States. Under the Food and Drug Administration Safety and Innovation Act (FDASIA) enacted in 2012, the term current good manufacturing practice (CGMP) includes the implementation of oversight and controls over the manufacturing, processing, and packing of drugs to ensure quality, including managing the risk of, and establishing the safety of, raw materials used in the manufacture of drugs. The safety and availability of drugs can be affected by raw material suppliers, the material supply chain, and the facility's controls
This is a one-time information collection, the primary purpose of which is to collect industry-wide data on how facilities that manufacture, process, and pack drug products for use in humans and/or animals ensure the quality of their operations, including their current risk management approaches and practices for ensuring the quality and suitability of the drug components, containers, and closures that they use. FDA intends to use this information to inform its economic analyses of potential updates to CGMPs for human and animal drug product manufacturing, processing, and packing facilities under 21 CFR parts 210 and 211. Survey respondents will be contacted by email or, if necessary, by regular mail. Respondents will be able to take the survey online or, if requested, they can return a hard copy by mail. FDA estimates the maximum burden of this collection of information as follows:
Burden hours are based on pretests of the survey and interviews with industry representatives and reflect the time required by each type of respondent to read the survey invitation and instructions and complete the survey questions. The total estimated one-time burden hours are 1,970.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C.,
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting. The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting. The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(a) of the Federal Advisory Committee Act, as amended, notice is hereby given of a meeting of the NIH Clinical Center Research Hospital Board.
The meeting will be open to the public, with attendance limited to space available. Individuals who plan to attend and need special assistance, such as sign language interpretation or other reasonable accommodations, should notify the Contact Person listed below in advance of the meeting.
Any interested person may file written comments with the committee by forwarding the statement to the Contact Person listed on this notice. The statement should include the name, address, telephone number and when applicable, the business or professional affiliation of the interested person.
In the interest of security, NIH has instituted stringent procedures for entrance onto the NIH campus. All visitor vehicles, including taxicabs, hotel, and airport shuttles will be inspected before being allowed on campus. Visitors will be asked to show one form of identification (for example, a government-issued photo ID, driver's license, or passport) and to state the purpose of their visit.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of a meeting of the National Advisory Eye Council.
The meeting will be open to the public as indicated below, the October 16, 2020 National Advisory Eye Council Meeting will be held via a ZOOM Webinar. Instructions for accessing the meeting can be found at
Attendees and interested parties can submit questions and comments through written Q&A during the meeting, and for 15 days after the meeting, to
The Zoom Webinar will have sign language interpretation and closed captions.
The open session (event) will be videocast by NIH with sign language interpretation and closed captioning. The link to the videocast is:
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications and/or contract proposals, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Any interested person may file written comments with the committee by forwarding the statement to the Contact Person listed on this notice. The statement should include the name, address, telephone number and when applicable, the business or professional affiliation of the interested person.
Information is also available on the Institute's/Center's home page:
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
The Substance Abuse and Mental Health Services Administration (SAMHSA) has submitted the following request (see below) for a Non-substantive Change review under the Paperwork Reduction Act (44 U.S.C. Chapter 35). A copy of the information collection plans may be obtained by calling the SAMHSA Reports Clearance Officer on (240) 276–0361.
The National Survey on Drug Use and Health (NSDUH) is a survey of the U.S. civilian, non-institutionalized population aged 12 years old or older. The data are used to determine the prevalence of use of tobacco products, alcohol, illicit substances, and illicit use of prescription drugs. The results are used by SAMHSA, the Office of National Drug Control Policy (ONDCP), federal government agencies, and other organizations and researchers to establish policy, direct program activities, and better allocate resources.
While NSDUH must be updated periodically to reflect changing substance use and mental health issues and to continue producing current data a non-substantive change has been warranted in response to the COVID–19 pandemic. For on the 2020 NSDUH the following minor changes are planned: (1) Adding eleven COVID–19 questions; and (2) four telemedicine utilization questions.
The COVID–19 questions seek to assess the pandemic effects on substance use and mental health in the United States. Including these questions on the NSDUH survey will allow SAMHSA to provide national-level estimates on the impact of COVID–19 on substance use and mental health. The four questions on telemedicine utilization will provide national, systematic survey data on its use to treat substance use and mental health in the United States. The updates will also allow the NSDUH to transition to a more agile data collection methodology. As certain parts of the United States reduce COVID–19 restrictions in-person data collection will resume in October 2020 when possible. However, in order to collect sufficient data to produce nationally representative estimates, a modified sampling strategy including alternate modes of administration will be applied including telephone and online interviews in areas with COVID–19 restrictions.
As with all NSDUH/NHSDA (Prior to 2002, the NSDUH was referred to as the National Household Survey on Drug Abuse) surveys conducted since 1999, the sample size of the survey for 2020 will be only be sufficient to permit prevalence estimates for each of the fifty states and the District of Columbia through multimodal data collection. Due to an estimated smaller sample size there is no increase to the annualized burden hours for the NSDUH. Adding the 11 COVID–19 pandemic and 4 telemedicine items is expected to add approximately 10 minutes extra burden per respondent shown below in Table 1.
Non-substantive Change approval is being requested because SAMHSA has determined proposed questions and modifications are necessary to address the effects of COVID–19 on substance use and mental health in American communities. Because of these additional questions, this
Send comments to Carlos Graham, SAMHSA Reports Clearance Officer, 5600 Fisher Lane, Room 15E57A, Rockville, MD 20852
Coast Guard, DHS.
Thirty-day notice requesting comments.
In compliance with the Paperwork Reduction Act of 1995 the U.S. Coast Guard is forwarding an Information Collection Request (ICR), abstracted below, to the Office of Management and Budget (OMB), Office of Information and Regulatory Affairs (OIRA), requesting an extension of its approval for the following collection of information: 1625–0008, Regattas and Marine Parades; without change.
Our ICR describes the information we seek to collect from the public. Review and comments by OIRA ensure we only impose paperwork burdens commensurate with our performance of duties.
You may submit comments to the Coast Guard and OIRA on or before October 19, 2020.
Comments to the Coast Guard should be submitted using the Federal eRulemaking Portal at
A copy of the ICR is available through the docket on the internet at
A.L. Craig, Office of Privacy Management, telephone 202–475–3528, or fax 202–372–8405, for questions on these documents.
This notice relies on the authority of the Paperwork Reduction Act of 1995; 44 U.S.C. chapter 35, as amended. An ICR is an application to OIRA seeking the approval, extension, or renewal of a Coast Guard collection of information (Collection). The ICR contains information describing the Collection's purpose, the Collection's likely burden on the affected public, an explanation of the necessity of the Collection, and other important information describing the Collection. There is one ICR for each Collection. The Coast Guard invites comments on whether this ICR should be granted based on the Collection being necessary for the proper performance of Departmental functions. In particular, the Coast Guard would appreciate comments addressing: (1) The practical utility of the Collection; (2) the accuracy of the estimated burden of the Collection; (3) ways to enhance the quality, utility, and clarity of information subject to the Collection; and (4) ways to minimize the burden of the Collection on respondents, including the use of automated collection techniques or other forms of information technology. Consistent with the requirements of Executive Order 13771, Reducing Regulation and Controlling Regulatory Costs, and Executive Order 13777, Enforcing the Regulatory Reform Agenda, the Coast Guard is also requesting comments on the extent to which this request for information could be modified to reduce the burden on respondents. These comments will help OIRA determine whether to approve the ICR referred to in this Notice.
We encourage you to respond to this request by submitting comments and related materials. Comments to Coast Guard or OIRA must contain the OMB Control Number of the ICR. They must also contain the docket number of this request, [USCG–2020–0316], and must be received by October 19, 2020.
We encourage you to submit comments through the Federal eRulemaking Portal at
We accept anonymous comments. All comments to the Coast Guard will be posted without change to
This request provides a 30-day comment period required by OIRA. The Coast Guard published the 60-day notice (85 FR 41060, July 8, 2020) required by 44 U.S.C. 3506(c)(2). That notice elicited one unrelated comment. Accordingly, no changes have been made to the Collection.
The Paperwork Reduction Act of 1995; 44 U.S.C. chapter 35, as amended.
Federal Emergency Management Agency, DHS.
Committee Management; Notice of Federal Advisory Committee meeting.
The Federal Emergency Management Agency (FEMA) Technical Mapping Advisory Council (TMAC) will hold a virtual meeting on Thursday, October 29 and Friday October 30, 2020. The meeting will be open to the public via a Zoom Video Communications link.
The TMAC will meet on Thursday, October 29 and Friday October 30, 2020, from 10 a.m. to 4 p.m. Eastern Time (ET). Please note that the meeting will close early if the TMAC has completed its business.
The meeting will be held virtually using Zoom Video Communications, Meeting Identification (ID) 16195624614 (
To facilitate public participation, members of the public are invited to provide written comments on the issues to be considered by the TMAC, as listed in the
A public comment period will be held on Thursday, October 29, 2020, from 12 p.m. to 12:30 p.m. ET and Friday, October 30, 2020, from 12 p.m. to 12:30 p.m. ET. Speakers are requested to limit their comments to no more than three minutes. The public comment period will not exceed 30 minutes. Please note that the public comment period may end before the time indicated, following the last call for comments. Contact the individual listed below to register as a speaker by close of business on Tuesday, October 27, 2020.
Michael Nakagaki, Designated Federal Officer for the TMAC, FEMA, 400 C Street SW, Washington, DC 20024, telephone (202) 212–2148, and email
Notice of this meeting is given under the
In accordance with the
Federal Emergency Management Agency, Department of Homeland Security (DHS).
Notice.
This is a notice of the Presidential declaration of an emergency for the Commonwealth of Puerto Rico (FEMA–3532–EM), dated July 29, 2020, and related determinations.
The declaration was issued July 29, 2020.
Dean Webster, Office of Response and Recovery, Federal Emergency Management Agency, 500 C Street SW, Washington, DC 20472, (202) 646–2833.
Notice is hereby given that, in a letter dated July 29, 2020, the President issued an emergency declaration under the authority of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121–5207 (the Stafford Act), as follows:
I have determined that the emergency conditions in the Commonwealth of Puerto Rico resulting from Potential Tropical Cyclone Nine beginning on July 27, 2020, and continuing, are of sufficient severity and magnitude to warrant an emergency declaration under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121
You are authorized to provide appropriate assistance for required emergency measures, authorized under title V of the Stafford Act, to save lives and to protect property and public health and safety, and to lessen or avert the threat of a catastrophe in the designated areas. Specifically, you are authorized to provide assistance for emergency protective measures (Category B), limited to direct Federal assistance and reimbursement for mass care including evacuation and shelter support.
Consistent with the requirement that Federal assistance be supplemental, any Federal funds provided under the Stafford Act for Public Assistance will be limited to 75 percent of the total eligible costs. In order to provide Federal assistance, you are hereby authorized to allocate from funds available for these purposes such amounts as you find necessary for Federal emergency assistance and administrative expenses.
Further, you are authorized to make changes to this declaration for the approved assistance to the extent allowable under the Stafford Act.
The Federal Emergency Management Agency (FEMA) hereby gives notice that pursuant to the authority vested in the Administrator, Department of Homeland Security, under Executive Order 12148, as amended, Alexis Amparo, of FEMA is appointed to act as the Federal Coordinating Officer for this declared emergency.
The following areas of the Commonwealth of Puerto Rico have been designated as adversely affected by this declared emergency:
Emergency protective measures (Category B), limited to direct federal assistance and reimbursement for mass care including evacuation and shelter support for all 78 municipalities in the Commonwealth of Puerto Rico.
U.S. Citizenship and Immigration Services, Department of Homeland Security.
60-day notice.
The Department of Homeland Security (DHS), U.S. Citizenship and Immigration Services (USCIS) invites the general public and other Federal agencies to comment upon this proposed extension of a currently approved collection of information. In accordance with the Paperwork Reduction Act (PRA) of 1995, the information collection notice is published in the
Comments are encouraged and will be accepted for 60 days until November 17, 2020.
All submissions received must include the OMB Control Number 1615–0100 in the body of the letter, the agency name and Docket ID USCIS–2008–0010. Submit comments via the Federal eRulemaking Portal website at
USCIS, Office of Policy and Strategy,
You may access the information collection instrument with instructions or additional information by visiting the Federal eRulemaking Portal site at:
Written comments and suggestions from the public and affected agencies should address one or more of the following four points:
(1) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(2) Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
(3) Enhance the quality, utility, and clarity of the information to be collected; and
(4) Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
(1)
(2)
(3)
(4)
(5)
(6)
(7)
U.S. Citizenship and Immigration Services, Department of Homeland Security.
60-day notice.
The Department of Homeland Security (DHS), U.S. Citizenship and Immigration Services (USCIS) invites the general public and other Federal agencies to comment upon this proposed extension of a currently approved collection of information. In accordance with the Paperwork Reduction Act (PRA) of 1995, the information collection notice is published in the
Comments are encouraged and will be accepted for 60 days until November 17, 2020.
All submissions received must include the OMB Control Number 1615–0104 in the body of the letter, the agency name and Docket ID USCIS–2010–0004. Submit comments via the Federal eRulemaking Portal website at
USCIS, Office of Policy and Strategy, Regulatory Coordination Division, Samantha Deshommes, Chief, telephone number 202–272–8377 (This is not a toll-free number. Comments are not accepted via telephone message). Please note contact information provided here is solely for questions regarding this notice. It is not for individual case status inquiries. Applicants seeking information about the status of their individual cases can check Case Status Online, available at the USCIS website at
You may access the information collection instrument with instructions or additional information by visiting the Federal eRulemaking Portal site at:
Written comments and suggestions from the public and affected agencies should address one or more of the following four points:
(1) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(2) Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
(3) Enhance the quality, utility, and clarity of the information to be collected; and
(4) Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
(1)
(2)
(3)
(4)
(5)
(6)
(7)
U.S. Citizenship and Immigration Services, Department of Homeland Security.
60-day notice.
The Department of Homeland Security (DHS), U.S. Citizenship and Immigration Services (USCIS) invites the general public and other Federal agencies to comment upon this proposed extension of a currently approved collection of information. In accordance with the Paperwork Reduction Act (PRA) of 1995, the information collection notice is published in the
Comments are encouraged and will be accepted for 60 days until November 17, 2020.
All submissions received must include the OMB Control Number 1615–0154 in the body of the letter, the agency name and Docket ID USCIS–2019–0026. Submit comments via the Federal eRulemaking Portal website at
USCIS, Office of Policy and Strategy, Regulatory Coordination Division, Samantha Deshommes, Chief, telephone number 202–272–8377 (This is not a toll-free number. Comments are not accepted via telephone message). Please note contact information provided here is solely for questions regarding this notice. It is not for individual case status inquiries. Applicants seeking information about the status of their individual cases can check Case Status Online, available at the USCIS website at
You may access the information collection instrument with instructions or additional information by visiting the Federal eRulemaking Portal site at:
Written comments and suggestions from the public and affected agencies
(1) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(2) Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
(3) Enhance the quality, utility, and clarity of the information to be collected; and
(4) Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
(1)
(2)
(3)
(4)
(5)
(6)
(7)
U.S. Geological Survey, Interior.
Notice of information collection; request for comment.
In accordance with the Paperwork Reduction Act of 1995, we, the U.S. Geological Survey (USGS) are proposing to renew an information collection.
Interested persons are invited to submit comments on or before November 17, 2020.
Send your comments on this information collection request (ICR) by mail to U.S. Geological Survey, Information Collections Officer, 12201 Sunrise Valley Drive, MS 159, Reston, VA 20192; or by email to
To request additional information about this ICR, contact David Wald by email at
In accordance with the Paperwork Reduction Act of 1995, we provide the general public and other Federal agencies with an opportunity to comment on new, proposed, revised, and continuing collections of information. This helps us assess the impact of our information collection requirements and minimize the public's reporting burden. It also helps the public understand our information collection requirements and provide the requested data in the desired format.
We are soliciting comments on the proposed ICR that is described below. We are especially interested in public comment addressing the following issues: (1) Is the collection necessary to the proper functions of the USGS; (2) will this information be processed and used in a timely manner; (3) is the estimate of burden accurate; (4) how might the USGS enhance the quality, utility, and clarity of the information to be collected; and (5) how might the USGS minimize the burden of this collection on the respondents, including through the use of information technology.
Comments that you submit in response to this notice are a matter of public record. We will include or summarize each comment in our request to OMB to approve this ICR. Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
We will protect information from respondents considered proprietary under the Freedom of Information Act (5 U.S.C. 552) and implementing regulations (43 CFR part 2), and under regulations at 30 CFR 250.197, “Data and information to be made available to the public or for limited inspection.” Responses are voluntary. No questions of a “sensitive” nature are asked. We will release data collected on these forms only in formats that do not include proprietary information volunteered by respondents. This collection is scheduled to expire on June 30, 2021.
An agency may not conduct or sponsor and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number.
The authority for this action is the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
United States International Trade Commission.
Notice.
The Commission hereby gives notice of the scheduling of the final phase of antidumping and countervailing duty investigation Nos. 701–TA–637 and 731–TA–1471 (Final) pursuant to the Tariff Act of 1930 (“the Act”) to determine whether an industry in the United States is materially injured or threatened with material injury, or the establishment of an industry in the United States is materially retarded, by reason of imports of large vertical shaft engines from China, provided for in subheadings 8407.90.10, 8407.90.90, and 8409.91.99 of the Harmonized Tariff Schedule of the United States, preliminarily determined by the Department of Commerce (“Commerce”) to be subsidized and sold at less-than-fair-value.
August 19, 2020.
Charlie Cummings (202–708–1666), Office of Investigations, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436. Hearing-impaired persons can obtain information on this matter by contacting the Commission's TDD terminal on 202–205–1810. Persons with mobility impairments who will need special assistance in gaining access to the Commission should contact the Office of the Secretary at 202–205–2000. General information concerning the Commission may also be obtained by accessing its internet server (
Engines covered by this scope normally must comply with and be certified under Environmental Protection Agency (EPA) air pollution controls title 40, chapter I, subchapter U, part 1054 of the Code of Federal Regulations standards for small non-road spark-ignition engines and equipment. Engines that otherwise meet the physical description of the scope but are not certified under 40 CFR part 1054 and are not certified under other parts of subchapter U of the EPA air pollution controls are not excluded from the scope of this proceeding. Engines that may be certified under both 40 CFR part 1054 as well as other parts of subchapter U remain subject to the scope of these proceedings.
For purposes of these investigations, an unfinished engine covers at a minimum a sub-assembly comprised of, but not limited to, the following components: Crankcase, crankshaft, camshaft, piston(s), and connecting rod(s). Importation of these components together, whether assembled or unassembled, and whether or not accompanied by additional components such as an oil pan, manifold, cylinder head(s), valve train, or valve cover(s), constitutes an unfinished engine for purposes of these investigations. The inclusion of other products such as spark plugs fitted into the cylinder head or electrical devices (
For further information concerning the conduct of this phase of the investigations, hearing procedures, and rules of general application, consult the Commission's Rules of Practice and Procedure, part 201, subparts A and B
Requests to appear at the hearing should be filed in writing with the Secretary to the Commission on or before December 29, 2020. A nonparty who has testimony that may aid the Commission's deliberations may request permission to present a short statement at the hearing. All parties and nonparties desiring to appear at the hearing and make oral presentations should participate in a prehearing conference to be held on December 30, 2020, if deemed necessary. Oral testimony and written materials to be submitted at the public hearing are governed by §§ 201.6(b)(2), 201.13(f), and 207.24 of the Commission's rules. Parties must submit any request to present a portion of their hearing testimony
Additional written submissions to the Commission, including requests pursuant to § 201.12 of the Commission's rules, shall not be accepted unless good cause is shown for accepting such submissions, or unless the submission is pursuant to a specific request by a Commissioner or Commission staff.
In accordance with §§ 201.16(c) and 207.3 of the Commission's rules, each document filed by a party to the investigations must be served on all other parties to the investigations (as identified by either the public or BPI service list), and a certificate of service must be timely filed. The Secretary will not accept a document for filing without a certificate of service.
These investigations are being conducted under authority of title VII of the Tariff Act of 1930; this notice is published pursuant to § 207.21 of the Commission's rules.
By order of the Commission.
On the basis of the record
Pursuant to section 207.18 of the Commission's rules, the Commission also gives notice of the commencement of the final phase of its investigations. The Commission will issue a final phase notice of scheduling, which will be published in the
On July 29, 2020, Novus International, Inc., St. Charles, Missouri, filed petitions with the Commission and Commerce, alleging that an industry in the United States is materially injured or threatened with material injury by reason of LTFV imports of methionine from France, Japan, and Spain. Accordingly, effective July 29, 2020, the Commission instituted antidumping duty investigation Nos. 731–TA–1534–1536 (Preliminary).
Notice of the institution of the Commission's investigations and of a public conference through video conferencing to be held in connection therewith was given by posting copies of the notice in the Office of the Secretary, U.S. International Trade Commission, Washington, DC, and by publishing the notice in the
The Commission made these determinations pursuant to § 733(a) of the Act (19 U.S.C. 1673b(a)). It completed and filed its determinations in these investigations on September 14, 2020. The views of the Commission are contained in USITC Publication 5120 (September 2020), entitled
By order of the Commission.
On the basis of the record
Pursuant to section 207.18 of the Commission's rules, the Commission also gives notice of the commencement of the final phase of its investigations. The Commission will issue a final phase notice of scheduling, which will be published in the
On July 30, 2020, the Coalition of American Chassis Manufacturers, consisting of Cheetah Chassis Corporation, Fairless Hills, Pennsylvania, Hercules Enterprises, LLC, Hillsborough, New Jersey, Pitts Enterprises, Inc., Pittsview, Alabama, Pratt Industries, Inc., Bridgman, Michigan, and Stoughton Trailers, LLC, Stoughton, Wisconsin, filed petitions with the Commission and Commerce, alleging that an industry in the United States is materially injured or threatened with material injury by reason of subsidized imports of chassis from China and LTFV imports of chassis from China. Accordingly, effective July 30, 2020, the Commission instituted countervailing duty investigation No. 71–TA–657 and antidumping duty investigation No. 731–TA–1537 (Preliminary).
Notice of the institution of the Commission's investigations and of a public conference to be held in connection therewith was given by posting copies of the notice in the Office of the Secretary, U.S. International Trade Commission, Washington, DC, and by publishing the notice in the
The Commission made these determinations pursuant to §§ 703(a) and 733(a) of the Act (19 U.S.C. 1671b(a) and 1673b(a)). It completed and filed its determinations in these investigations on September 14, 2020. The views of the Commission are contained in USITC Publication 5119 (September 2020), entitled
By order of the Commission.
Pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 16(b)–(h), the United States hereby publishes below the Response to Public Comments on the Proposed Final Judgment in
A copy of the comment and the United States' response to the comment is available at
Pursuant to the requirements of the Antitrust Procedures and Penalties Act (the “APPA” or “Tunney Act”), 15 U.S.C. 16(b)–(h), the United States submits this response to the one public comment received regarding the proposed Final Judgment in this case. After careful consideration of the submitted comment, the United States continues to believe that the proposed Final Judgment will provide an effective and appropriate remedy for the antitrust violations alleged in the Complaint. The United States will move the Court for entry of the proposed Final Judgment after the public comment and this response have been published pursuant to 15 U.S.C § 16(d).
Dean Foods Company (“Dean”) filed for bankruptcy on November 12, 2019, in the United States Bankruptcy Court for the Southern District of Texas. The bankruptcy court ordered an auction and then accelerated the auction process because of Dean's liquidity condition. On March 30, 2020, Dairy Farmers of America, Inc. (“DFA”) bid for 44 of Dean's plants for a total value of $433 million.
The United States, along with the State of Wisconsin and the Commonwealth of Massachusetts (collectively, the “Plaintiff States”), filed a civil antitrust complaint on May 1, 2020, seeking to enjoin the proposed transaction. Based on a comprehensive investigation, the Complaint (Docket No. 1) alleges that the likely effect of this transaction would be to substantially lessen competition for the processing and sale of fluid milk in areas encompassing (1) northeastern Illinois and Wisconsin and (2) New England in violation of Section 7 of the Clayton Act, 15 U.S.C. 18. The Complaint alleges that DFA and Dean compete head-to-head to sell fluid milk to customers in these geographic areas, including supermarkets, schools, convenience stores, and hospitals.
Simultaneously with the filing of the Complaint, the United States filed a proposed Final Judgment (Docket No. 4–2) and an Asset Preservation and Hold Separate Stipulation and Order (“Stipulation and Order”) (Docket No. 4), signed by the parties that consents to entry of the proposed Final Judgment after compliance with the requirements of the Tunney Act, 15 U.S.C. 16. Pursuant to requirements under the Tunney Act, the United States filed the Competitive Impact Statement with this Court on May 26, 2020 (Docket No. 16), describing the transaction and the proposed Final Judgment. The United States then published the Complaint, proposed Final Judgment, and Competitive Impact Statement in the
The Complaint alleges that the likely effect of this transaction would be to substantially lessen competition for the processing and sale of fluid milk in (1) northeastern Illinois and Wisconsin and (2) New England in violation of Section 7 of the Clayton Act, 15 U.S.C. 18. Under the proposed Final Judgment and Stipulation and Order, which are designed to address the anticompetitive effects of the acquisition, DFA is required to divest Dean's fluid milk processing plants, ancillary facilities, and related tangible and intangible assets located in Franklin, Massachusetts (“Franklin Plant”); De Pere, Wisconsin (“De Pere Plant”); and Harvard, Illinois (“Harvard Plant”) (collectively the “Divestiture Plants”).
As the Complaint alleges, northeastern Illinois and Wisconsin and New England each represent a relevant market where the merger would reduce the number of competitors from three to two. DFA's existing fluid milk processing plants overlap with two Dean plants that it proposed to acquire in northeastern Illinois and Wisconsin—the Harvard Plant and the De Pere Plant—and with Dean's Franklin Plant in New England. The Complaint further alleges that DFA and Dean are two of only three significant fluid milk processors that can serve customers, including supermarkets and schools, in each of these geographic areas. If the acquisition were permitted to proceed, DFA would control nearly 70% of the fluid milk market in northeastern Illinois and Wisconsin and approximately 51% of the fluid milk market in New England. DFA and Dean competed head-to-head to supply fluid milk customers in these areas before the merger, and customers have relied on competition between DFA and Dean to get lower prices and better terms. If DFA's and Dean's plants in these areas were owned by a single entity, this competitive dynamic would no longer exist, leading to higher prices and inferior service for supermarkets, schools, and other fluid milk customers
The proposed Final Judgment requires DFA to divest the Franklin Plant, De Pere Plant, and Harvard Plant. It defines three sets of divestiture assets, one for each Divestiture Plant, that include assets necessary to process, market, sell, and distribute fluid milk and other products by each of the Divestiture Plants. The divestiture assets also include brands and/or brand licenses which will allow the buyer of each Divestiture Plant to successfully market its milk. Each set of assets must be divested in such a way as to satisfy the United States, in its sole discretion, after consultation with the Plaintiff States, that they can and will be operated by the purchaser as a viable, ongoing business that can compete effectively in the market for the processing and sale of fluid milk in (1) northeastern Illinois and Wisconsin or (2) New England.
Plaintiffs and Defendants have stipulated that the proposed Final Judgment may be entered after compliance with the APPA. Entry of the proposed Final Judgment will terminate this action, except that the Court will retain jurisdiction to construe, modify, or enforce the provisions of the Final Judgment and to punish violations thereof.
The Clayton Act, as amended by the APPA, requires that proposed consent judgments in antitrust cases brought by the United States be subject to a 60-day comment period, after which the Court shall determine whether entry of the proposed Final Judgment “is in the public interest.” 15 U.S.C. 16(e)(1).
(A) The competitive impact of such judgment, including termination of alleged violations, provisions for enforcement and modification, duration of relief sought, anticipated effects of alternative remedies actually considered, whether its terms are ambiguous, and any other competitive considerations bearing upon the adequacy of such judgment that the court deems necessary to a determination of whether the consent judgment is in the public interest; and
(B) the impact of entry of such judgment upon competition in the relevant market or markets, upon the public generally and individuals alleging specific injury from the violations set forth in the complaint including consideration of the public benefit, if any, to be derived from a determination of the issues at trial.
As the U.S. Court of Appeals for the District of Columbia Circuit has held, under the APPA a court considers, among other things, the relationship between the remedy secured and the specific allegations in the government's complaint, whether the proposed Final Judgment is sufficiently clear, whether its enforcement mechanisms are sufficient, and whether it may positively harm third parties.
The United States' predictions about the efficacy of the remedy are to be afforded deference by the Court.
Moreover, the Court's role under the APPA is limited to reviewing the remedy in relationship to the violations that the United States has alleged in its complaint, and does not authorize the Court to “construct [its] own hypothetical case and then evaluate the decree against that case.”
In its 2004 amendments to the APPA, Congress made clear its intent to preserve the practical benefits of using consent judgments proposed by the United States in antitrust enforcement, Public Law 108–237 § 221, and added the unambiguous instruction that “[n]othing in this section shall be construed to require the court to conduct an evidentiary hearing or to require the court to permit anyone to intervene.” 15 U.S.C. 16(e)(2);
During the 60-day comment period, the United States received a single comment. The comment is from Martin T. Petroski, a dairy farmer in Pennsylvania. Upon review, the United States believes that nothing in the comment warrants a change to the proposed Final Judgment or supports a conclusion that the proposed Final Judgment is not in the public interest. As required by the APPA, the comment, with the author's address and phone number removed, and this response will be published in the
The comment expresses criticism of DFA, claiming that DFA is too large and engages in anticompetitive conduct in general. The comment, however, does not appear to be in any way critical of the merger. The comment, for example, does not refer to any of the allegations in the Complaint nor to the impact of the proposed Final Judgment.
The proposed Final Judgment addresses each alleged competitive harm that the merger presented. As Plaintiffs allege in the Complaint and the United States explains in the Competitive Impact Statement, the proposed merger, without the remedy in the proposed Final Judgment, would have substantially lessened competition for the processing and sale of fluid milk in two geographic markets—northeastern Illinois and Wisconsin and New England—in violation of Section 7 of the Clayton Act, 15 U.S.C. 18.
The proposed Final Judgment addresses the harm that the Complaint alleges by preventing an increase in concentration in these two fluid milk processing markets. The proposed Final Judgment maintains competition at pre-merger levels in both markets in which the Complaint alleges that the merger would substantially reduce competition. The proposed Final Judgment requires DFA to divest the Dean plants in northeastern Illinois and northern Wisconsin which compete with a DFA fluid milk processing plant. Similarly, the proposed Final Judgment requires DFA to divest the Dean plant near Boston which competes against other DFA fluid milk processing plants.
The comment also states that DFA is the “only market,” without identifying any specific geographic location or clearly describing the market to which it refers. From the context in which the commenter uses this phrase, the United States understands this part of the comment to relate to DFA's actions as a dairy cooperative, buying raw milk from its farmer members and coordinating the sale of milk from independent farmers. To the extent this comment advances a claim about DFA's purchase of raw milk from farmers, the comment is discussing the sale of
The comment closes by raising concerns about farmers dumping raw milk rather than selling it to processors. But farmers began dumping raw milk as a result of conditions caused by the COVID–19 pandemic before the merger was consummated on May 1, 2020, making it clear that the merger did not cause farmers to dump milk.
In summary, while the commenter appears to criticize several aspects or actions of DFA, the commenter does not appear to be in any way critical of the merger or to provide any criticism of any part of the remedy that the United States and Defendants have agreed to in
After reviewing the public comment, the United States continues to believe that the proposed Final Judgment, as drafted, provides an effective and appropriate remedy for the antitrust violations alleged in the Complaint, and is therefore in the public interest. The United States will move this Court to enter the proposed Final Judgment after the comment and this response are published in the
Notice is hereby given that, on September 1, 2020, pursuant to Section 6(a) of the National Cooperative Research and Production Act of 1993, 15 U.S.C. 4301
Pursuant to Section 6(b) of the Act, the identities of the parties to the venture are: Broadcom Corporation, San Jose, CA; Federated Wireless, Inc., Arlington, VA; Gigabit Libraries Network, Sausalito, CA; Aruba, a Hewlett Packard Enterprise company, Santa Clara, CA; Microsoft Corporation, Redmond, WA; and New America, Palo Alto, CA.
The general area of DSA's planned activity is to (a) promote the adoption of laws and regulations that increase dynamic access to unused radio spectrum (“Spectrum”); (b) support efforts to gain a better understanding of Spectrum use around the world; (c) be technology-neutral and support regulations allowing for the coexistence of a variety of technology platforms; (d) support making unused Spectrum available for dynamic Spectrum access in licensed, license-exempt (unlicensed), and lightly licensed Spectrum bands; (e) support dynamic Spectrum access across a variety of complementary Spectrum bands; (f) support the use of geolocation databases and other interference protection mechanisms; (g) support globally harmonized dynamic access to unused Spectrum; (h) support long-term efforts to develop regulations making dynamic Spectrum access the default mode of access to radio spectrum, with technical rules that address legitimate interference concerns; and (i) undertake such other activities as may from time to time be appropriate to further the purposes and achieve the goals set forth above.
Drug Enforcement Administration, Justice.
Notice of application.
Rhodes Technologies has applied to be registered as a bulk manufacturer of basic class(es) of controlled substance(s). Refer to Supplemental Information listed below for further drug information.
Registered bulk manufacturers of the affected basic class(es), and applicants therefore, may file written comments on or objections to the issuance of the proposed registration on or before November 17, 2020. Such persons may also file a written request for a hearing on the application on or before November 17, 2020.
Written comments should be sent to: Drug Enforcement Administration, Attention: DEA Federal Register Representative/DPW, 8701 Morrissette Drive, Springfield, Virginia 22152.
In accordance with 21 CFR 1301.33(a), this is notice that on February 13, 2020, Rhodes Technologies, 498 Washington Street, Coventry, Rhode Island 02816, applied to be registered as an bulk manufacturer of the following basic class(es) of controlled substance(s):
The company plans to manufacture the above-listed controlled substance(s) in bulk for conversion and sale to finished dosage form manufacturers. In
Drug Enforcement Administration, Justice.
Notice of application.
Fisher Clinical Services, Inc. has applied to be registered as an importer of basic class(es) of controlled substances. Refer to Supplemental Information listed below for further drugs information.
Registered bulk manufacturers of the affected basic class(es), and applicants therefore, may file written comments on or objections to the issuance of the proposed registration on or before October 19, 2020. Such persons may also file a written request for a hearing on the application on or before October 19, 2020.
Written comments should be sent to: Drug Enforcement Administration, Attention: DEA Federal Register Representative/DPW, 8701 Morrissette Drive, Springfield, Virginia 22152. All requests for a hearing must be sent to: Drug Enforcement Administration, Attn: Administrator, 8701 Morrissette Drive, Springfield, Virginia 22152. All requests for a hearing should also be sent to: (1) Drug Enforcement Administration, Attn: Hearing Clerk/OALJ, 8701 Morrissette Drive, Springfield, Virginia 22152; and (2) Drug Enforcement Administration, Attn: DEA Federal Register Representative/DPW, 8701 Morrissette Drive, Springfield, Virginia 22152.
In accordance with 21 CFR 1301.34(a), this is notice that on August 3, 2020, Fisher Clinical Services, Inc., 7554 Schantz Road, Allentown, Pennsylvania 18106–9032, applied to be registered as an importer of the following basic class(es) of controlled substances:
The company plans to import the listed controlled substances for clinical trials only.
Approval of permit applications will occur only when the registrant's business activity is consistent with what is authorized under 21 U.S.C. 952(a)(2). Authorization will not extend to the import of the Food and Drug Administration approved or non-approved finished dosage forms for commercial sale.
Drug Enforcement Administration, Justice.
Notice of application.
Cambrex High Point, Inc., has applied to be registered as a bulk manufacturer of basic class(es) of controlled substance(s). Refer to Supplemental Information listed below for further drug information.
Registered bulk manufacturers of the affected basic class(es), and applicants therefore, may file written comments on or objections to the issuance of the proposed registration on or before November 17, 2020. Such persons may also file a written request for a hearing on the application on or before November 17, 2020.
Written comments should be sent to: Drug Enforcement Administration, Attention: DEA Federal Register Representative/DPW, 8701 Morrissette Drive, Springfield, Virginia 22152.
In accordance with 21 CFR 1301.33(a), this is notice that on July 27, 2020, Cambrex High Point, Inc., 4180 Mendenhall Oaks Parkway, High Point, North Carolina 27265–8017, applied to be registered as an bulk manufacturer of the following basic class(es) of controlled substances:
The company plans to manufacture the above-listed controlled substances in bulk for distribution to its customers. No other activities for these drug codes are authorized for this registration.
Drug Enforcement Administration, Justice.
Notice of application.
Nalas Engineering Services, Inc. has applied to be registered as a bulk manufacturer of basic class(es) of controlled substance(s). Refer to Supplemental Information listed below for further drug information.
Registered bulk manufacturers of the affected basic class(es), and applicants therefore, may file written comments on or objections to the issuance of the proposed registration on or before November 17, 2020. Such persons may also file a written request for a hearing on the application on or before November 17, 2020.
Written comments should be sent to: Drug Enforcement Administration, Attention: DEA Federal Register Representative/DPW, 8701 Morrissette Drive, Springfield, Virginia 22152.
In accordance with 21 CFR 1301.33(a), this is notice that on August 13, 2020, Nalas Engineering Services, Inc., 85 Westbrook Road, Centerbrook, Connecticut 06409, applied to be registered as an bulk manufacturer of the following basic class(es) of controlled substance(s):
The company plans to manufacture derviates of the above controlled substance for distribution for its customers.
Drug Enforcement Administration, Justice.
Notice of application.
The Drug Enforcement Administration (DEA) is providing notice of an application it has received from an entity applying to be registered to manufacture in bulk basic class(es) of controlled substances listed in schedule I. DEA intends to evaluate this and other pending applications according to proposed regulations that, if finalized, would govern the program of growing marihuana for scientific and medical research under DEA registration. Refer to Supplemental Information listed below for further drug information.
Registered bulk manufacturers of the affected basic class(es), and applicants therefore, may file written comments on or objections to the issuance of the proposed registration on or before November 17, 2020. Such persons may also file a written request for a hearing on the application on or before November 17, 2020.
Written comments should be sent to: Drug Enforcement Administration, Attention: DEA Federal Register Representative/DPW, 8701 Morrissette Drive, Springfield, Virginia 22152. All requests for a hearing must be sent to: Drug Enforcement Administration, Attn: Administrator, 8701 Morrissette Drive, Springfield, Virginia 22152. All requests for a hearing should also be sent to: (1) Drug Enforcement Administration, Attn: Hearing Clerk/OALJ, 8701 Morrissette Drive, Springfield, Virginia 22152; and (2) Drug Enforcement Administration, Attn: DEA Federal Register Representative/DPW, 8701 Morrissette Drive, Springfield, Virginia 22152.
The Controlled Substances Act (CSA) prohibits the cultivation and distribution of marihuana except by persons who are registered under the CSA to do so for lawful purposes. In accordance with the purposes specified in 21 CFR 1301.33(a), DEA is providing notice that the entity identified below has applied for registration as a bulk manufacturer of schedule I controlled substances. In response, registered bulk manufacturers of the affected basic class(es), and applicants therefor, may file written comments on or objections of the requested registration, as provided in this notice. This notice does not constitute any evaluation or determination of the merits of the application submitted.
The applicant plans to manufacture bulk active pharmaceutical ingredients (APIs) for product development and distribution to DEA registered researchers. If the application for registration is granted, the registrant would not be authorized to conduct other activity under this registration aside from those coincident activities specifically authorized by DEA regulations. DEA will evaluate the application for registration as a bulk manufacturer for compliance with all applicable laws, treaties, and regulations and to ensure adequate safeguards against diversion are in place.
As this applicant has applied to become registered as a bulk manufacturer of marihuana, the application will be evaluated under the criteria of 21 U.S.C. 823(a). DEA proposes to conduct this evaluation in the manner described in the rule proposed at 85 FR 16292, published on March 23, 2020, if finalized.
In accordance with 21 CFR 1301.33(a), DEA is providing notice that on July 27, 2020, Bright Green Corporation, 1033 George Hanosh Boulevard, Grants, New Mexico 87020, applied to be registered as a bulk manufacturer of the following basic class(es) of controlled substances:
The applicant notice above applied to become registered with DEA to grow marihuana as a bulk manufacturer subsequent to a 2020 DEA notice of proposed rulemaking that provided information on how DEA intends to expand the number of registrations and described the way it would oversee those additional growers. If finalized, the proposed rule would govern persons seeking to become registered with DEA to grow marihuana as a bulk manufacturer, consistent with applicable law. The notice of proposed rulemaking is available at 85 FR 16292.
Approval of permit applications will occur only when the registrant's business activity is consistent with what is authorized under 21 U.S.C. 952(a)(2). Authorization will not extend to the import of the Food Drug Administration-approved or non-approved finished dosage forms for commercial sale.
Employment and Training Administration, Labor.
Notice; correction; extension of comment period.
The Department of Labor's (DOL) Employment and Training Administration (ETA) published a document in the
Written comments must be submitted on or before November 17, 2020 to be considered, via the methods published in the original
Lawrence Lyford, National Office of Job Corps, by telephone at 202–693–3121 (this is not a toll free number) or by email at
In the
You may send comments, identified by docket number ETA–2020–0001, by one of the following methods:
•
•
•
1.
2.
A. Authorities. This Order is issued pursuant to 29 U.S.C. 551
B. Directives Affected. Secretary's Order 1–2012 is hereby superseded by this Order.
3.
4.
A. The Assistant Secretary for Occupational Safety and Health.
(1) The Assistant Secretary for Occupational Safety and Health is delegated authority and assigned responsibility for administering the safety and health, and whistleblower programs and activities of the Department of Labor, except as provided in paragraph 4.A.(2) below, under the designated provisions of the following laws:
(a) Occupational Safety and Health Act of 1970, 29 U.S.C. 651
(b) Walsh-Healey Public Contracts Act of 1936, as amended, 41 U.S.C. 35, 37–41, 43–45.
(c) McNamara-O'Hara Service Contract Act of 1965, as amended, 41 U.S.C. 351–354, 356–357.
(d) Contract Work Hours and Safety Standards Act, as amended, 40 U.S.C. 329, 333.
(e) Maritime Safety Act of 1958, 33 U.S.C. 941.
(f) National Foundation on the Arts and the Humanities Act of 1965, 20 U.S.C. 954(m)(2).
(g) 5 U.S.C. 7902 and any executive order thereunder, including Executive Order 12196 (“Occupational Safety and Health Programs for Federal Employees”) (February 26, 1980).
(h) Surface Transportation Assistance Act of 1982, 49 U.S.C. 31105.
(i) Asbestos Hazard Emergency Response Act of 1986, 15 U.S.C. 2651.
(j) International Safe Container Act, 46 U.S.C. 80507.
(k) Safe Drinking Water Act, 42 U.S.C. 300j–9(i).
(l) Energy Reorganization Act of 1974, as amended, 42 U.S.C. 5851.
(m) Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. 9610(a)–(d).
(n) Federal Water Pollution Control Act, 33 U.S.C. 1367.
(o) Toxic Substances Control Act, 15 U.S.C. 2622.
(p) Solid Waste Disposal Act, 42 U.S.C. 6971.
(q) Clean Air Act, 42 U.S.C. 7622.
(r) Wendell H. Ford Aviation Investment and Reform Act for the 21st Century, 49 U.S.C. 42121.
(s) Sarbanes-Oxley Act of 2002, 18 U.S.C. 1514A.
(t) Pipeline Safety Improvement Act of 2002, 49 U.S.C. 60129.
(u) National Transit Systems Security Act, 6 U.S.C. 1142.
(v) Federal Railroad Safety Act, 49 U.S.C. 20109.
(w) Affordable Care Act amendment to the Fair Labor Standards Act, 29 U.S.C. 218C. Authority and
(x) Consumer Financial Protection Act, 12 U.S.C. 5567.
(y) Consumer Product Safety Improvement Act, 15 U.S.C. 2087.
(z) Seaman's Protection Act, 46 U.S.C. 2114.
(aa) FDA Food Safety Modernization Act, 21 U.S.C. 399d.
(bb) Moving Ahead for Progress in the 21st Century Act, 49 U.S.C. 30171.
(cc) Taxpayer First Act, 26 U.S.C. 7623(d).
(dd) Responsibilities of the Secretary of Labor with respect to safety and health, or whistleblower provisions of any other Federal law except those responsibilities which are assigned to another DOL agency.
(2) The authority of the Assistant Secretary for Occupational Safety and Health under the Occupational Safety and Health Act of 1970 does not include authority to conduct inspections and investigations, issue citations, assess and collect penalties, or enforce any other remedies available under the statute, or to develop and issue compliance interpretations under the statute, with regard to the standards on:
(a) Field sanitation, 29 CFR 1928.110; and
(b) Temporary labor camps, 29 CFR 1910.142, with respect to any agricultural establishment where employees are engaged in “agricultural employment” within the meaning of the Migrant and Seasonal Agricultural Worker Protection Act, 29 U.S.C. 1802(3), regardless of the number of employees, including employees engaged in hand packing of produce into containers, whether done on the ground, on a moving machine, or in a temporary packing shed, except that the Assistant Secretary for Occupational Safety and Health retains enforcement responsibility over temporary labor camps for employees engaged in egg, poultry, or red meat production, or the post-harvest processing of agricultural or horticultural commodities.
Nothing in this Order shall be construed as derogating from the right of States operating OSHA-approved State plans under 29 U.S.C. 667 to continue to enforce field sanitation and temporary labor camp standards if they so choose. The Assistant Secretary for Occupational Safety and Health retains the authority to monitor the activity of such States with respect to field sanitation and temporary labor camps. Moreover, the Assistant Secretary for Occupational Safety and Health retains all other agency authority and responsibility under the Occupational Safety and Health Act with regard to the standards on field sanitation and temporary labor camps, such as rulemaking authority.
(3) The Assistant Secretary for Occupational Safety and Health is also delegated authority and assigned responsibility for coordinating Agency efforts with those of other officials or agencies having responsibilities in the occupational safety and health area.
B. The Assistant Secretary for Occupational Safety and Health and the Administrator of the Wage and Hour Division are directed to confer regularly on enforcement of the Occupational Safety and Health Act with regard to the standards on field sanitation and temporary labor camps (see paragraph 4.A.(2) of this Order), and to enter into any memoranda of understanding which may be appropriate to clarify questions of coverage which arise in the course of such enforcement.
C. The Solicitor of Labor is responsible for providing legal advice and assistance to all Department of Labor officials relating to implementation and administration of all aspects of this Order. The bringing of legal proceedings under those authorities, the representation of the Secretary and/or other officials of the Department of Labor, and the determination of whether such proceedings or representations are appropriate in a given case, are delegated exclusively to the Solicitor.
D. The Commissioner of Labor Statistics is delegated authority and assigned responsibility for:
(1) Furthering the purpose of the Occupational Safety and Health Act by developing and maintaining an effective program of collection, compilation, analysis, and publication of occupational safety and health statistics consistent with applicable law and Secretary's orders.
(2) Making grants to states or political subdivisions thereof in order to assist them in developing and administering programs dealing with occupational safety and health statistics under Sections 18, 23, and 24 of the Occupational Safety and Health Act.
(3) Coordinating the above functions with the Assistant Secretary for Occupational Safety and Health.
E. The Regional Administrators for Occupational Safety and Health are also hereby delegated authority and assigned responsibility to issue subpoenas and conduct investigations under Sections 9 and 11 of the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. 209 and 211, in cases arising under Section 18C of the FLSA, 29 U.S.C. 218C.
5.
A. The submission of reports and recommendations to the President and the Congress concerning the administration of the statutory provisions and Executive Orders listed in paragraph 4.a. above is reserved to the Secretary.
B. No delegation of authority or assignment of responsibility under this Order will be deemed to affect the Secretary's authority to continue to exercise or further delegate such authority or responsibility.
C. Nothing in this Order shall limit or modify the delegation of authority and assignment of responsibility to the Administrative Review Board by Secretary's Order 01–2019 (February 15, 2019).
6.
Notice.
1.
2.
A. Authorities. This Order is issued pursuant to the following authorities:
1. 29 U.S.C. 551
2. 5 U.S.C. 301–02; and
3. 5 U.S.C. app. 2, 1–15.
B. Directives Affected. Secretary's Order 04–2018 is hereby cancelled.
3.
“Committee” refers to any advisory committee, committee, board, task force, or working group to which the Secretary or the Secretary's designee appoints individuals subject to the Federal Advisory Committee Act, and these bodies' subcommittees. This Order does
4.
The Secretary or the Secretary's designee has the authority and responsibility to appoint members of Committees that provide information, expertise, and recommendations to Department agencies. The formation of Committees and the selection of their membership are governed in detail by the Department of Labor Manual Series. Secretary's Order 04–2018 established new, additional procedures for the selection and appointment of Committee members. These procedures included specific requirements regarding the content of vacancy notices, screening procedures, the composition and number of employees involved in recommending selections, and various procedures governing recommendations and appointments by agency heads, the Deputy Secretary, and the Secretary. While the Department has a strong interest in obtaining disinterested expert advice from its Committees, after two years, the Department has determined these new procedures on balance are unnecessary and inefficient.
The Department's Committees vary widely in the issues on which they advise the Department and the qualifications required of their members. The processes by which Committee members are selected should reflect the differing needs and priorities associated with each Committee and be proportionate to them. Accordingly, this Order rescinds Secretary's Order 04–2018. Appointments previously made under Secretary's Order 04–2018 are unaffected by this Order.
5.
A. The Deputy Secretary is responsible for issuing written guidance, as necessary, to implement this Order.
B. The Committee Management Officer (CMO), as required by § 8(b) of the Federal Advisory Committee Act, is responsible for coordinating all Federal Advisory Committee activities with DOL agencies. The CMO is an employee of the Office of the Executive Secretariat.
C. The Assistant Secretary for Administration and Management, in consultation with the Deputy Secretary, Solicitor of Labor, and the Committee Management Officer, is responsible for maintaining internal Department guidance related to the selection and appointment of members to Committees.
D. The Solicitor of Labor is responsible for providing legal advice to the Department on all matters arising in the implementation and administration of this Order.
6.
7.
8.
9.
Bureau of Labor Statistics (BLS), Department of Labor.
Request for nominations for membership on the BLS Technical Advisory Committee.
The BLS is soliciting new members for the Technical Advisory Committee (TAC) to address five member terms expiring on April 12, 2021, and any vacancy that may occur on the TAC between the date of publication of this notice and April 12, 2021. The TAC provides advice to the Bureau of Labor Statistics on technical aspects of data collection and the formulation of economic measures and makes recommendations on areas of research. On some technical issues there are differing views, and receiving feedback at public meetings provides BLS with the opportunity to consider all viewpoints. The Committee consists of 16 members chosen from a cross-section of economists, statisticians, and behavioral scientists who represent a balance of expertise. The economists have research experience with technical issues related to BLS data and are familiar with employment and unemployment statistics, price index numbers, compensation measures, productivity measures, occupational and health statistics, or other topics relevant to BLS data series. The statisticians are familiar with sample design, data analysis, computationally intensive statistical methods, non-sampling errors, or other areas which are relevant to BLS work. The behavioral scientists are familiar with questionnaire design, usability, or other areas of survey development. BLS invites persons interested in serving on the TAC to submit their names for consideration for committee membership. Economists and statisticians with an expertise in data science will receive special consideration. Typically, TAC members are appointed to three-year terms, and serve as Special Government Employees.
Nominations for the TAC membership should be postmarked or transmitted by October 19, 2020.
Nominations for the TAC membership should be emailed to
Lucy Eldridge, Associate Commissioner, U.S. Bureau of Labor Statistics, 2 Massachusetts Avenue NE, Office of Productivity and Technology, Room 2150, Washington, DC 20212. Telephone: 202–691–5600. This is not a toll free number. Email:
The Bureau often faces highly technical issues while developing and maintaining the accuracy and relevancy of its data on employment and unemployment, prices, productivity, and compensation and working conditions. These issues range from how to develop new measures to how to make sure that existing measures account for the ever-changing economy. BLS presents issues and then draws on the specialized expertise of Committee members representing specialized fields within the academic disciplines of economics, statistics and survey design. Committee members are also invited to bring to the attention of BLS issues that have been identified in the academic literature or in their own research.
The TAC was established to provide advice to the Commissioner of Labor Statistics on technical topics selected by the BLS. Responsibilities include, but
This notice was prepared in accordance with the provisions of the Federal Advisory Committee Act (FACA), 5 U.S.C. App. 2.
Mine Safety and Health Administration, Labor.
Notice.
This notice is a summary of 4 petitions for modification submitted to the Mine Safety and Health Administration (MSHA) by the parties listed below.
All comments on the petitions must be received by MSHA's Office of Standards, Regulations, and Variances on or before October 19, 2020.
You may submit your comments, identified by “docket number” on the subject line, by any of the following methods:
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MSHA will consider only comments postmarked by the U.S. Postal Service or proof of delivery from another delivery service such as UPS or Federal Express on or before the deadline for comments.
Aromie Noe, Office of Standards, Regulations, and Variances at 202–693–9557 (voice),
Section 101(c) of the Federal Mine Safety and Health Act of 1977 and Title 30 of the Code of Federal Regulations Part 44 govern the application, processing, and disposition of petitions for modification.
Section 101(c) of the Federal Mine Safety and Health Act of 1977 (Mine Act) allows the mine operator or representative of miners to file a petition to modify the application of any mandatory safety standard to a coal or other mine if the Secretary of Labor determines that:
1. An alternative method of achieving the result of such standard exists which will at all times guarantee no less than the same measure of protection afforded the miners of such mine by such standard; or
2. The application of such standard to such mine will result in a diminution of safety to the miners in such mine.
In addition, the regulations at 30 CFR 44.10 and 44.11 establish the requirements for filing petitions for modification.
The petitioner states that:
(a) Peabody currently uses the 3M Airstream helmet to provide miners with respirable protection against coal mine dust, a protection with long-term health benefits.
(b) 3M has discontinued the Airstream helmet but it will offer the
(c) The 3M Airstream helmet has been used in mines for over 40 years, in that time technology has advanced and 3M has recently faced component disruptions for the Airstream product. This caused 3M to discontinue the Airstream on June 1, 2020 globally.
(d) The last time to order an Airstream system and components was February
(e) There are currently no replacement 3M PAPRs that meet the MSHA standard for permissibility. 3M does not offer an alternative product that meets the MSHA 30 CFR standard for electronic equipment used in underground mining environments that are potentially explosive.
(f) Mines using the Airstream do not have an alternative to offer miners. PAPRs are beneficial due to the constant airflow provided, which offers respiratory protection and comfort in hot working environments.
The petitioner proposes the following alternative method:
(a) The petitioner is applying to use the
(b) The product is not MSHA approved and is not pursuing approval.
(c) The petitioner states that the standards for the approval of these respirators are an accepted alternative to MSHA's standards and they provide the same level of protection.
(d) The petitioner states that the ANSI/ISA standards are an accepted alternative to ACRI2001 and provide the same level of protection.
(e) The equipment will be examined at least weekly by a qualified person according to 30 CFR 75.512–2 and examination results will be recorded weekly and may be expunged after one year.
(f) The petitioner will comply with 30 CFR 75.323.
(g) A qualified person under 30 CFR 75.151 will monitor for methane as is required by the standard in the affected areas of the mine.
(h) Qualified miners will receive training regarding the information in the Decision and Order before using equipment in the relevant part of the mine. A record of the training will be kept and available upon request.
(i) Within 60 days of the Decision and Order becoming finalized, the petitioner will submit proposed revisions to 30 CFR 75.370, mine ventilation, to be approved under the 30 CFR part 48 training plan by the Coal Mine Safety and Health District Manager. The revisions will specify initial and refresher training and when the revisions are conducted, the MSHA Certificate of Training (Form 5000–23) will be completed. Comments will be made on the certificate to note non-permissible testing equipment training.
(j) The petitioner is responsible for making sure that all people, including contractors, are using the equipment in accordance with the final decision and order. The petitioner asserts that the alternative method will guarantee no less than the same measure of protection afforded the miners under the mandatory standard.
The petitioner states that:
(a) Peabody currently uses the 3M Airstream helmet to provide miners with respirable protection against coal mine dust, a protection with long-term health benefits.
(b) 3M has discontinued the Airstream helmet but it will offer the
(c) The 3M Airstream helmet has been used by mines for over 40 years, in that time technology has advanced and 3M has recently faced component disruptions for the Airstream product. This caused 3M to discontinue the Airstream on June 1, 2020 globally.
(d) The last time to order an Airstream system and components was February 2020 and components were available until June 2020.
(e) There are currently no replacement 3M PAPRs that meet the MSHA standard for permissibility. 3M does not offer an alternative product that meets the MSHA 30 CFR standard for electronic equipment used in underground mining environments that are potentially explosive.
(f) Mines using the Airstream do not have an alternative to offer miners. PAPRs are beneficial due to the constant airflow provided, which offers respiratory protection and comfort in hot working environments.
The petitioner proposes the following alternative method:
(a) The petitioner is applying to use the
(b) The product is not MSHA approved and is not pursuing approval.
(c) The petitioner states that the standards for the approval of these respirators are an accepted alternative to MSHA's standards and they provide the same level of protection.
(d) The petitioner states that the ANSI/ISA standards are an accepted alternative to ACRI2001 and provide the same level of protection.
(e) The equipment will be examined at least weekly by a qualified person according to 30 CFR 75.512–2 and examination results will be recorded weekly and may be expunged after one year.
(f) The petitioner will comply with 30 CFR 75.323.
(g) A qualified person under 30 CFR 75.151 will monitor for methane as is required by the standard in the affected area of the mine.
(h) Qualified miners will receive training regarding the information in the Decision and Order before using equipment in the relevant part of the mine. A record of the training will be kept and available upon request.
(i) Within 60 days of the Decision and Order becoming finalized, the petitioner will submit proposed revisions to 30 CFR 75.370, mine ventilation, to be approved under the 30 CFR part 48 training plan by the Coal Mine Safety and Health District Manager. The revisions will specify initial and refresher training and when the revisions are conducted, the MSHA Certificate of Training (Form 5000–23) will be completed. Comments will be made on the certificate to note non-permissible testing equipment training.
(j) The petitioner is responsible for making sure that all people, including contractors, are using the equipment in accordance with the final decision and order. The petitioner asserts that the alternative method will guarantee no less than the same measure of protection afforded the miners under the mandatory standard.
The petitioner states that:
(a) Peabody currently uses the 3M Airstream helmet to provide miners with respirable protection against coal mine dust, a protection with long-term health benefits.
(b) 3M has discontinued the Airstream helmet but it will offer the
(c) The 3M Airstream helmet has been used in mines for over 40 years, in that time technology has advanced and 3M has recently faced component disruptions for the Airstream product. This caused 3M to discontinue the Airstream on June 1, 2020 globally.
(d) The last time to order an Airstream system and components was February 2020 and components were available until June 2020.
(e) There are currently no replacement 3M PAPRs that meet the MSHA standard for permissibility. 3M does not offer an alternative product that meets the MSHA 30 CFR standard for electronic equipment used in underground mining environments that are potentially explosive.
(f) Mines using the Airstream do not have an alternative to offer miners. PAPRs are beneficial due to the constant airflow provided, which offers respiratory protection and comfort in hot working environments.
The petitioner proposes the following alternative method:
(a) The petitioner is applying to use the
(b) The product is not MSHA approved and is not pursuing approval.
(c) The petitioner states that the standards for the approval of these respirators are an accepted alternative to MSHA's standards and they provide the same level of protection.
(d) The petitioner states that the ANSI/ISA standards are an accepted alternative to ACRI2001 and provide the same level of protection.
(e) The equipment will be examined at least weekly by a qualified person according to 30 CFR 75.512–2 and examination results will be recorded weekly and may be expunged after one year.
(f) The petitioner will comply with 30 CFR 75.323.
(g) A qualified person under 30 CFR 75.151 will monitor for methane as is required by the standard in the affected area of the mine.
(h) Qualified miners will receive training regarding the information in the Decision and Order before using equipment in the relevant part of the mine. A record of the training will be kept and available upon request.
(i) Within 60 days of the Decision and Order becoming finalized, the petitioner will submit proposed revisions to 30 CFR 75.370, mine ventilation, to be approved under the 30 CFR part 48 training plan by the Coal Mine Safety and Health District Manager. The revisions will specify initial and refresher training and when the revisions are conducted, the MSHA Certificate of Training (Form 5000–23) will be completed. Comments will be made on the certificate to note non-permissible testing equipment training.
(j) The petitioner is responsible for making sure that all people, including contractors, are using the equipment in accordance with the final decision and order. The petitioner asserts that the alternative method will guarantee no less than the same measure of protection afforded the miners under the mandatory standard.
The petitioner states that:
(a) There are currently two MSHA-approved PAPRs: The 3M Airstream and the Kasco K80 ET8. The 3M Airstream was discontinued by the manufacturer and the Kasco K80 ET8 (now the only available MSHA-approved model) poses safety and health deficiencies. It is difficult to use, restricts communication, restricts peripheral vision, and requires removing the hood to speak or listen. The Kasco model additionally only protects against organic vapor and is not suitable for protecting against respirable dust.
(b) The petitioner currently intends to use the TR–800 PAPR but is also petitioning to use the CleanSpace EX, which is equal in safety to the TR–800 model but has added enhancements. The CleanSpace EX model is also utilized for different tasks that miners are required to do.
The petitioner proposes the following alternative method:
(a) The petitioner is applying to use the CleanSpace EX PAPR at this mine location. The CleanSpace EX is UL certified to the ANSI/UL 60079–11 standard and can be used in hazardous locations; it meets the intrinsic safety protection level and is acceptable to use in mines with the potential for firedamp.
(b) The product uses a lithium polymer battery that is not detachable from the electrical circuit. It charges as a complete unit.
(c) The product has a NIOSH approved high capacity high efficiency (HEPA) particulate/vapor filter for a half mask and a HEPA particulate filter for the full facemask.
(d) The product does not impair vision or communication.
(e) The product allows for the miner to simultaneously wear the issued hardhat with a headlamp, unlike the TR–800 model, which does not account for the headlamp.
(f) The product uses technology placing the filter housing and fan assembly above the shoulders to reduce ergonomic restrictions, freeing the miner from having to wear the fan and filter unit around the waist. There are also no hose attachments to the unit, which could create added hazards.
(g) Using the CleanSpace EX PAPR allows the petitioner to quantitatively fit test employees.
(h) The CleanSpace EX allows for more comfort and it can be easily disassembled and cleaned.
(i) CleanSpace EX units will be charged out-by the last open crosscut and will utilize the manufacturer approved battery charger.
(j) Employees will be trained on how to properly use and take care of the CleanSpace EX PAPR, according to manufacturer guidelines.
(k) 30 CFR 57.22234 will be adhered to if 1.0 percent or more methane is detected.
(l) This petition will achieve the same level of safety that is provided by 30 CFR 57.22305.
Cost Accounting Standards Board, Office Federal Procurement Policy, Office of Management and Budget.
Notice.
The Office of Federal Procurement Policy, Cost Accounting Standards Board, is publishing this notice to announce the availability of a Staff Discussion Paper (SDP) on conformance of the Cost Accounting Standards (CAS) to Generally Accepted Accounting Principles (GAAP) for capitalization of tangible assets and accounting for acquisition costs of material.
Comments must be in writing and must be received by November 17, 2020.
Due to delays in OMB's receipt and processing of mail, respondents are strongly encouraged to submit comments electronically to ensure timely receipt. Electronic comments should be submitted to
Mathew Blum, Cost Accounting Standards Board (Telephone 202–680–9579; email
Section 820 of Public Law 114–328 directed the Board to conform CAS to GAAP to the maximum extent practicable. This notice announces the availability of a staff discussion paper addressing the potential conformance of CAS 404, Capitalization of Tangible Assets, and CAS 411, CAS Accounting for Acquisition Costs of Material, to GAAP. Issuance of a staff discussion paper is the first of a four-step process required by law (41 U.S.C. 1502(c)) prior to the establishment of any new or revised Cost Accounting Standard.
On March 13, 2019, the Board issued a roadmap for public comment addressing the overall prioritization and specific sequencing of its conformance work. See 84 FR 9143. Among other things, the roadmap explained that the Board would give priority attention to standards focused primarily on cost measurement and assignment of costs to accounting periods, including CAS 404 and CAS 411. The majority of commenters recognized the benefit of focusing on those standards anticipated to offer the most opportunity to conform CAS to existing content in GAAP and generally agreed with the proposed prioritization. See 85 FR 15817 (March 19, 2020). The Board also found that the template it used for its first analysis, addressing CAS 408 and CAS 409, was helpful in organizing public input. For these reasons, the Board is using the same template to cross-walk coverage of CAS 404 and 411 with GAAP in the SDP.
Respondents are encouraged to provide comments to the questions raised by the Board, although the Board also welcomes identification and comment on any other important issues related to conformance of the subject CAS to GAAP.
Interested persons are invited to participate by providing input with respect to conformance of CAS to GAAP. All comments must be in writing and submitted as instructed in the
National Archives and Records Administration (NARA).
Notice of availability of proposed records schedule; extension of comment period.
We are extending the deadline for submitting comments on the Department of Homeland Security (DHS), U.S. Customs and Border Patrol (CBP), proposed records schedule covering Internal Investigation Files (DAA–0568–2018–0001), which was published in the
We are extending the original comment period (published August 4, 2020, at 85 FR 47248) for the proposed CBP records schedule to no later than 11:59 p.m. Eastern Time on September 30, 2020.
You may submit comments by either of the following methods. You must cite the control number for this records schedule, which is DAA–0568–2018–0001.
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Kimberly Keravuori, Regulatory and External Policy Program Manager, by email at
On August 4, 2020, we issued a notice listing proposed records schedules open for comment (
Institute of Museum and Library Services, National Foundation for the Arts and the Humanities.
Notice, request for comments, collection of information.
The Institute of Museum and Library Services (IMLS), as part of its continuing effort to reduce paperwork and respondent burden, conducts a preclearance consultation program to provide the general public and Federal agencies with an opportunity to comment on proposed and/or continuing collections of information in accordance with the Paperwork Reduction Act. This pre-clearance consultation program helps to ensure that requested data can be provided in the desired format, reporting burden (time and financial resources) is minimized, collection instruments are clearly understood, and the impact of collection requirements on respondents can be properly assessed. The purpose of this notice is to solicit comments concerning an information collection from museums participating in the
Written comments must be submitted to the office listed in the addressee section below on or before November 13, 2020.
Send comments to Connie Bodner, Ph.D., Director of Grants Policy and Management, Office of Grants Policy and Management, Institute of Museum and Library Services, 955 L'Enfant Plaza North SW, Suite 4000, Washington, DC 20024–2135. Dr. Bodner can be reached by Telephone: 202–653–4636 or by email at
Christopher J. Reich, Chief Administrator, Office of Museum Services, Institute of Museum and Library Services, 955 L'Enfant Plaza North SW, Suite 4000, Washington, DC 20024–2135. Mr. Reich can be reached by Telephone: 202–653–4685, or by email at
IMLS is particularly interested in public comment that help the agency to:
• Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
• Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information including the validity of the methodology and assumptions used;
• Enhance the quality, utility, and clarity of the information to be collected; and
• Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated electronic, mechanical, or other technological collection techniques, or other forms of information technology,
The Institute of Museum and Library Services is the primary source of Federal support for the Nation's libraries and museums. We advance, support, and empower America's museums, libraries, and related organizations through grant making, research, and policy development. Our vision is a nation where museums and libraries work together to transform the lives of individuals and communities. To learn more, visit
The purpose of this collection is to support a program to increase access to museums for underserved audiences through
In accordance with the Federal Advisory Committee Act (Pub. L. 92–463, as amended), the National Science Foundation (NSF) announces the following meeting:
October 15, 2020; 11:00 a.m.—5:00 p.m. EDT.
National Science Foundation.
Notice of permit applications received.
The National Science Foundation (NSF) is required to publish a notice of permit applications received to conduct activities regulated under the Antarctic Conservation Act of 1978. NSF has published regulations under the Antarctic Conservation Act in the Code of Federal Regulations. This is the required notice of permit applications received.
Interested parties are invited to submit written data, comments, or views with respect to this permit application by October 19, 2020. This application may be inspected by interested parties at the Permit Office, address below.
Comments should be addressed to Permit Office, Office of Polar Programs, National Science Foundation, 2415 Eisenhower Avenue, Alexandria, Virginia 22314.
Nature McGinn, ACA Permit Officer, at the above address, 703–292–8030, or
The National Science Foundation, as directed by the Antarctic Conservation Act of 1978 (Pub. L. 95–541, 45 CFR 671), as amended by the Antarctic Science, Tourism and Conservation Act of 1996, has developed regulations for the establishment of a permit system for various activities in Antarctica and designation of certain animals and certain geographic areas a requiring special protection. The regulations establish such a permit system to designate Antarctic Specially Protected Areas.
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National Science Foundation.
Notice of permit issued.
The National Science Foundation (NSF) is required to publish notice of permits issued under the Antarctic Conservation Act of 1978. This is the required notice.
Nature McGinn, ACA Permit Officer, Office of Polar Programs, National Science Foundation, 2415 Eisenhower Avenue, Alexandria, VA 22314; 703–292–8030; email:
On June 26, 2020, the National Science Foundation published a notice in the
1. Megan Cimino
Weeks of September 14, 21, 28, October 5, 12, 19, 2020.
Commissioners' Conference Room, 11555 Rockville Pike, Rockville, Maryland.
Public.
The public was invited to attend the Commission's meeting live by webcast at the Web address—
There are no meetings scheduled for the week of September 21, 2020.
There are no meetings scheduled for the week of October 12, 2020.
For more information or to verify the status of meetings, contact Denise McGovern at 301–415–0681 or via email at
The NRC Commission Meeting Schedule can be found on the internet at:
The NRC provides reasonable accommodation to individuals with disabilities where appropriate. If you need a reasonable accommodation to participate in these public meetings or need this meeting notice or the transcript or other information from the public meetings in another format (
Members of the public may request to receive this information electronically. If you would like to be added to the distribution, please contact the Nuclear Regulatory Commission, Office of the Secretary, Washington, DC 20555 (301–415–1969), or by email at
The NRC is holding the meetings under the authority of the Government in the Sunshine Act, 5 U.S.C. 552b.
For the Nuclear Regulatory Commission.
Nuclear Regulatory Commission.
Notice of submission to the Office of Management and Budget; request for comment.
The U.S. Nuclear Regulatory Commission (NRC) has recently submitted a request for renewal of an existing collection of information to the Office of Management and Budget (OMB) for review. The information collection is entitled, NRC Online Form, “Nuclear Materials Relief Requests.”
Submit comments by October 19, 2020. Comments received after this date will be considered if it is practical to do so, but the Commission is able to ensure consideration only for comments received on or before this date.
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
David Cullison, NRC Clearance Officer, U.S. Nuclear Regulatory Commission, Washington, DC 20555–0001; telephone: 301–415–2084; email:
Please refer to Docket ID NRC–2020–0104 when contacting the NRC about the availability of information for this action. You may obtain publicly-available information related to this action by any of the following methods:
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The NRC cautions you not to include identifying or contact information in comment submissions that you do not want to be publicly disclosed in your comment submission. All comment submissions are posted at
If you are requesting or aggregating comments from other persons for submission to the OMB, then you should inform those persons not to include identifying or contact information that they do not want to be publicly disclosed in their comment submission. Your request should state that comment submissions are not routinely edited to remove such information before making the comment submissions available to the public or entering the comment into ADAMS.
Under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the NRC recently submitted a request for renewal of an existing collection of information to OMB for review entitled, NRC Online Form, “Nuclear Materials Relief Requests.” The NRC hereby informs potential respondents that an agency may not conduct or sponsor, and that a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.
The NRC published a
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The NRC requires licensed facilities to comply with requirements in title 10 of the
For the Nuclear Regulatory Commission.
Peace Corps.
Notice of information collection—OMB emergency review and request for comments requested.
The Peace Corps has submitted the following information collection request, utilizing emergency review procedures, to the Office of Management and Budget (OMB) for review and clearance in accordance with the Paperwork Reduction Act of 1995 and OMB regulations. OMB approval has been requested by the Office of Volunteer Recruitment and Selection. OMB is particularly interested in comments that: Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; Enhance the quality, utility, and clarity of the information to be collected; and Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
Comments on this proposal for emergency review should be received by
Interested persons are invited to submit written comments on the proposed information collection to the Office of Information and Regulatory Affairs, Office of Management and Budget, 725 17th Street NW, Washington, DC 20503, Attention: Desk Officer for the Peace Corps or sent via email to
Virginia Burke, FOIA Officer, Peace Corps, 1275 First Street NE, Washington, DC 20526, (202) 692–1887, or email at
This process is conducted in accordance with 5 CFR 1320.13. The Peace Corps plans to follow this emergency request with a submission for a three year approval through OMB's normal PRA clearance process. We are seeking an emergency clearance to allow us to collect information from Returned Peace Corps Volunteers.
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Securities and Exchange Commission.
Notice of meeting.
Notice is being provided that the Securities and Exchange Commission Fixed Income Market Structure Advisory Committee will hold a public meeting on Monday, October 5, 2020, by remote means. The meeting will begin at 9:30 a.m. (ET) and will be open to the public via webcast on the Commission's website at
The public meeting will be held on October 5, 2020. Written statements should be received on or before September 28, 2020.
The meeting will be held by remote means and webcast on
• Use the Commission's internet submission form (
• Send an email message to
• Send paper statements in triplicate to Vanessa A. Countryman, Federal Advisory Committee Management Officer, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090.
Statements also will be available for website viewing and printing in the Commission's Public Reference Room, 100 F Street NE, Room 1580, Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. For up-to-date information on the availability of the Public Reference Room, please refer to
All statements received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from submissions. You should submit only information that you wish to make available publicly.
David Dimitrious, Senior Special Counsel, at (202) 551–5131, or Arisa Kettig, Special Counsel, at (202) 551–5676, Division of Trading and Markets, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–7010.
In accordance with Section 10(a) of the Federal Advisory Committee Act, 5 U.S.C.–App. 1, and the regulations thereunder, Brett Redfearn,
Designated Federal Officer of the Committee, has ordered publication of this notice.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
FINRA is proposing to (1) amend the standardized membership application forms—Form NMA (New Membership Application Form) and Form CMA (Continuing Membership Application Form)—required under Rule 1013 (New Member Application and Interview) and Rule 1017 (Application for Approval of Change in Ownership, Control, or Business Operations), respectively, to conform to amendments to the Membership Application Program (“MAP”) rules
The text of the proposed rule change is available on FINRA's website at
In its filing with the Commission, FINRA included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. FINRA has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The MAP rules require an applicant for new or continuing membership to file an application that includes a Form NMA or Form CMA, as applicable.
In general, Form NMA and Form CMA are organized into sections that align with the standards for admission set forth in Rule 1014(a) (Standards for Admission). Each section begins with a description of the applicable standard in Rule 1014(a), followed by a series of questions related to that standard that are intended to help the applicant provide the responses needed to demonstrate that it can meet each of the standards described under Rule 1014(a), and to facilitate FINRA's review of the application.
Rule 1014(a)(3) (“Standard 3”) is one of the standards for admission FINRA must consider in determining whether to approve an NMA or CMA. Standard 3 requires FINRA to determine whether an applicant for new or continuing membership and its associated persons “are capable of complying with” the federal securities laws, the rules and regulations thereunder, and FINRA rules. Standard 3 sets forth several factors, including past and current disciplinary actions and customer claims, that FINRA must consider in making that determination. The existence of specified factors “[raises] a question of capacity to comply with the federal securities laws and the rules of [FINRA],” which results in a rebuttable presumption to deny the application. Form NMA and Form CMA describe the specified factors in Standard 3, as well as the specified factors that trigger a rebuttable presumption to deny an application.
In addition, both forms require the applicant to provide a “yes” or “no” answer as to whether the applicant or any of its associated persons are subject to any of the specified factors described in Standard 3,
The forms require the applicant to explain in detail how, even with the existence of any of the specified factors that trigger the presumption to deny the application, it is nonetheless capable of complying with industry rules, regulation, laws, and observing high standards of commercial honor and just and equitable principles of trade.
FINRA has amended the MAP rules to create further incentives for the timely payment of arbitration awards by preventing an individual from switching firms, or a firm from using asset transfers or similar transactions, to avoid payment of arbitration awards.
As a result of the amendments to the MAP rules, FINRA is proposing to amend Form NMA and Form CMA to: (1) Align the description of Standard 3 used in the forms with the amended language in Rule 1014(a)(3); (2) align the description of the rebuttable presumption to deny an application with amended Rules 1014(b)(1) and 1017(i)(1), which set forth the Standard 3 factors that trigger the presumption to deny an NMA and CMA, respectively; (3) incorporate into Form NMA relevant arbitration-related questions that currently appear in Form CMA but not in Form NMA, to create consistency between the forms; (4) incorporate into Form NMA arbitration-related documentation options that currently appear in Form CMA but not in Form NMA to create consistency between the forms, and amend these options, as applicable, to conform to new IM–1014–1; and (5) make other non-substantive and technical changes throughout both standardized forms.
Once an application is deemed filed, FINRA evaluates an applicant's financial, operational, supervisory and compliance systems to ensure that the applicant meets Standard 3, among other standards. As noted above, in determining whether an applicant for new or continuing membership and its associated persons are able to meet Standard 3, FINRA must consider a variety of factors, such as past and current disciplinary actions, in making that determination.
FINRA is proposing to amend Form NMA and Form CMA such that the language to describe Standard 3 reflects the language in Rule 1014(a)(3), as amended. Specifically, the proposed amendments would reflect that the specified factors now appear in eight subparagraphs, rather than six.
An applicant for new or continuing membership will trigger a presumption to deny the application if the applicant or its associated persons are subject to certain of the factors specified in Standard 3.
Currently, both forms include a description of the presumption to deny an application, referencing the language in Rule 1014(b)(1) prior to its amendment.
Form CMA's Standard 3 section contains requirements that FINRA believes are relevant to new membership applications, but are not currently included in Form NMA.
Specifically, Form CMA directs the applicant to indicate whether it or any associated persons have been found to have repeat violations of the same federal securities laws or regulations, the rules thereunder, or FINRA rules and if so, to identify the nature of the repetitive occurrences, the corrective action the applicant has taken to prevent future violations, and the specific persons with responsibility for supervision in the areas noted with repeat violations or associated persons who have been found to have repeat violations.
In addition, Form CMA directs the applicant to provide details regarding any pending arbitration claims or closed or settled arbitration matters by providing a summary of each claim, including the amounts claimed for pending matters, the current status, and the amount of settled matters.
FINRA is proposing to incorporate these requirements into Form NMA, without substantive modification, but would include some clarifying language that would also be reflected in Form CMA.
Currently, Form NMA and Form CMA provide, within the category titled, “Provide supporting documents[,]” that an applicant may provide additional documents to evidence its ability to meet Standard 3. This category of the forms is not marked with a red asterisk, indicating that the applicant is not required to provide documents.
Form NMA's Question 1 within the category titled “Provide supporting documents” permits an applicant for new membership to provide copies of any state, federal, or other orders, decrees or formal actions.
Within the “Providing Supporting Documents” category, Form NMA's Question 2 permits an applicant to provide relevant and supporting documents, citing as examples statements of claim or settlement agreements.
New IM–1014–1 expressly provides that an applicant may demonstrate its ability to satisfy an unpaid arbitration award, other adjudicated customer award, unpaid arbitration settlement or a pending arbitration claim, through an escrow agreement, insurance coverage, a clearing deposit, a guarantee, a reserve fund, or the retention of proceeds from an asset transfer, or such other forms of documentation that FINRA may determine to be acceptable. In addition, an applicant may provide a written opinion of an independent, reputable U.S. licensed counsel knowledgeable in the area as to the value of the arbitration claims (which might be zero). IM–1014–1 also provides that to overcome the presumption to deny the application due to unpaid arbitration awards, other adjudicated customer awards, unpaid arbitration settlements, or pending arbitration claims, as applicable, the applicant must guarantee that any funds used to evidence the applicant's ability to satisfy any awards, settlements, or claims will be used for that purpose. Any demonstration by an applicant of its ability to satisfy these outstanding obligations would be subject to a reasonableness assessment by FINRA.
FINRA is proposing to add to Form NMA the more detailed documentation options set forth in Form CMA, but modify the options in both forms, as appropriate, to align them with new IM–1014–1. Specifically, FINRA is proposing to remove the reference to a specific type of business change in Form CMA (
Further, FINRA is proposing to modify the documentation option in Form CMA to specify that an applicant may provide a written opinion of counsel from an independent, reputable U.S. licensed counsel knowledgeable in the value of the arbitration claims and any other documentation developed by the applicant's financial operations principal, accountants, or auditors that support the applicant's treatment of unpaid and pending arbitration or civil litigation claims. FINRA is proposing to incorporate this documentation option into Form NMA.
Finally, FINRA is proposing to modify the Arbitration Plan requirements in Form CMA to provide that the Arbitration Plan should include the provision the applicant will make and guarantee for payment of awards, settlements or claims. In addition, the Arbitration Plan would include more examples of how an applicant may demonstrate its ability to satisfy awards, including through an escrow agreement, insurance coverage, clearing deposit or guarantee. In addition to incorporating Form CMA's documentation options relating to the Relationship Statement and Statement of Future Plans, without substantive change, FINRA is also proposing to incorporate the Arbitration Plan requirements, as modified, into Form NMA.
The proposed changes to Form NMA and Form CMA would conform the forms to the amendments to the MAP rules. Incorporating the provisions and documentation options, as modified, from Form CMA to Form NMA would not impose additional requirements on an applicant for new membership beyond the scope of the amended MAP rules; instead, the proposed changes would help the applicant prepare to address, as applicable, the areas pertaining to meeting Standard 3, as amended. Moreover, the proposed changes to these standardized forms would make the forms more consistent as to the documents and information FINRA would need to determine whether a new or continuing membership applicant would be able to meet Standard 3, as amended.
In 2019, as part of the process of completing a consolidated FINRA rulebook, FINRA transferred the remaining legacy NASD rules, without substantive change, as FINRA rules in the consolidated FINRA rulebook and the remaining Incorporated NYSE Rules and Incorporated NYSE Rule Interpretations, without substantive change, in the consolidated FINRA rulebook as a separate Temporary Dual FINRA–NYSE Member Rules Series.
FINRA has filed the proposed rule change for immediate effectiveness and has requested that the SEC waive the requirement that the proposed rule change not become operative for 30 days after the date of the filing, so that FINRA can implement the proposed rule change on September 14, 2020, consistent with the effective date for the amendments to the MAP rules.
FINRA believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act,
The proposed changes to Form NMA and Form CMA will conform the forms to the amendments to the MAP rules, as described in File No. SR–FINRA–2019–030, that are intended to create further incentives for the timely payment of customer arbitration awards by preventing an individual from switching firms, or a firm from using asset transfers or similar transactions, to avoid payment of customer arbitration awards. The proposed changes to Form NMA and Form CMA will help ensure that applicants for new and continuing membership provide the information and documentation to produce a complete application package for FINRA's review. In addition, the proposed changes to Form NMA and Form CMA will provide more consistency, where applicable, between the forms.
FINRA does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. FINRA's recent amendments to the MAP rules necessitate conforming changes to the Standard 3 section of Form NMA and Form CMA to reflect the documents and information that may be necessary for applicants to demonstrate their ability to meet Standard 3, as amended. The proposed conforming changes to the forms effectuate the recent amendments to the MAP rules as described in File No. SR–FINRA–2019–030. FINRA believes that the proposed conforming changes to the forms would not result in new material economic effects. FINRA considered and discussed the potential economic impact of the recent amendments in File No. SR–FINRA–2019–030, including the burden imposed on some applicants to address in the application arbitration-related questions and documentation options.
Written comments were neither solicited nor received.
Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act
A proposed rule change filed under Rule 19b–4(f)(6) normally does not become operative for 30 days after the date of filing. However, pursuant to Rule 19b–4(f)(6)(iii), the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. FINRA has asked the Commission to waive the 30-day operative delay so that the proposed rule change becomes operative immediately upon filing to help applicants for new and continuing membership to provide the information and documentation required by the updated MAP Rules.
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes to amend Rule 7.37 to update the Exchange's source of data feeds from MIAX PEARL, LLC (“MIAX PEARL”) for purposes of order handling, order execution, order routing, and regulatory compliance. The proposed rule change is available on the Exchange's website at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The Exchange proposes to update and amend the use of data feeds table in Rule 7.37, which sets forth on a market-by-market basis the specific securities information processor (“SIP”) and proprietary data feeds that the Exchange utilizes for the handling, execution, and routing of orders, and for performing the regulatory compliance checks related to each of those functions. Specifically, the Exchange proposes to amend the table in Rule 7.37(d) to specify that, with respect to MIAX PEARL, the Exchange will receive the SIP feed as its primary source of data for order handling, order execution, order routing, and regulatory compliance. The Exchange will not have a secondary source for data from MIAX PEARL.
The Exchange proposes that this proposed rule change would be operative on the day that MIAX PEARL launches operations as an equities exchange, which is currently expected on September 25, 2020.
The proposed rule change is consistent with Section 6(b) of the Act,
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed change is not designed to address any competitive issue, but rather would provide the public and market participants with up-to-date information about the data feeds the Exchange will use for the handling, execution, and routing of orders, as well as for regulatory compliance.
No written comments were solicited or received with respect to the proposed rule change.
Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act
A proposed rule change filed pursuant to Rule 19b–4(f)(6) under the Act
At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule change should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
2:00 p.m. on Wednesday, September 23, 2020.
The meeting will be held via remote means and/or at the Commission's headquarters, 100 F Street NE, Washington, DC 20549.
This meeting will be closed to the public.
Commissioners, Counsel to the Commissioners, the Secretary to the Commission, and recording secretaries will attend the closed meeting. Certain staff members who have an interest in the matters also may be present.
In the event that the time, date, or location of this meeting changes, an announcement of the change, along with the new time, date, and/or place of the meeting will be posted on the Commission's website at
The General Counsel of the Commission, or his designee, has certified that, in his opinion, one or more of the exemptions set forth in 5 U.S.C. 552b(c)(3), (5), (6), (7), (8), 9(B) and (10) and 17 CFR 200.402(a)(3), (a)(5), (a)(6), (a)(7), (a)(8), (a)(9)(ii) and (a)(10), permit consideration of the scheduled matters at the closed meeting.
The subject matter of the closed meeting will consist of the following topic:
Institution and settlement of injunctive actions;
Institution and settlement of administrative proceedings;
Resolution of litigation claims; and
Other matters relating to enforcement proceedings.
At times, changes in Commission priorities require alterations in the scheduling of meeting agenda items that may consist of adjudicatory, examination, litigation, or regulatory matters.
For further information; please contact Vanessa A. Countryman from the Office of the Secretary at (202) 551–5400.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
ICE Clear Europe proposes to make certain amendments to its Rules
In its filing with the Commission, ICE Clear Europe included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. ICE Clear Europe has prepared summaries, set forth in sections (A), (B), and (C) below, of the most significant aspects of such statements.
ICE Clear Europe proposes to amend the definitions of “Applicable Law” and “Regulatory Authority” set out in Rule 101. The amendments are being made to clarify the scope of such definitions in the context of the application by ICE Clear Europe to ESMA for recognition as a third country CCP under the European Market Infrastructure Regulation (EMIR).
Specifically, the defined term “Applicable Law” would be amended to include expressly any consent entered into by the Clearing House for the benefit or one or more Governmental Authorities. The term “Regulatory Authority,” which is defined as a Governmental Authority that exercise certain regulatory or supervisory functions, would be amended specifically to refer to ESMA, among other enumerated regulatory authorities. The amendments are intended to clarify that the term Applicable Law will include a consent required to be executed by the Clearing House in favor of ESMA under EMIR
ICE Clear Europe believes that the changes described herein are consistent with the requirements of Section 17A of the Act
The amendments are also consistent with Rule 17Ad–22(e)(1), which requires in relevant part that a covered clearing agency have policies and procedures reasonably designed to “provide for a well-founded, clear, transparent and enforceable legal basis for each aspect of its activities in all relevant jurisdictions.”
ICE Clear Europe does not believe the proposed rule changes would have any impact, or impose any burden, on competition not necessary or appropriate in furtherance of the purpose of the Act. The amendments are limited to modifying certain defined terms in order to clarify that the Consent, and the related provision of certain required information, and required access, to ESMA as a regulatory authority under EMIR, is consistent with the Rules. To the extent the amendments affect Clearing Members or Sponsored Principals, they will apply consistently across all such persons. The amendments are also not expected to affect the cost of, or access to, clearing or affect the market for cleared derivatives generally. As a result, in ICE Clear Europe's view, the amendments would not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
Written comments relating to the proposed rule changes have not been solicited or received. ICE Clear Europe will notify the Commission of any written comments received by ICE Clear Europe.
Because the foregoing proposed rule change does not:
(i) Significantly affect the protection of investors or the public interest;
(ii) impose any significant burden on competition; and
(iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b–4(f)(6) thereunder.
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090.
All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–ICEEU–2020–012 and should be submitted on or before October 9, 2020.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Securities and Exchange Commission (“Commission”).
Notice.
Notice of an application under Section 6(c) of the Investment Company Act of 1940 (the “Act”) for an exemption from Sections 18(a)(2), 18(c), 18(i) and Section 61(a) of the Act.
Secretary, U.S. Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090; Applicants: Marisa J. Beeney, GSO Capital Partners LP, 345 Park Avenue, 31st Floor, New York, NY 10154.
Rochelle Plesset, Senior Counsel, or David Marcinkus, Branch Chief, at (202) 551–6821 (Division of Investment Management, Chief Counsel's Office).
The following is a summary of the application. The complete application may be obtained via the Commission's website by searching for the file number, or for an applicant using the Company name box, at
1. The Current Investment Adviser is registered as an investment adviser under the Investment Advisers Act of 1940 and will serve as investment adviser to BCRED.
2. BCRED is a newly organized Delaware statutory trust that intends to operate as a non-diversified, closed-end management investment company that will elect to be regulated as a BDC under the Act.
3. Applicants seek an order to permit BCRED and other Funds (defined below) to offer investors multiple classes of shares of beneficial interest (“Shares”) with varying sales loads and asset-based service and/or distribution fees.
4. Applicants request that the order also apply to any continuously offered registered closed-end management investment company that elects to be regulated as a BDC that has been previously organized or that may be organized in the future for which the Current Investment Adviser or any entity controlling, controlled by, or under common control with the Current Investment Adviser, or any successor in interest to any such entity,
5. As a BDC, each Fund will be organized as a closed-end investment company, but will offer its Shares continuously, similar to an open-end management investment company. Shares of the Funds will not be offered or traded in a secondary market and will not be listed on any securities exchange and do not trade on an over-the-counter system.
6. Each Fund is seeking the ability to offer multiple classes of Shares that may charge differing front-end sales loads, contingent deferred sales charges (“CDSCs”), an early withdrawal charge (“Repurchase Fee”), and/or annual asset-based service and/or distribution fees. Each class of Shares will comply with the provisions of Rule 2310 of the Financial Industry Regulatory Authority, Inc. (“FINRA”) Manual (“FINRA Rule 2310”).
7. Any Share of a Fund that is subject to asset-based service or distribution fees shall convert to a class with no asset based service or distribution fees upon such Share reaching the applicable sales charge cap determined in accordance with FINRA Rule 2310. Further, if a class of Shares were to be listed on an exchange in the future, all other then-existing classes of Shares of the listing Fund will be converted into the listed class, without the imposition of any sales load, fee or other charge.
8. In order to provide a limited degree of liquidity to shareholders, Applicants state that each Fund may from time to time offer to repurchase Shares in accordance with the requirements of Rule 23c–3 under the Act and/or Rule 13e–4 under the Exchange Act and Section 23(c)(2) of the Act. Applicants state further that repurchases of each Fund's Shares will be made at such times, in such amounts and on such terms as may be determined by the applicable Fund's board of trustees in its sole discretion.
9. Each Fund will disclose in its prospectus the fees, expenses and other characteristics of each class of Shares offered for sale by the prospectus, as is required for open-end, multiple-class funds under Form N–1A. As if it were an open-end management investment company, each Fund will disclose fund expenses in shareholder reports,
10. Distribution fees will be paid pursuant to a plan of distribution adopted by each Fund in compliance with Rules 12b–1 and 17d–3 under the Act, as if those rules applied to closed-end funds electing to be regulated as BDCs, with respect to a class (a “Distribution Plan”).
11. Each Fund will allocate all expenses incurred by it among the various classes of Shares based on the respective net assets of the Fund attributable to each such class, except that the net asset value and expenses of each class will reflect the expenses associated with the Distribution Plan of that class (if any), shareholder servicing fees attributable to a particular class (including transfer agency fees, if any) and any other incremental expenses of that class. Expenses of the Fund allocated to a particular class of the Fund's Shares will be borne on a pro rata basis by each outstanding Share of that class. Applicants state that each Fund will comply with the provisions of Rule 18f-3 under the Act as if it were an open-end management investment company.
12. Any Fund that imposes a CDSC will comply with the provisions of Rule 6c–10 (except to the extent a Fund will comply with FINRA Rule 2310 rather than FINRA Rule 2341, as such rule may be amended (“FINRA Rule 2341”)), as if that rule applied to BDCs. With respect to any waiver of, scheduled variation in, or elimination of the CDSC, a Fund will comply with the requirements of Rule 22d–1 under the Act as if the Fund were an open-end management investment company. Each Fund also will disclose CDSCs in accordance with the requirements of Form N–1A concerning CDSCs as if the Fund were an open-end management investment company.
13. Funds may impose a Repurchase Fee at a rate no greater than 2% of the shareholder's repurchase proceeds if the interval between the date of purchase of the Shares and the valuation date with respect to the repurchase of such Shares is less than a specified period. Any Repurchase Fee will apply equally to all shareholders of the applicable Fund, regardless of class, consistent with Section 18 of the Act and Rule 18f–3 under the Act. To the extent a Fund determines to waive, impose scheduled variations of, or eliminate any Repurchase Fees, it will do so consistently with the requirements of Rule 22d–1 under the Act as if the Repurchase Fee were a CDSC and as if the Fund were an open-end investment company and the Fund's waiver of, scheduled variation in, or elimination of, the Repurchase Fee will apply uniformly to all shareholders of the Fund.
1. Section 18(a)(2) of the Act provides that a closed-end investment company may not issue or sell a senior security that is a stock unless certain requirements are met. Applicants state that the creation of multiple classes of shares of the Funds may violate Section 18(a)(2), which is made applicable to BDCs through Section 61(a) of the Act, because the Funds may not meet such requirements with respect to a class of shares that may be a senior security.
2. Section 18(c) of the Act provides, in relevant part, that a closed-end investment company may not issue or sell any senior security if, immediately thereafter, the company has outstanding more than one class of senior security. Applicants state that the creation of multiple classes of Shares of the Funds may be prohibited by Section 18(c), which is made applicable to BDCs through Section 61(a) of the Act, as a class may have priority over another class as to payment of dividends because shareholders of different classes would pay different fees and expenses.
3. Section 18(i) of the Act provides that each share of stock issued by a registered management investment company will be a voting stock and have equal voting rights with every other outstanding voting stock. Applicants state that multiple classes of shares of the Funds may violate Section 18(i) of the Act, which is made applicable to BDCs through Section 61(a) of the Act, because each class would be entitled to exclusive voting rights with respect to matters solely related to that class.
4. Section 6(c) of the Act provides that the Commission may exempt any person, security or transaction or any class or classes of persons, securities or transactions from any provision of the Act, or from any rule or regulation under the Act, if and to the extent such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. Applicants request an exemption under Section 6(c) from Sections 18(a)(2), 18(c) and 18(i) (which are made applicable to BDCs by Section 61(a) of the Act) to permit the Funds to issue multiple classes of Shares.
5. Applicants submit that the proposed allocation of expenses relating to distribution and voting rights among multiple classes is equitable and will not discriminate against any group or class of shareholders. Applicants submit that the proposed arrangements would permit a Fund to facilitate the distribution of its Shares and provide investors with a broader choice of fee options. Applicants assert that the proposed BDC multiple class structure does not raise the concerns underlying Section 18 of the Act to any greater degree than open-end management investment companies' multiple class structures that are permitted by Rule 18f-3 under the Act.
Applicants agree that any order granting the requested relief will be subject to the following condition:
1. Each Fund will comply with the provisions of Rules 6c-10 (except to the extent a Fund will comply with FINRA Rule 2310 rather than FINRA Rule 2341), 12b–1, 17d–3, 18f-3, 22d–1, and, where applicable, 11a–3 under the 1940 Act, as amended from time to time, or any successor rules thereto, as if those rules applied to BDCs. In addition, each Fund will comply with FINRA Rule 2310, as amended from time to time, or any successor rule thereto, and will make available to any distributor of a Fund's shares all of the information necessary to permit the distributor to prepare client account statements in compliance with FINRA Rule 2231.
For the Commission, by the Division of Investment Management, under delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange proposes to amend the Exchange's transaction fees, at Equity 7, Section 118(a), as described further below. The text of the proposed rule change is available on the Exchange's website at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Exchange operates on the “taker-maker” model, whereby it generally pays credits to members that take liquidity and charges fees to members that provide liquidity. Currently, the Exchange has a schedule, at Equity 7, Section 118(a), which consists of several different credits that it provides for orders in securities priced at $1 or more per share that access liquidity on the Exchange and several different charges that it assesses for orders in such securities that add liquidity on the Exchange.
The Exchange proposes to revise its schedule of charges to add one new fee. Specifically, the Exchange proposes to charge a $0.0022 per share executed fee for displayed orders that add liquidity entered by a member that: (i) Adds liquidity equal to or exceeding 0.12% of total Consolidated Volume during a month; and (ii) adds at least 35% more liquidity, as a percentage of total Consolidated Volume during a month, than it did during August 2020. The proposed fee represents a discount relative to the standard $0.0030 per share executed charge for orders that provide liquidity to the Exchange, as well as a discount relative to the $0.0024–$0.0028 per share executed range of existing charges for displayed orders that add liquidity above certain threshold percentages of total Consolidated during a month. Accordingly, the Exchange believes that the proposed new fee will incentivize members to grow their existing level of liquidity adding activity on the Exchange, and in particular, to grow such levels relative to a baseline of such activity. In doing so, the Exchange intends to improve the overall quality and attractiveness of the Nasdaq BX market.
Those participants that act as net adders of liquidity from the Exchange will benefit directly from the proposed fee. Other participants will also benefit from the new fee insofar as any ensuing increase in liquidity adding activity will improve the overall quality of the market.
The Exchange notes that its proposal is not otherwise targeted at or expected to be limited in its applicability to a specific segment(s) of market participants nor will it apply differently to different types of market participants.
The Exchange believes that its proposal is consistent with Section 6(b) of the Act,
The Exchange's proposed change to its schedule of charge is reasonable in several respects. As a threshold matter, the Exchange is subject to significant competitive forces in the market for equity securities transaction services that constrain its pricing determinations in that market. The fact that this market is competitive has long been recognized by the courts. In
The Commission and the courts have repeatedly expressed their preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. In Regulation NMS, while adopting a series of steps to improve the current market model, the Commission highlighted the importance of market forces in determining prices and SRO revenues and, also, recognized that current regulation of the market system “has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.”
Numerous indicia demonstrate the competitive nature of this market. For example, clear substitutes to the Exchange exist in the market for equity security transaction services. The Exchange is only one of several equity venues to which market participants may direct their order flow, and it represents a small percentage of the overall market. It is also only one of several taker-maker exchanges. Competing equity exchanges offer similar tiered pricing structures to that of the Exchange, including schedules of rebates and fees that apply based upon members achieving certain volume thresholds.
Within this environment, market participants can freely and often do shift their order flow among the Exchange and competing venues in response to changes in their respective pricing schedules.
The Exchange has designed its proposed schedule of charges to provide increased overall incentives to members to increase their liquidity adding activity on the Exchange. An increase in liquidity adding activity on the Exchange will, in turn, improve the quality of the Nasdaq BX market and increase its attractiveness to existing and prospective participants. Generally, the proposed new charge will be comparable to, if not favorable to, those that its competitors provide.
The Exchange notes that those participants that are dissatisfied with the proposed charge are free to shift their order flow to competing venues that offer them lower fees.
The Exchange believes its proposal will allocate its proposed new charge fairly among its market participants. It is equitable for the Exchange to charge a discounted fee to participants whose displayed orders add liquidity to the Exchange as a means of incentivizing increased liquidity adding activity on the Exchange as well as to tie the charge to the member engaging in a threshold volume of liquidity adding activity on the Exchange. An increase in liquidity adding activity on the Exchange will improve the quality of the Nasdaq BX market and increase its attractiveness to existing and prospective participants.
Any participant that is dissatisfied with the proposed new charge is free to shift their order flow to competing venues that provide more favorable pricing or less stringent qualifying criteria.
The Exchange believes that the proposal is not unfairly discriminatory. As an initial matter, the Exchange believes that nothing about its volume-based tiered pricing model is inherently unfair; instead, it is a rational pricing model that is well-established and ubiquitous in today's economy among firms in various industries—from co-branded credit cards to grocery stores to cellular telephone data plans—that use it to reward the loyalty of their best customers that provide high levels of business activity and incent other customers to increase the extent of their business activity. It is also a pricing model that the Exchange and its competitors have long employed with the assent of the Commission. It is fair because it incentivizes customer activity that increases liquidity, enhances price discovery, and improves the overall quality of the equity markets.
The Exchange intends for its proposal to improve market quality for all members on the Exchange and by extension attract more liquidity to the market, improving market wide quality and price discovery. Both net removers and net adders of liquidity to the Exchange stand to benefit directly from the proposed change. That is, to the extent that the proposed change increases liquidity adding activity on the Exchange, this will improve market quality and the attractiveness of the Nasdaq BX market, to the benefit of all existing and prospective participants.
Moreover, any participant that is dissatisfied with the proposed new charge is free to shift their order flow to competing venues that provide more favorable pricing or less stringent qualifying criteria.
The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act.
The Exchange does not believe that its proposal will place any category of Exchange participant at a competitive disadvantage. As noted above, all members of the Exchange will benefit from any increase in market activity that the proposal effectuates. Members may grow or modify their businesses so that they can receive the discounted fee. Moreover, members are free to trade on other venues to the extent they believe that the fee charged is not attractive. As one can observe by looking at any market share chart, price competition between exchanges is fierce, with liquidity and market share moving freely between exchanges in reaction to fee and credit changes. The Exchange notes that the tier structure is consistent with broker-dealer fee practices as well as the other industries, as described above.
Addressing whether the proposal could impose a burden on competition on other SROs that is not necessary or appropriate, the Exchange believes that its proposed modifications to its schedule of charges will not impose a burden on competition because the Exchange's execution services are completely voluntary and subject to extensive competition both from a multitude of other live exchanges and off-exchange venues. The Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a particular venue to be excessive, or rebate opportunities available at other venues to be more favorable. In such an environment, the Exchange must continually adjust its fees to remain competitive with other exchanges and with alternative trading systems that have been exempted from compliance with the statutory standards applicable to exchanges. Because competitors are free to modify their own fees in response, and because market participants may readily adjust their order routing practices, the Exchange believes that the degree to which fee changes in this market may impose any burden on competition is extremely limited.
The proposed new charge is reflective of this competition because, as a threshold issue, the Exchange is a relatively small market so its ability to burden intermarket competition is limited. In this regard, even the largest U.S. equities exchange by volume has less than 17–18% market share, which in most markets could hardly be categorized as having enough market power to burden competition. Moreover, as noted above, price competition between exchanges is fierce, with liquidity and market share moving freely between exchanges in reaction to fee and credit changes. This is in addition to free flow of order flow to and among off-exchange venues which presently comprises approximately 44% of industry volume.
The Exchange intends for the proposed change to its schedule of fees to increase member incentives to engage in the addition of liquidity to the Exchange. These changes are procompetitive and reflective of the Exchange's efforts to make it an attractive and vibrant venue to market participants.
In sum, if the changes proposed herein is unattractive to market participants, it is likely that the Exchange will lose market share as a result. Accordingly, the Exchange does not believe that the proposed change will impair the ability of members or competing order execution venues to
No written comments were either solicited or received.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act.
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Norfolk Southern Railway Company (NSR) has filed a verified notice of exemption under 49 CFR part 1152 subpart F—
NSR has certified that: (1) No local traffic has moved over the Line for at least two years; (2) no overhead traffic has moved over the Line for at least two years, and overhead traffic, if there were any, could be rerouted over other lines; (3) no formal complaint filed by a user of rail service on the Line (or by a state or local government entity acting on behalf of such user) regarding cessation of service over the Line either is pending with the Surface Transportation Board (Board) or with any U.S. District Court or has been decided in favor of complainant within the two-year period; and (4) the requirements at 49 CFR 1105.7 and 1105.8 (notice of environmental and historic report), 49 CFR 1105.12 (newspaper publication), and 49 CFR 1152.50(d)(1) (notice to governmental agencies) have been met.
Any employee of NSR adversely affected by the abandonment shall be protected under
Provided no formal expression of intent to file an offer of financial assistance (OFA) has been received,
A copy of any petition filed with the Board should be sent to NSR's representative, William A. Mullins, Baker & Miller PLLC, 2401 Pennsylvania Ave. NW, Suite 300, Washington, DC 20037.
If the verified notice contains false or misleading information, the exemption is void ab initio.
NSR has filed a combined environmental and historic report that addresses the potential effects, if any, of the abandonment on the environment and historic resources. OEA will issue a Draft Environmental Assessment (Draft EA) by September 25, 2020. The Draft
Environmental, historic preservation, public use, or interim trail use/rail banking conditions will be imposed, where appropriate, in a subsequent decision.
Pursuant to the provisions of 49 CFR 1152.29(e)(2), NSR shall file a notice of consummation with the Board to signify that it has exercised the authority granted and fully abandoned the Line. If consummation has not been effected by NSR's filing of a notice of consummation by September 18, 2021, and there are no legal or regulatory barriers to consummation, the authority to abandon will automatically expire.
Board decisions and notices are available at
By the Board, Allison C. Davis, Director, Office of Proceedings.
Federal Aviation Administration, (FAA), DOT.
Notice of availability.
The FAA, Eastern Service Center, is issuing this notice to advise the public of the availability of the Final Environmental Assessment (Final EA)/Finding of No Significant Impact (FONSI) and the Record of Decision (ROD) for the Teterboro Airport RNAV (GPS) RWY 19 Offset arrival procedure. The Final EA/FONSI/ROD documents that the project is consistent with FAA Order 1050.1F,
The Final EA responds to agency and public comments received by the FAA and it updates the Draft EA, issued on December 23, 2019. The publication of the RNAV (GPS) RWY 19 Offset arrival procedure seeks to respond to a request from the Port Authority of New York and New Jersey by making available an alternative arrival procedure that overflies a less densely populated corridor while maintaining efficient operation of airspace around the Teterboro Airport.
The Final EA/FONSI/ROD documents the FAA's decision to implement the Proposed Action alternative as detailed in and supported by the Final EA.
The Final EA and FONSI/ROD for the Teterboro Airport RNAV (GPS) RWY 19 Offset arrival procedure are available at the following locations:
(1) Online at
(2) Electronic Versions of the Final EA/FONSI/ROD have been sent to eight libraries in the vicinity of Teterboro Airport with a request to make the digital document available to patrons. A list of these libraries is available online at the website above and is shown below. The FAA recognizes that libraries may be closed due to the COVID–19 public health emergency and, therefore, availability through these libraries may be impacted.
(3) If you are unable to access the Final EA/FONSI/ROD through one of these means, email
Mr. Andrew Pieroni, Federal Aviation Administration, Operations Support Group, Eastern Service Center, 1701 Columbia Avenue, College Park, Georgia 30337, (404) 305–5586. Additional information about the FAA's actions and environmental review of this project is available at the following website:
Federal Highway Administration (FHWA), DOT.
Notice and request for comments.
The FHWA invites public comments about our intention to request the Office of Management and Budget's (OMB) approval for a new information collection, which is summarized below under Supplementary Information. We are required to publish this notice in the
Please submit comments by November 17, 2020.
You may submit comments identified by DOT Docket ID 2020–0013 by any of the following methods:
Christine Thorkildsen, 518–487–1186,
The Paperwork Reduction Act of 1995; 44 U.S.C. Chapter 35, as amended; and 49 CFR 1.48.
Under part 211 of title 49 Code of Federal Regulations (CFR), this document provides the public notice that on September 2, 2020, the Virginia Museum of Transportation (VMTX) petitioned the Federal Railroad Administration (FRA) for a waiver of compliance from certain provisions of the Federal railroad safety regulations contained at 49 CFR part 230, Steam Locomotive Inspection and Maintenance Standards. FRA assigned the petition Docket Number FRA–2020–0073.
VMTX is a non-profit organization based in Roanoke, Virginia. It maintains and operates steam locomotive No. 611, which was built in 1944 by the Norfolk & Western Roanoke Shops and is used for educational displays at various railroad museums and special trains operating mostly in the Mid-Atlantic region. VMTX seeks relief from 49 CFR 230.41(a),
A copy of the petition, as well as any written communications concerning the petition, is available for review online at
Interested parties are invited to participate in these proceedings by submitting written views, data, or comments. FRA does not anticipate scheduling a public hearing in connection with these proceedings since the facts do not appear to warrant a hearing. If any interested parties desire an opportunity for oral comment and a public hearing, they should notify FRA, in writing, before the end of the comment period and specify the basis for their request.
All communications concerning these proceedings should identify the appropriate docket number and may be submitted by any of the following methods:
•
•
•
•
Communications received by November 2, 2020 will be considered by FRA before final action is taken. Comments received after that date will be considered if practicable.
Anyone can search the electronic form of any written communications and comments received into any of our dockets by the name of the individual submitting the comment (or signing the document, if submitted on behalf of an association, business, labor union, etc.). Under 5 U.S.C. 553(c), DOT solicits comments from the public to better inform its processes. DOT posts these comments, without edit, including any personal information the commenter provides, to
Issued in Washington, DC.
Maritime Administration, DOT.
Notice.
The Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to grant waivers of the U.S.-build requirements of the coastwise trade laws to allow the carriage of no more than twelve passengers for hire on vessels, which are three years old or more. A request for such a waiver has been received by MARAD. The vessel, and a brief description of the proposed service, is listed below.
Submit comments on or before October 19, 2020.
You may submit comments identified by DOT Docket Number MARAD–2020–0124 by any one of the following methods:
•
•
Russell Haynes, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE, Room W23–461, Washington, DC 20590. Telephone 202–366–3157, Email
As described by the applicant the intended service of the vessel ALOHA is:
The complete application is available for review identified in the DOT docket as MARAD–2020–0124 at
Please submit your comments, including the attachments, following the instructions provided under the above heading entitled
Go to the docket online at
Yes. Be aware that your entire comment, including your personal identifying information, will be made publicly available.
If you wish to submit comments under a claim of confidentiality, you should submit three copies of your complete submission, including the information you claim to be confidential business information, to the Department of Transportation, Maritime Administration, Office of Legislation and Regulations, MAR–225, W24–220, 1200 New Jersey Avenue SE, Washington, DC 20590. Include a cover letter setting forth with specificity the basis for any such claim and, if possible, a summary of your submission that can be made available to the public.
In accordance with 5 U.S.C. 553(c), DOT solicits comments from the public to better inform its rulemaking process. DOT posts these comments, without edit, to
By Order of the Maritime Administrator.
Maritime Administration, DOT.
Notice.
The Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to grant waivers of the U.S.-build requirements of the coastwise trade laws to allow the carriage of no more than twelve passengers for hire on vessels, which are three years old or more. A request for such a waiver has been received by MARAD. The vessel, and a brief description of the proposed service, is listed below.
Submit comments on or before October 19, 2020.
You may submit comments identified by DOT Docket Number MARAD–2020–0122 by any one of the following methods:
•
•
Russell Haynes, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE, Room W23–461, Washington, DC 20590. Telephone 202–366–3157, Email
As described by the applicant the intended service of the vessel VELOCE is:
The complete application is available for review identified in the DOT docket as MARAD–2020–0122 at
Please submit your comments, including the attachments, following the instructions provided under the above heading entitled
Go to the docket online at
Yes. Be aware that your entire comment, including your personal identifying information, will be made publicly available.
If you wish to submit comments under a claim of confidentiality, you should submit three copies of your complete submission, including the information you claim to be confidential business information, to the Department of Transportation, Maritime Administration, Office of Legislation and Regulations, MAR–225, W24–220, 1200 New Jersey Avenue SE, Washington, DC 20590. Include a cover letter setting forth with specificity the basis for any such claim and, if possible, a summary of your submission that can be made available to the public.
In accordance with 5 U.S.C. 553(c), DOT solicits comments from the public to better inform its rulemaking process. DOT posts these comments, without edit, to
By Order of the Maritime Administrator.
Maritime Administration, DOT.
Notice.
The Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to grant waivers of the U.S.-build requirements of the coastwise trade laws to allow the carriage of no more than twelve passengers for hire on vessels, which are three years old or more. A request for such a waiver has been received by MARAD. The vessel, and a brief description of the proposed service, is listed below.
Submit comments on or before October 19, 2020.
You may submit comments identified by DOT Docket Number MARAD–2020–0123 by any one of the following methods:
•
•
Russell Haynes, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE, Room W23–461, Washington, DC 20590. Telephone 202–366–3157, Email
As described by the applicant the intended service of the vessel JAVA is:
The complete application is available for review identified in the DOT docket as MARAD–2020–0123 at
Please submit your comments, including the attachments, following the instructions provided under the above heading entitled
Go to the docket online at
Yes. Be aware that your entire comment, including your personal identifying information, will be made publicly available.
If you wish to submit comments under a claim of confidentiality, you should submit three copies of your complete submission, including the information you claim to be confidential business information, to the Department of Transportation, Maritime Administration, Office of Legislation and Regulations, MAR–225, W24–220, 1200 New Jersey Avenue SE, Washington, DC 20590. Include a cover letter setting forth with specificity the basis for any such claim and, if possible, a summary of your submission that can be made available to the public.
In accordance with 5 U.S.C. 553(c), DOT solicits comments from the public to better inform its rulemaking process. DOT posts these comments, without edit, to
By Order of the Maritime Administrator.
National Highway Traffic Safety Administration (NHTSA), Department of Transportation (DOT).
Receipt of petition.
Mack Trucks Inc. (Mack Trucks) has determined that certain model year (MY) 2016 2020 Mack heavy duty motor vehicles do not fully comply with Federal Motor Vehicle Safety Standard (FMVSS) No. 101,
Send comments on or before October 19, 2020.
Interested persons are invited to submit written data, views, and arguments on this petition. Comments must refer to the docket and notice number cited in the title of this notice and submitted by any of the following methods:
•
•
•
• Comments may also be faxed to (202) 493–2251.
Comments must be written in the English language, and be no greater than 15 pages in length, although there is no limit to the length of necessary attachments to the comments. If comments are submitted in hard copy form, please ensure that two copies are provided. If you wish to receive confirmation that comments you have submitted by mail were received, please enclose a stamped, self-addressed postcard with the comments. Note that all comments received will be posted without change to
All comments and supporting materials received before the close of business on the closing date indicated above will be filed in the docket and will be considered. All comments and supporting materials received after the closing date will also be filed and will be considered to the fullest extent possible.
When the petition is granted or denied, notice of the decision will also be published in the
All comments, background documentation, and supporting materials submitted to the docket may be viewed by anyone at the address and times given above. The documents may also be viewed on the internet at
DOT's complete Privacy Act Statement is available for review in a
I.
This notice of receipt of Mack Trucks' petition is published under 49 U.S.C. 30118 and 30120 and does not represent any Agency decision or other exercise of judgment concerning the merits of the petition.
II.
III.
IV.
V.
In support of its petition, Mack Trucks submitted the following reasoning:
1. For the heating and air conditioning fan control, the requirement specified that the control must be labeled with the fan symbol or the word “fan.” The required symbol or the word “fan” is not on the control. The rotary control has numbers 0 to 4 and is located on the HVAC panel; therefore, it is obvious to the driver that the control is for the fan speed. The owner's manual shows the control and informs that the control is the fan speed. Operation of the vehicles requires a Commercial Driver's License (CDL); therefore, the driver will be a licensed professional driver.
2. For the position side marker, end-outline marker, or identification or clearance lamps control, the control must be labeled with the required symbol or the words “Marker Lamps” or “MK Lps.” The control uses a different symbol to identify the marker. The rotary control has a symbol that indicates that the position is for the parking lights. The position in the sequence makes it discernible to the driver. The owner's manual shows the control and informs that the pictured symbol is for the marker lamps. Operation of the vehicle requires a CDL;
3. For the Master Lighting Control, the control must be labeled with the identified symbol or the word “lights.” The control is not identified with the symbol or the word. The control is a three-position toggle switch and includes the low beam headlight symbol and the parking light symbol and, therefore, is discernible to the driver. The owner's manual includes information on the control and its purpose. Operation of the vehicles requires a CDL; therefore, the driver will be a licensed professional driver.
4. Mack Trucks views these noncompliances as inconsequential to the safe operation of the vehicle. Mack Trucks states that there are no customer complaints, field reports, warranty claims, or accidents associated with these noncompliances.
5. Class 7 & 8 vehicles require that the driver have CDL to operate the vehicle.
Mack Trucks concluded by expressing its belief that the subject noncompliance is inconsequential as it relates to motor vehicle safety and that its petition be exempted from providing notification of the noncompliance, as required by 49 U.S.C. 30118, and a remedy for the noncompliance, as required by 49 U.S.C. 30120, should be granted.
NHTSA notes that the statutory provisions (49 U.S.C. 30118(d) and 30120(h)) that permit manufacturers to file petitions for a determination of inconsequentiality allow NHTSA to exempt manufacturers only from the duties found in sections 30118 and 30120, respectively, to notify owners, purchasers, and dealers of a defect or noncompliance and to remedy the defect or noncompliance. Therefore, any decision on this petition only applies to the subject vehicles that Mack Trucks no longer controlled at the time it determined that the noncompliance existed. However, any decision on this petition does not relieve vehicle distributors and dealers of the prohibitions on the sale, offer for sale, or introduction or delivery for introduction into interstate commerce of the noncompliant vehicles under their control after Mack Trucks notified them that the subject noncompliance existed.
National Highway Traffic Safety Administration (NHTSA), Department of Transportation (DOT).
Receipt of petition.
Mercedes-Benz AG (“MBAG”) and Mercedes-Benz USA, LLC, (“MBUSA”) (collectively, “Mercedes-Benz”) have determined that certain model year (MY) 2020 Mercedes-Benz CLA 250 motor vehicles do not fully comply with Federal Motor Vehicle Safety Standard (FMVSS) No. 111,
Send comments on or before October 19, 2020.
Interested persons are invited to submit written data, views, and arguments on this petition. Comments must refer to the docket and notice number cited in the title of this notice and submitted by any of the following methods:
•
•
•
• Comments may also be faxed to (202) 493–2251.
Comments must be written in the English language, and be no greater than 15 pages in length, although there is no limit to the length of necessary attachments to the comments. If comments are submitted in hard copy form, please ensure that two copies are provided. If you wish to receive confirmation that comments you have submitted by mail were received, please enclose a stamped, self-addressed postcard with the comments. Note that all comments received will be posted without change to
All comments and supporting materials received before the close of business on the closing date indicated above will be filed in the docket and will be considered. All comments and supporting materials received after the closing date will also be filed and will be considered to the fullest extent possible.
When the petition is granted or denied, notice of the decision will also be published in the
All comments, background documentation, and supporting materials submitted to the docket may be viewed by anyone at the address and times given above. The documents may also be viewed on the internet at
DOT's complete Privacy Act Statement is available for review in a
This notice of receipt of Mercedes-Benz's petition is published under 49 U.S.C. 30118 and 30120 and does not represent any Agency decision or other exercise of judgment concerning the merits of the petition.
II.
III.
IV.
V.
In support of its petition, Mercedes-Benz submitted the following reasoning:
1. When the subject vehicles are placed in reverse, a driver alert message appears on the in-vehicle display to remind drivers to pay attention to their surroundings. A deviation in the software received from the supplier caused the pitch of the rearview camera image not to meet MBAG's specification, so that when the driver alert message appears, the black border that surrounds the message box slightly covers a portion of the top of the rear middle test object (Test Object B). When the text box is displayed, approximately 10 percent of the extreme top of Test Object B is covered by the border. However, the remaining 90 percent of the test object is displayed without issue. None of the other test objects is affected by this condition, and the rearview camera display otherwise functions as intended.
2. MBAG corrected the issue in production in early September 2019, and through its technical investigation of the issue found that 155 vehicles in the United States market contain the affected software. On May 4, 2020, MBAG determined that a noncompliance existed with the requirements of FMVSS 111, S5.5.1 pertaining to the rearview camera field of view. Mercedes-Benz submitted its initial Noncompliance Information Report on May 11, 2020, and submitted an amended report on May 18, 2020, to include information identifying the affected components.
3. The subject vehicles display a driver alert message that appears when the driver places the vehicle in Reverse and reminds drivers to pay attention to their surroundings when backing up the vehicle. The warning message remains on the screen the entire time the vehicle is in the Reverse position and automatically extinguishes at the end of the backing event (when the vehicle is moved to a position other than Reverse). In the subject vehicles, when the alert message appears, the black border that surrounds the box partially obscures the extreme top portion of Test Object B. As a result, the rear middle test object does not meet the full field of view requirements. Despite the manner in which the text box displays, the condition does not pose an increased safety risk because a person behind the vehicle, including a small child, would still be visible by the driver. The objective of the FMVSS No. 111 field of view requirements, to ensure that persons located at the rear of the vehicle remain visible to the driver, continues to be met despite the variation in the software.
4. The overarching objective of FMVSS No. 111 is to mitigate against the potential for accidents or injuries due to striking persons, including children, located at the rear of the vehicle. The rearview camera provisions contain a field of view requirement for the zone behind the vehicle and are met by displaying certain height and width parameters of the designated test objects when tested in accordance with the test procedure set out in the standard.
Field of view. When tested in accordance with the procedures in S14.1, the rearview image shall include: (a) A minimum of a 150-mm wide portion along the circumference of each test object located at positions F and G specified in S14.1.4; and (b) The full width and height of each test object located at positions A through E specified in S14.1.4.
5. The Agency previously considered the safety benefits related to the use of overlays such as text-based alert messages, guidance markers, and other indicators on rear camera visibility systems during the development of the FMVSS No. 111 rulemaking. While NHTSA recognized the inherent safety benefit of these features, the concerns it raised about the appropriate use of overlays was specific. NHTSA carefully considered whether and how to regulate the use of overlays in order to mitigate against a specific type of concern, the potential for overlays to create blind spots in the rearview image that could obscure or mask small objects or persons at the rear of the vehicle, particularly children.
6. Ultimately, NHTSA declined to mandate specific performance criteria related to the use of overlays, largely due to a lack of practical means of testing the wide variations of overlay use and design without additional research. Instead, the Agency considered the field of view requirements to have been met as long as they did not cover any of the required portions of the test objects if activated automatically or if the overlay was manually activated by the driver. In doing so, NHTSA recognized the “decision not to regulate overlays does not relieve manufacturers from designing their system overlays so as to afford their customers
7. Given the background regarding the very specific type of concern related to the use of overlays, the subject vehicles do not create an increased safety risk. The portion of Test Object B that is affected by the software issue is limited to the extreme top edge of the test object. The border of the text box covers approximately 10 percent of the top edge of Test Object B. The full height of the test object when displayed on the screen is 800 mm. The uppermost portion of the test object is 150 mm. When the alert message appears on the in-vehicle display, the border obscures approximately half of the 150 mm strip of the text object, or 75 mm.
8. Despite the manner in which the alert message displays, the system still operates to provide the driver an ability to fully and safely see the required field of view. The key concern related to the use of overlays raised by the Agency in the FMVSS No. 111 final rule was the potential for the overlay to prevent the driver from seeing a child or small person located at the rear of the vehicle. That concern does not manifest in this instance. The border obscures only the
Mercedes-Benz concluded by expressing the belief that the subject noncompliance is inconsequential as it relates to motor vehicle safety, and that its petition to be exempted from providing notification of the noncompliance, as required by 49 U.S.C. 30118, and a remedy for the noncompliance, as required by 49 U.S.C. 30120, should be granted.
NHTSA notes that the statutory provisions (49 U.S.C. 30118(d) and 30120(h)) that permit manufacturers to file petitions for a determination of inconsequentiality allow NHTSA to exempt manufacturers only from the duties found in sections 30118 and 30120, respectively, to notify owners, purchasers, and dealers of a defect or noncompliance and to remedy the defect or noncompliance. Therefore, any decision on this petition only applies to the subject vehicles that Mercedes-Benz no longer controlled at the time it determined that the noncompliance existed. However, any decision on this petition does not relieve vehicle distributors and dealers of the prohibitions on the sale, offer for sale, or introduction or delivery for introduction into interstate commerce of the noncompliant vehicles under their control after Mercedes-Benz notified them that the subject noncompliance existed.
Office of Foreign Assets Control, Treasury.
Notice.
The Department of the Treasury's Office of Foreign Assets Control (OFAC) is publishing the names of one or more persons that have been placed on OFAC's Specially Designated Nationals and Blocked Persons List based on OFAC's determination that one or more applicable legal criteria were satisfied. All property and interests in property subject to U.S. jurisdiction of these persons are blocked, and U.S. persons are generally prohibited from engaging in transactions with them.
See Supplementary Information section for applicable date(s).
OFAC: Associate Director for Global Targeting, tel.: 202–622–2420; Assistant Director for Sanctions Compliance & Evaluation, tel.: 202–622–2490; Assistant Director for Licensing, tel.: 202–622–2480.
The Specially Designated Nationals and Blocked Persons List and additional information concerning OFAC sanctions programs are available on OFAC's website (
On September 15, 2020, OFAC determined that the property and interests in property subject to U.S. jurisdiction of the following persons are blocked under the relevant sanctions authority listed below.
1. JAMMEH, Zineb Souma Yahya (a.k.a. JAMMEH, Zeinab Zuma; a.k.a. JAMMEH, Zineb Yahya), Equatorial Guinea; DOB 05 Oct 1977; POB Rabat, Morocco; nationality Equatorial Guinea; alt. nationality Morocco; Gender Female (individual) [GLOMAG].
Designated pursuant to section 1(a)(iii)(A)(2) of Executive Order 13818 of December 20, 2017, “Blocking the Property of Persons Involved in Serious Human Rights Abuse or Corruption,” 82 FR 60839, 3 CFR, 2018 Comp., p. 399, (E.O. 13818) for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, YAHYA JAMMEH, a person whose property and interests in property are blocked pursuant to this Order.
1. NABAH LTD, 7–10 Chandos Street, London W1G 9DQ, United Kingdom; Company Number 12146985 (United Kingdom) [GLOMAG] (Linked To: AL–CARDINAL, Ashraf Seed Ahmed).
Designated pursuant to section 1(a)(iii)(B) of E.O. 13818 for being owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, ASHRAF SEED AHMED AL–CARDINAL, a person whose property and interests in property are blocked pursuant to this Order.
Office of Foreign Assets Control, Treasury.
Notice.
The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) is publishing the name of one or more persons that have been placed on OFAC's Specially Designated Nationals and Blocked Persons List based on OFAC's determination that one or more applicable legal criteria were satisfied. All property and interests in property subject to U.S. jurisdiction of this person are blocked, and U.S. persons are generally prohibited from engaging in transactions with them.
See
OFAC: Associate Director for Global Targeting, tel.: 202–622–2420; Assistant Director for Sanctions Compliance & Evaluation, tel.: 202–622–2490; Assistant Director for Licensing, tel.: 202–622–2480.
The Specially Designated Nationals and Blocked Persons List and additional information concerning OFAC sanctions programs are available on OFAC's website (
On September 15, 2020, OFAC determined that the property and interests in property subject to U.S. jurisdiction of the following person are blocked under the relevant sanctions authorities listed below.
1. UNION DEVELOPMENT GROUP CO., LTD. (a.k.a. UNION DEVELOPMENT GROUP), 12AB, Street 348, Sangkat Boeng Keng Kang III Khan Chamkar Mon, Phnom Penh, Cambodia; 11, 592, Phum 13 Boeng Kak Pir Tuol Kouk, Phnom Penh 12152, Cambodia; Tax ID No. L001–100119212 (Cambodia) [GLOMAG].
Designated pursuant to section 1(a)(ii)(B)(1) of Executive Order 13818 of December 20, 2017, “Blocking the Property of Persons Involved in Serious Human Rights
Internal Revenue Service (IRS), Treasury.
Notice and request for comments.
The Internal Revenue Service, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on information collections, as required by the Paperwork Reduction Act of 1995. The IRS is soliciting comments concerning the VITA/TCE Volunteer Program.
Written comments should be received on or before November 17, 2020 to be assured of consideration.
Direct all written comments to Paul Adams, Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW, Washington, DC 20224. Requests for additional information or copies of the form and instructions should be directed to Sara Covington, at Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW, Washington, DC 20224, or at (737) 800–6149 or through the internet at
The following paragraph applies to all of the collections of information covered by this notice:
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number.
Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.
United States Mint, Department of the Treasury.
Notice.
The United States Mint is changing the prices of Bronze Medals and Bronze Medal Presentation Cases, effective January 1, 2021.
Ann Bailey, Sales and Marketing; United States Mint; 801 9th Street NW; Washington, DC 20220; or call 202–354–7500.
31 U.S.C. 5111(a)(2), 31 U.S.C. 5136.
Veterans Benefits Administration, Department of Veterans Affairs.
Notice.
Veterans Benefits Administration, Department of Veterans Affairs (VA), is announcing an opportunity for public comment on the proposed collection of certain information by the agency. Under the Paperwork Reduction Act (PRA) of 1995, Federal agencies are required to publish notice in the
Written comments and recommendations on the proposed collection of information should be received on or before November 17, 2020.
Submit written comments on the collection of information through Federal Docket Management System (FDMS) at
Danny S. Green at (202) 421–1354.
Under the PRA of 1995, Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. This request for comment is being made pursuant to Section 3506(c)(2)(A) of the PRA.
With respect to the following collection of information, VBA invites comments on: (1) Whether the proposed collection of information is necessary for the proper performance of VBA's functions, including whether the information will have practical utility; (2) the accuracy of VBA's estimate of the burden of the proposed collection of information; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or the use of other forms of information technology.
38 U.S.C. 3100, 38 U.S.C. 501.
By direction of the Secretary:
Centers for Medicare & Medicaid Services (CMS), HHS.
Final rule.
We are revising the Medicare hospital inpatient prospective payment systems (IPPS) for operating and capital-related costs of acute care hospitals to implement changes arising from our continuing experience with these systems for FY 2021 and to implement certain recent legislation. We are also making changes relating to Medicare graduate medical education (GME) for teaching hospitals. In addition, we are providing the market basket update that will apply to the rate-of-increase limits for certain hospitals excluded from the IPPS that are paid on a reasonable cost basis, subject to these limits for FY 2021. We are updating the payment policies and the annual payment rates for the Medicare prospective payment system (PPS) for inpatient hospital services provided by long-term care hospitals (LTCHs) for FY 2021. In this FY 2021 IPPS/LTCH PPS final rule, we are finalizing changes to the new technology add-on payment pathway for certain antimicrobial products and other changes to new technology add-on payment policies, and the collection of market-based rate information on the Medicare cost report for cost reporting periods ending on or after January 1, 2021 and finalizing the adoption of a market-based MS–DRG relative weight methodology beginning in FY 2024. We are establishing new requirements or revising existing requirements for quality reporting by acute care hospitals and PPS-exempt cancer hospitals. We also established new requirements and revised existing requirements for eligible hospitals and critical access hospitals (CAHs) participating in the Medicare and Medicaid Promoting Interoperability Programs. We are also establishing performance standards for the Hospital Value-Based Purchasing (VBP) Program, and updating policies for the Hospital Readmissions Reduction Program and the Hospital-Acquired Condition (HAC) Reduction Program.
Donald Thompson, (410) 786–4487, and Michele Hudson, (410) 786–4487, Operating Prospective Payment, MS–DRGs, Wage Index, New Medical Service and Technology Add-On Payments, Hospital Geographic Reclassifications, Graduate Medical Education, Capital Prospective Payment, Excluded Hospitals, Medicare Disproportionate Share Hospital (DSH) Payment Adjustment, Medicare-Dependent Small Rural Hospital (MDH) Program, Low-Volume Hospital Payment Adjustment, and Critical Access Hospital (CAH) Issues. Michele Hudson, (410) 786–4487 and Emily Lipkin, (410) 786–3633, Long-Term Care Hospital Prospective Payment System and MS–LTC–DRG Relative Weights Issues. Emily Forrest, (202) 205–1922, Market-Based Data Collection and Market-Based MS–DRG Relative Weight Methodology Issues.
Siddhartha Mazumdar, (410) 786–6673, Rural Community Hospital Demonstration Program Issues.
Jeris Smith, (410) 786–0110, Frontier Community Health Integration Project Demonstration Issues.
Erin Patton, (410) 786–2437, Hospital Readmissions Reduction Program—Administration Issues.
Vinitha Meyyur, (410) 786–8819, Hospital Readmissions Reduction Program—Readmissions—Measures Issues.
Lang Le, (410) 786–5693, Hospital-Acquired Condition Reduction Program—Administration Issues.
Annese Abdullah-Mclaughlin, (410) 786–2995, Hospital-Acquired Condition Reduction Program—Measures Issues.
Julia Venanzi, (410) 786–1471, Hospital Inpatient Quality Reporting Program—Administration Issues Mihir Patel, (410) 786–2815 and Grace Snyder, (410) 786–0700, Hospital Quality Reporting Program Validation and Reconsideration Issues.
Julia Venanzi, (410) 786–1471and Pamela Brown (410) 786–3940, Hospital Value-Based Purchasing Program—Administration Issues
Katrina Hoadley, (410) 786–8490, Hospital Inpatient Quality Reporting and Hospital Value-Based Purchasing—Measures Issues Except Hospital Consumer Assessment of Healthcare Providers and Systems Issues.
Elizabeth Goldstein, (410) 786–6665, Hospital Inpatient Quality Reporting and Hospital Value-Based Purchasing—Hospital Consumer Assessment of Healthcare Providers and Systems Measures Issues.
Erin Patton, (410) 786–2437 and Katrina Hoadley, (410) 786–8490, PPS-Exempt Cancer Hospital Quality Reporting Issues.
Mary Pratt, (410) 786–6867, Long-Term Care Hospital Quality Data Reporting Issues.
Dylan Podson (410) 786–5031, Jessica Warren (410) 786–7519, and Elizabeth Holland, (410) 786–1309, Promoting Interoperability Programs.
Steve Rubio, (410) 786–1782, Reimbursement for Submission of Patient Records to Beneficiary and Family Centered Care Quality Improvement Organizations (BFCC–QIOs) in Electronic Format.
Maude Shepard, (410) 786–5598, Provider Reimbursement Review Board Electronic Filing.
Kellie Shannon, (410) 786–0416 and Bob Kuhl, (443) 896–8410, Medicare Bad Debt.
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The IPPS tables for this FY 2021 final rule are available through the internet on the CMS website at:
This FY 2021 IPPS/LTCH PPS final rule makes payment and policy changes under the Medicare inpatient prospective payment systems (IPPS) for operating and capital-related costs of acute care hospitals as well as for certain hospitals and hospital units excluded from the IPPS. In addition, it makes payment and policy changes for inpatient hospital services provided by long-term care hospitals (LTCHs) under the long-term care hospital prospective payment system (LTCH PPS). This final rule also makes policy changes to programs associated with Medicare IPPS hospitals, IPPS-excluded hospitals, and LTCHs. In this FY 2021 final rule, we are continuing policies to address wage index disparities impacting low wage index hospitals; and including policies related to new technology add-on payments for certain antimicrobial products, other policies related to new technology add-on payments, collecting market-based rate information on the Medicare cost report for cost reporting periods ending on or after January 1, 2021, and finalizing the adoption of a market-based MS–DRG relative weight methodology beginning in FY 2024.
We are establishing new requirements and revising existing requirements for quality reporting by acute care hospitals and PPS-exempt cancer hospitals that participate in Medicare. We are also establishing new requirements and revising existing requirements for eligible hospitals and CAHs participating in the Medicare and Medicaid Promoting Interoperability Programs.
We are establishing performance standards for the Hospital Value-Based Purchasing (VBP) Program and updating policies for the Hospital Readmissions Reduction Program and the Hospital-Acquired Condition (HAC) Reduction Program.
Under various statutory authorities, we either discuss continued program implementation or are making changes to the Medicare IPPS, to the LTCH PPS, and to other related payment methodologies and programs for FY 2021 and subsequent fiscal years. These statutory authorities include, but are not limited to, the following:
• Section 1886(d) of the Social Security Act (the Act), which sets forth a system of payment for the operating costs of acute care hospital inpatient stays under Medicare Part A (Hospital Insurance) based on prospectively set rates. Section 1886(g) of the Act requires that, instead of paying for capital-related costs of inpatient hospital services on a reasonable cost basis, the Secretary use a prospective payment system (PPS).
• Section 1886(d)(1)(B) of the Act, which specifies that certain hospitals and hospital units are excluded from the IPPS. These hospitals and units are: Rehabilitation hospitals and units; LTCHs; psychiatric hospitals and units; children's hospitals; cancer hospitals; extended neoplastic disease care hospitals, and hospitals located outside the 50 States, the District of Columbia, and Puerto Rico (that is, hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa). Religious nonmedical health care institutions (RNHCIs) are also excluded from the IPPS.
• Sections 123(a) and (c) of the BBRA (Public Law (Pub. L.) 106–113) and section 307(b)(1) of the BIPA (Pub. L. 106–554) (as codified under section 1886(m)(1) of the Act), which provide for the development and implementation of a prospective payment system for payment for inpatient hospital services of LTCHs described in section 1886(d)(1)(B)(iv) of the Act.
• Sections 1814(l), 1820, and 1834(g) of the Act, which specify that payments are made to critical access hospitals (CAHs) (that is, rural hospitals or facilities that meet certain statutory requirements) for inpatient and outpatient services and that these payments are generally based on 101 percent of reasonable cost.
• Section 1866(k) of the Act, which provides for the establishment of a quality reporting program for hospitals described in section 1886(d)(1)(B)(v) of the Act, referred to as “PPS-exempt cancer hospitals.”
• Section 1886(a)(4) of the Act, which specifies that costs of approved educational activities are excluded from the operating costs of inpatient hospital services. Hospitals with approved graduate medical education (GME) programs are paid for the direct costs of GME in accordance with section 1886(h) of the Act.
• Section 1886(b)(3)(B)(viii) of the Act, which requires the Secretary to reduce the applicable percentage increase that would otherwise apply to the standardized amount applicable to a subsection (d) hospital for discharges occurring in a fiscal year if the hospital does not submit data on measures in a form and manner, and at a time, specified by the Secretary.
• Section 1886(o) of the Act, which requires the Secretary to establish a Hospital Value-Based Purchasing (VBP) Program, under which value-based incentive payments are made in a fiscal year to hospitals meeting performance standards established for a performance period for such fiscal year.
• Section 1886(p) of the Act, which establishes a Hospital-Acquired Condition (HAC) Reduction Program, under which payments to applicable hospitals are adjusted to provide an incentive to reduce hospital-acquired conditions.
• Section 1886(q) of the Act, as amended by section 15002 of the 21st Century Cures Act, which establishes the Hospital Readmissions Reduction Program. Under the program, payments for discharges from an applicable hospital as defined under section 1886(d) of the Act will be reduced to account for certain excess readmissions. Section 15002 of the 21st Century Cures Act directs the Secretary to compare hospitals with respect to the number of their Medicare-Medicaid dual-eligible beneficiaries (dual-eligibles) in determining the extent of excess readmissions.
• Section 1886(r) of the Act, as added by section 3133 of the Affordable Care Act, which provides for a reduction to disproportionate share hospital (DSH) payments under section 1886(d)(5)(F) of the Act and for a new uncompensated care payment to eligible hospitals. Specifically, section 1886(r) of the Act requires that, for fiscal year 2014 and each subsequent fiscal year, subsection (d) hospitals that would otherwise receive a DSH payment made under section 1886(d)(5)(F) of the Act will receive two separate payments: (1) 25 percent of the amount they previously would have received under section 1886(d)(5)(F) of the Act for DSH (“the empirically justified amount”), and (2) an additional payment for the DSH hospital's proportion of uncompensated care, determined as the product of three factors. These three factors are: (1) 75 percent of the payments that would otherwise be made under section 1886(d)(5)(F) of the Act; (2) 1 minus the percent change in the percent of individuals who are uninsured; and (3) a hospital's uncompensated care amount relative to the uncompensated care amount of all DSH hospitals expressed as a percentage.
• Section 1886(m)(6) of the Act, as added by section 1206(a)(1) of the Pathway for Sustainable Growth Rate (SGR) Reform Act of 2013 (Pub. L. 113–67) and amended by section 51005(a) of the Bipartisan Budget Act of 2018 (Pub. L. 115–123), which provided for the establishment of site neutral payment rate criteria under the LTCH PPS, with implementation beginning in FY 2016. Section 51005(b) of the Bipartisan Budget Act of 2018 amended section 1886(m)(6)(B) by adding new clause (iv), which specifies that the IPPS comparable amount defined in clause (ii)(I) shall be reduced by 4.6 percent for FYs 2018 through 2026.
• Section 1899B of the Act, as added by section 2(a) of the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act) (Pub. L. 113–185), which provides for the establishment of standardized data reporting for certain post-acute care providers, including LTCHs.
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”).
Due to the significant devotion of resources to the COVID–19 response, for the reasons discussed in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32889 through 32890) and as also discussed in section XI.D. of the preamble of this final rule, we are hereby waiving the 60-day delay in the effective date of the final rule.
The following is a summary of the major provisions in this final rule. In general, these major provisions are part of the annual update to the payment policies and payment rates, consistent with the applicable statutory provisions. A general summary of the proposed changes that were included in the FY 2021 IPPS/LTCH PPS proposed rule is presented in section I.D. of the preamble of this final rule.
Section 631 of the American Taxpayer Relief Act of 2012 (ATRA, Pub. L. 112–240) amended section 7(b)(1)(B) of Public Law 110–90 to require the Secretary to make a recoupment adjustment to the standardized amount of Medicare payments to acute care hospitals to account for changes in MS– DRG documentation and coding that do not reflect real changes in case-mix, totaling $11 billion over a 4-year period of FYs 2014, 2015, 2016, and 2017. The FY 2014 through FY 2017 adjustments represented the amount of the increase in aggregate payments as a result of not completing the prospective adjustment authorized under section 7(b)(1)(A) of Public Law 110–90 until FY 2013. Prior to the ATRA, this amount could not have been recovered under Public Law 110 90. Section 414 of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (Pub. L. 114–10) replaced the single positive adjustment we intended to make in FY 2018 with a 0.5 percent positive adjustment to the standardized amount of Medicare payments to acute care hospitals for FYs 2018 through 2023. (The FY 2018 adjustment was subsequently adjusted to 0.4588 percent by section 15005 of the 21st Century Cures Act.) Therefore, for FY 2021, we are making an adjustment of + 0.5 percent to the standardized amount.
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42292 through 42297), we established an alternative inpatient new technology add-on payment pathway for certain antimicrobial products in light of the significant concerns related to the ongoing public health crisis represented by antimicrobial resistance. Under this alternative pathway, if a medical product receives the FDA's Qualified Infectious Disease Product (QIDP) designation and received FDA marketing authorization, such a product will be considered new and not substantially similar to an existing technology for purposes of new technology add-on payment under the IPPS and will not need to meet the requirement that it represent an advance that substantially improves, relative to technologies previously available, the diagnosis or treatment of Medicare beneficiaries.
In the proposed rule, in light of recent information that continues to highlight the significant concerns and impacts related to antimicrobial resistance and emphasizes the continued importance of this issue both with respect to Medicare beneficiaries and public health overall, we proposed changes to the new technology add-on payment policy for certain antimicrobials for FY 2021.
As discussed in section II.G.9.b. of the preamble of this final rule, after consideration of public comments, we are finalizing our proposal to expand our alternative new technology add-on payment pathway for QIDPs to include products approved through FDA's Limited Population Pathway for Antibacterial and Antifungal Drugs (LPAD pathway). Under this policy, for applications received for new technology add-on payments for FY 2022 and subsequent fiscal years, if an antimicrobial product is approved through FDA's LPAD pathway, it will be considered new and not substantially similar to an existing technology for purposes of the new technology add-on payment under the IPPS, and will not need to meet the requirement that it represent an advance that substantially improves, relative to technologies previously available, the diagnosis or treatment of Medicare beneficiaries.
Under current policy, a new technology must receive FDA marketing authorization (for example, approval or clearance) by July 1 to be considered in the final rule in order to allow complete review and consideration of all the information to determine if the technology meets the new technology add-on payment criteria. For the reasons discussed in section II.G.9.c. of the preamble of this final rule, after consideration of public comments, we are finalizing our proposal to provide for conditional new technology add-on payment approval for products designated as QIDPs that do not receive FDA approval by July 1 and products that do not receive approval through FDA's LPAD pathway by July 1 but otherwise meet the applicable add-on payment criteria. Under this policy, cases involving eligible antimicrobial products would begin receiving the new technology add-on payment sooner, effective for discharges the quarter after the date of FDA marketing authorization provided that the technology receives FDA marketing authorization by July 1 of the particular fiscal year for which the applicant applied for new technology add-on payments.
To help mitigate wage index disparities between high wage and low hospitals, in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42326 through 42332), we adopted a policy to provide an opportunity for certain low wage index hospitals to increase employee compensation by increasing the wage index values for certain hospitals with low wage index values (the low wage index hospital policy). This policy was adopted in a budget neutral manner through an adjustment applied to the standardized amounts for all hospitals. We also indicated that this policy would be effective for at least 4 years, beginning in FY 2020, in order to allow employee compensation increases implemented by these hospitals sufficient time to be reflected in the wage index calculation. Therefore, for FY 2021, we are continuing the low wage index hospital policy, and also applying this policy in a budget neutral manner by applying an adjustment to the standardized amounts.
Section 3133 of the Affordable Care Act modified the Medicare disproportionate share hospital (DSH) payment methodology beginning in FY 2014. Under section 1886(r) of the Act, which was added by section 3133 of the Affordable Care Act, starting in FY 2014, DSHs receive 25 percent of the amount they previously would have received under the statutory formula for Medicare DSH payments in section 1886(d)(5)(F) of the Act. The remaining amount, equal to 75 percent of the amount that otherwise would have been paid as Medicare DSH payments, is paid as additional payments after the amount is reduced for changes in the percentage of individuals that are uninsured. Each Medicare DSH will receive an additional payment based on its share of the total amount of uncompensated care for all Medicare DSHs for a given time period.
In this final rule, we have updated our estimates of the three factors used to determine uncompensated care payments for FY 2021. We continue to use uninsured estimates produced by CMS' Office of the Actuary (OACT) as part of the development of the National Health Expenditure Accounts (NHEA) in the calculation of Factor 2; however, given the unprecedented effects on health insurance enrollment as a result of the public health emergency for the COVID–19 pandemic, OACT has updated the NHEA-based projection of the FY 2021 rate of uninsurance using more recently available unemployment data. In addition, we are using a single year of data on uncompensated care costs from Worksheet S–10 of the FY 2017 cost reports to calculate Factor 3 in the FY 2021 methodology for all eligible hospitals with the exception of Indian Health Service (IHS) and Tribal hospitals and Puerto Rico hospitals. For IHS and Tribal hospitals and Puerto Rico hospitals we are continuing to use the low-income insured days proxy to calculate Factor 3 for these hospitals. Furthermore, we are establishing that to calculate Factor 3 for FY 2022 and all subsequent fiscal years for all eligible hospitals, except IHS and Tribal hospitals and Puerto Rico hospitals, we will use the most recent available single year of audited Worksheet S–10 data. We are also making other methodological changes for purposes of calculating Factor 3.
We are finalizing our proposal to make changes to policies for the Hospital Readmissions Reduction Program, which was established under section 1886(q) of the Act, as amended by section 15002 of the 21st Century Cures Act. The Hospital Readmissions Reduction Program requires a reduction to a hospital's base operating DRG payment to account for excess readmissions of selected applicable conditions. For FY 2017 and subsequent years, the reduction is based on a hospital's risk-adjusted readmission rate during a 3-year period for acute myocardial infarction (AMI), heart failure (HF), pneumonia, chronic obstructive pulmonary disease (COPD), elective primary total hip arthroplasty/total knee arthroplasty (THA/TKA), and coronary artery bypass graft (CABG) surgery. In this FY 2021 IPPS/LTCH PPS final rule, we are finalizing the following policies: (1) To automatically adopt applicable periods beginning with the FY 2023 program year and all subsequent program years, unless otherwise specified by the Secretary; and (2) to update the definition of
Section 1886(o) of the Act requires the Secretary to establish a Hospital VBP Program under which value-based incentive payments are made in a fiscal year to hospitals based on their performance on measures established for a performance period for such fiscal year. In this FY 2021 IPPS/LTCH PPS final rule, we are providing newly established performance standards for certain measures for the FY 2023 program year, the FY 2024 program year, the FY 2025 program year, and the FY 2026 program year.
Section 1886(p) of the Act establishes an incentive to hospitals to reduce the incidence of hospital-acquired conditions by requiring the Secretary to make an adjustment to payments to applicable hospitals, effective for discharges beginning on October 1, 2014. This 1-percent payment reduction applies to hospitals that rank in the worst-performing quartile (25 percent) of all applicable hospitals, relative to the national average, of conditions acquired during the applicable period and on all of the hospital's discharges for the specified fiscal year. In this FY 2021 IPPS/LTCH PPS final rule, we are finalizing the following policies: (1) To automatically adopt applicable periods beginning with the FY 2023 program year and all subsequent program years, unless otherwise specified by the secretary, (2) to make refinements to the process for validation of HAC Reduction Program measure data in alignment with the Hospital IQR Program measure validation policies finalized in this rule; and (3) to update the definition of
Under section 1886(b)(3)(B)(viii) of the Act, subsection (d) hospitals are required to report data on measures selected by the Secretary for a fiscal year in order to receive the full annual percentage increase that would otherwise apply to the standardized amount applicable to discharges occurring in that fiscal year.
In this FY 2021 IPPS/LTCH PPS final rule, we are finalizing proposals related to the reporting, submission, and public display requirements for eCQMs. These policies are: (1) Progressively increasing the numbers of quarters of eCQM data reported, from one self-selected quarter of data to four quarters of data over a three-year period, by requiring hospitals to report: (a) Two quarters of data for the CY 2021 reporting period/FY 2023 payment determination; (b) three quarters of data for the CY 2022 reporting period/FY 2024 payment determination; and (c) four quarters of data beginning with the CY 2023 reporting period/FY 2025 payment determination and for subsequent years, while continuing to allow hospitals to report: (i) Three self-selected eCQMs, and (ii) the Safe Use of Opioids eCQM; and (2) beginning public display of eCQM data starting with data reported by hospitals for the CY 2021 reporting period/FY 2023 payment determination and for subsequent years. The eCQM-related policies are in alignment with proposals under the Promoting Interoperability Program. We also are finalizing our proposal to expand the requirement to use EHR technology certified to the 2015 Edition for submitting data on not only the previously finalized Hybrid Hospital-Wide Readmission measure, but all hybrid measures in the Hospital IQR Program.
We also are finalizing proposals to streamline the validation processes under the Hospital IQR Program. We are finalizing proposals to: (1) Update the quarters of data required for validation for both chart-abstracted measures and eCQMs; (2) expand targeting criteria to include hospital selection for eCQMs; (3) change the validation pool from 800 hospitals to 400 hospitals; (4) remove the current exclusions for eCQM validation selection, (5) require electronic file submissions for chart-abstracted measure data; (6) align the eCQM and chart-abstracted measure scoring processes; and (7) update the educational review process to address eCQM validation results.
Section 1866(k)(1) of the Act requires, for purposes of FY 2014 and each subsequent fiscal year, that a hospital described in section 1886(d)(1)(B)(v) of the Act (a PPS-exempt cancer hospital, or a PCH) submit data in accordance with section 1866(k)(2) of the Act with respect to such fiscal year. There is no financial impact to PCH Medicare payment if a PCH does not participate.
In this FY 2021 IPPS/LTCH PPS final rule, we are finalizing our proposal to refine two existing program measures, Catheter-associated Urinary Tract Infection (CAUTI) (NQF #0138) and Central Line-associated Bloodstream Infection (CLABSI) (NQF #0139), to adopt the updated SIR calculation methodology developed by the Center for Disease Control and Prevention's (CDC) that calculates rates using updated HAI baseline data that are further stratified by patient location.
For purposes of an increased level of stability, reducing the burden on eligible hospitals and CAHs, and clarifying certain existing policies, we are finalizing several changes to the Medicare Promoting Interoperability Program. Specifically, these policies include: (1) An EHR reporting period of a minimum of any continuous 90-day period in CY 2022 for new and returning participants (eligible hospitals and CAHs); (2) to maintain the Electronic Prescribing Objective's Query of PDMP measure as optional and worth 5 bonus points in CY 2021; (3) to modify the name of the Support Electronic Referral Loops by Receiving and Incorporating Health Information measure; (4) to progressively increase the number of quarters for which hospitals are required to report eCQM data, from the current requirement of one self-selected calendar quarter of data, to four calendar quarters of data, over a three year period. Specifically, we finalized proposals to require: (a) Two self-selected calendar quarters of data for the CY 2021 reporting period; (b) three self-selected calendar quarters of data for the CY 2022 reporting period; and (c) four calendar quarters of data beginning with the CY 2023 reporting period, where the submission period for the Medicare Promoting Interoperability Program will be the 2 months following the close of the respective calendar year; (5) to begin publicly reporting eCQM performance data beginning with the eCQM data reported by eligible hospitals and CAHs for the reporting period in CY 2021 on the
As discussed in section IV.P. of the preamble of this final rule, in order to reduce the Medicare program's reliance on the hospital chargemaster and to support the development of a market-based approach to payment under the Medicare FFS system, we are finalizing our proposal, with modification, to require that hospitals report certain market-based payment rate information on their Medicare cost report for cost reporting periods ending on or after January 1, 2021.
Specifically, we are finalizing that hospitals would report on the Medicare cost report the median payer-specific negotiated charge that the hospital has negotiated with all of its Medicare Advantage (MA) organizations (also referred to as MA organizations) payers, by MS–DRG. The market-based rate information we are finalizing for collection on the Medicare cost report would be the median of the payer-specific negotiated charges by MS–DRG, as described previously, for a hospital's MA organization payers. The payer-specific negotiated charges used by hospitals to calculate these medians would be the payer-specific negotiated charges for service packages that hospitals are required to make public under the requirements we finalized in the Hospital Price Transparency Final Rule (84 FR 65524) that can be cross-walked to an MS–DRG. We believe that because hospitals are already required to publically report payer-specific negotiated charges, in accordance with the Hospital Price Transparency Final Rule, that the additional calculation and reporting of the median payer-specific negotiated charge will be less burdensome for hospitals.
We are also finalizing the market-based MS–DRG relative weight methodology as described in the FY
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We are also providing for conditional new technology add-on payment approval for products designated as QIDPs that do not receive FDA approval by July 1 and products that do not receive approval through FDA's LPAD pathway by July 1 (the current deadline for consideration in the final rule) but otherwise meet the applicable add-on payment criteria. Under this policy, cases involving eligible antimicrobial products would begin receiving the new technology add-on payment sooner, effective for discharges the quarter after the date of FDA marketing authorization provided that the technology receives FDA marketing authorization by July 1 of the particular fiscal year for which the applicant applied for new technology add-on payments.
Given the relatively recent introduction of the FDA's LPAD pathway there have not been any drugs that were approved under the FDA's LPAD pathway that applied for a new technology add-on payment under the IPPS. If all of the future LPADs that would have applied for new technology add-on payments would have been approved under existing criteria, this finalized policy has no impact relative to current policy. To the extent that there are future LPADs that are the subject of applications for new technology add-on payments, and those applications would have been denied under the current new technology add-on payment criteria, this final policy is a cost, but that cost is not estimable. Therefore, it is not possible to quantify the impact of these policies.
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Section 1886(d) of the Act sets forth a system of payment for the operating costs of acute care hospital inpatient stays under Medicare Part A (Hospital Insurance) based on prospectively set rates. Section 1886(g) of the Act requires the Secretary to use a prospective payment system (PPS) to pay for the capital-related costs of inpatient hospital services for these “subsection (d) hospitals.” Under these PPSs, Medicare payment for hospital inpatient operating and capital-related costs is made at predetermined, specific rates for each hospital discharge. Discharges are classified according to a list of diagnosis-related groups (DRGs).
The base payment rate is comprised of a standardized amount that is divided into a labor-related share and a nonlabor-related share. The labor-related share is adjusted by the wage index applicable to the area where the hospital is located. If the hospital is located in Alaska or Hawaii, the nonlabor-related share is adjusted by a cost-of-living adjustment factor. This base payment rate is multiplied by the DRG relative weight.
If the hospital treats a high percentage of certain low-income patients, it receives a percentage add-on payment applied to the DRG-adjusted base payment rate. This add-on payment, known as the disproportionate share hospital (DSH) adjustment, provides for a percentage increase in Medicare payments to hospitals that qualify under either of two statutory formulas designed to identify hospitals that serve a disproportionate share of low-income patients. For qualifying hospitals, the amount of this adjustment varies based on the outcome of the statutory calculations. The Affordable Care Act revised the Medicare DSH payment methodology and provides for a new additional Medicare payment for fiscal years beginning on or after October 1, 2013, that considers the amount of uncompensated care furnished by the hospital relative to all other qualifying hospitals.
If the hospital is training residents in an approved residency program(s), it receives a percentage add-on payment for each case paid under the IPPS, known as the indirect medical education (IME) adjustment. This percentage varies, depending on the ratio of residents to beds.
Additional payments may be made for cases that involve new technologies or medical services that have been approved for special add-on payments. In general, to qualify, a new technology or medical service must demonstrate that it is a substantial clinical improvement over technologies or services otherwise available, and that, absent an add-on payment, it would be inadequately paid under the regular DRG payment. In addition, certain transformative new devices and certain antimicrobial products may qualify under an alternative inpatient new technology add-on payment pathway by demonstrating that, absent an add-on payment, they would be inadequately paid under the regular DRG payment.
The costs incurred by the hospital for a case are evaluated to determine whether the hospital is eligible for an additional payment as an outlier case. This additional payment is designed to protect the hospital from large financial losses due to unusually expensive cases. Any eligible outlier payment is added to the DRG-adjusted base payment rate, plus any DSH, IME, and new technology or medical service add-on adjustments.
Although payments to most hospitals under the IPPS are made on the basis of the standardized amounts, some categories of hospitals are paid in whole or in part based on their hospital-specific rate, which is determined from their costs in a base year. For example, sole community hospitals (SCHs) receive the higher of a hospital-specific rate based on their costs in a base year (the highest of FY 1982, FY 1987, FY 1996, or FY 2006) or the IPPS Federal rate based on the standardized amount. SCHs are the sole source of care in their areas. Specifically, section 1886(d)(5)(D)(iii) of the Act defines an SCH as a hospital that is located more than 35 road miles from another hospital or that, by reason of factors such as an isolated location, weather conditions, travel conditions, or absence of other like hospitals (as determined by the Secretary), is the sole source of
Under current law, the Medicare-dependent, small rural hospital (MDH) program is effective through FY 2022. For discharges occurring on or after October 1, 2007, but before October 1, 2022, an MDH receives the higher of the Federal rate or the Federal rate plus 75 percent of the amount by which the Federal rate is exceeded by the highest of its FY 1982, FY 1987, or FY 2002 hospital-specific rate. MDHs are a major source of care for Medicare beneficiaries in their areas. Section 1886(d)(5)(G)(iv) of the Act defines an MDH as a hospital that is located in a rural area (or, as amended by the Bipartisan Budget Act of 2018, a hospital located in a State with no rural area that meets certain statutory criteria), has not more than 100 beds, is not an SCH, and has a high percentage of Medicare discharges (not less than 60 percent of its inpatient days or discharges in its cost reporting year beginning in FY 1987 or in two of its three most recently settled Medicare cost reporting years).
Section 1886(g) of the Act requires the Secretary to pay for the capital-related costs of inpatient hospital services in accordance with a prospective payment system established by the Secretary. The basic methodology for determining capital prospective payments is set forth in our regulations at 42 CFR 412.308 and 412.312. Under the capital IPPS, payments are adjusted by the same DRG for the case as they are under the operating IPPS. Capital IPPS payments are also adjusted for IME and DSH, similar to the adjustments made under the operating IPPS. In addition, hospitals may receive outlier payments for those cases that have unusually high costs.
The existing regulations governing payments to hospitals under the IPPS are located in 42 CFR part 412, subparts A through M.
Under section 1886(d)(1)(B) of the Act, as amended, certain hospitals and hospital units are excluded from the IPPS. These hospitals and units are: Inpatient rehabilitation facility (IRF) hospitals and units; long-term care hospitals (LTCHs); psychiatric hospitals and units; children's hospitals; cancer hospitals; extended neoplastic disease care hospitals, and hospitals located outside the 50 States, the District of Columbia, and Puerto Rico (that is, hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa). Religious nonmedical health care institutions (RNHCIs) are also excluded from the IPPS. Various sections of the Balanced Budget Act of 1997 (BBA, Pub. L. 105–33), the Medicare, Medicaid and SCHIP [State Children's Health Insurance Program] Balanced Budget Refinement Act of 1999 (BBRA, Pub. L. 106–113), and the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA, Pub. L. 106–554) provide for the implementation of PPSs for IRF hospitals and units, LTCHs, and psychiatric hospitals and units (referred to as inpatient psychiatric facilities (IPFs)). (We note that the annual updates to the LTCH PPS are included along with the IPPS annual update in this document. Updates to the IRF PPS and IPF PPS are issued as separate documents.) Children's hospitals, cancer hospitals, hospitals located outside the 50 States, the District of Columbia, and Puerto Rico (that is, hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa), and RNHCIs continue to be paid solely under a reasonable cost-based system, subject to a rate-of-increase ceiling on inpatient operating costs. Similarly, extended neoplastic disease care hospitals are paid on a reasonable cost basis, subject to a rate-of-increase ceiling on inpatient operating costs.
The existing regulations governing payments to excluded hospitals and hospital units are located in 42 CFR parts 412 and 413.
The Medicare prospective payment system (PPS) for LTCHs applies to hospitals described in section 1886(d)(1)(B)(iv) of the Act, effective for cost reporting periods beginning on or after October 1, 2002. The LTCH PPS was established under the authority of sections 123 of the BBRA and section 307(b) of the BIPA (as codified under section 1886(m)(1) of the Act). Section 1206(a) of the Pathway for SGR Reform Act of 2013 (Pub. L. 113–67) established the site neutral payment rate under the LTCH PPS, which made the LTCH PPS a dual rate payment system beginning in FY 2016. Under this statute, effective for LTCH's cost reporting periods beginning in FY 2016 cost reporting period, LTCHs are generally paid for discharges at the site neutral payment rate unless the discharge meets the patient criteria for payment at the LTCH PPS standard Federal payment rate. The existing regulations governing payment under the LTCH PPS are located in 42 CFR part 412, subpart O. Beginning October 1, 2009, we issue the annual updates to the LTCH PPS in the same documents that update the IPPS.
Under sections 1814(l), 1820, and 1834(g) of the Act, payments made to critical access hospitals (CAHs) (that is, rural hospitals or facilities that meet certain statutory requirements) for inpatient and outpatient services are generally based on 101 percent of reasonable cost. Reasonable cost is determined under the provisions of section 1861(v) of the Act and existing regulations under 42 CFR part 413.
Under section 1886(a)(4) of the Act, costs of approved educational activities are excluded from the operating costs of inpatient hospital services. Hospitals with approved graduate medical education (GME) programs are paid for the direct costs of GME in accordance with section 1886(h) of the Act. The amount of payment for direct GME costs for a cost reporting period is based on the hospital's number of residents in that period and the hospital's costs per resident in a base year. The existing regulations governing payments to the various types of hospitals are located in 42 CFR part 413.
The Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act) (Pub. L. 113–185), enacted on October 6, 2014, made a number of changes that affect the Long-Term Care Hospital Quality Reporting Program (LTCH QRP). We did not make proposals or updates to the LTCH Quality Reporting Program. We are continuing to maintain portions of section 1899B of the Act, as added by section 2(a) of the IMPACT Act, which, in part, requires LTCHs, among other post-acute care providers, to report standardized patient assessment data, data on quality measures, and data on resource use and other measures.
Section 414 of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA, Pub. L. 114–10) specifies a 0.5
Section 108 of the Further Consolidated Appropriations Act, 2020 (Pub. L. 116–94) provides that, effective for cost reporting periods beginning on or after October 1, 2020, payment to a subsection (d) hospital that furnishes an allogeneic hematopoietic stem cell transplant for hematopoietic stem cell acquisition shall be made on a reasonable cost basis, and that the Secretary shall specify the items included in such hematopoietic stem cell acquisition in rulemaking. This statutory provision also requires that, beginning in FY 2021, the payments made based on reasonable cost for the acquisition costs of allogeneic hematopoietic stem cells be made in a budget neutral manner.
In the FY 2021 IPPS/LTCH PPS proposed rule that appeared in the May 29, 2020
The following is a general summary of the changes that we proposed to make.
In section II. of the preamble of the proposed rule, we included—
• Proposed changes to MS–DRG classifications based on our yearly review for FY 2021.
• Proposed adjustment to the standardized amounts under section 1886(d) of the Act for FY 2021 in accordance with the amendments made to section 7(b)(1)(B) of Public Law 110– 90 by section 414 of the MACRA.
• Proposed recalibration of the MS–DRG relative weights.
• A discussion of the proposed FY 2021 status of new technologies approved for add-on payments for FY 2020, a presentation of our evaluation and analysis of the FY 2021 applicants for add-on payments for high-cost new medical services and technologies (including public input, as directed by Pub. L. 108–173, obtained in a town hall meeting) for applications not submitted under an alternative pathway, and a discussion of the proposed status of FY 2021 new technology applicants under the alternative pathways for certain medical devices and certain antimicrobial products.
• Proposed revision to the new technology add-on payment policy where the coding associated with an application for new technology add-on payments or a previously approved technology that may continue to receive new technology add-on payments is proposed to be assigned to a proposed new MS–DRG.
• Proposed changes to the timing of the IPPS new technology add-on payment for certain antimicrobial products, and proposed expansion of the alternative pathway for certain antimicrobial products.
In section III. of the preamble of the proposed rule we proposed to make revisions to the wage index for acute care hospitals and the annual update of the wage data. Specific issues addressed included, but were not limited to, the following:
• Proposed changes in the labor market area delineations based on revisions to the OMB Core Based Statistical Area (CBSA) delineations and proposed policies related to the proposed changes in CBSAs.
• The proposed FY 2021 wage index update using wage data from cost reporting periods beginning in FY 2017.
• Calculation, analysis, and implementation of the proposed occupational mix adjustment to the wage index for acute care hospitals for FY 2021 based on the 2016 Occupational Mix Survey.
• Proposed application of the rural floor and the frontier State floor, and continuation of the low wage index hospital policy.
• Proposed revisions to the wage index for acute care hospitals, based on hospital redesignations and reclassifications under sections 1886(d)(8)(B), (d)(8)(E), and (d)(10) of the Act.
• Proposed change to Lugar county assignments.
• Proposed adjustment to the wage index for acute care hospitals for FY 2021 based on commuting patterns of hospital employees who reside in a county and work in a different area with a higher wage index.
• Proposed labor-related share for the proposed FY 2021 wage index.
In section IV of the preamble of the proposed rule, we discuss proposed changes or clarifications of a number of the provisions of the regulations in 42 CFR parts 412 and 413, including the following:
• Proposed changes to MS–DRGs subject to the post-acute care transfer policy and special payment policy.
• Proposed inpatient hospital update for FY 2021.
• Proposed amendment to address short cost reporting periods during applicable timeframe for establishment of service area for SCHs.
• Proposed updated national and regional case-mix values and discharges for purposes of determining RRC status, and proposed amendment for hospital cost reporting periods that are longer or shorter than 12 months.
• The statutorily required IME adjustment factor for FY 2021.
• Proposed changes to the methodology for determining Medicare DSH for uncompensated care payments.
• Proposed changes to payment for allogeneic hematopoietic stem cell acquisition costs.
• Proposed payment adjustment for chimeric antigen receptor (CAR) T-cell therapy clinical trial cases.
• Proposed requirements for payment adjustments under the Hospital Readmissions Reduction Program for FY 2021.
• The provision of estimated and newly established performance standards for the calculation of value-based incentive payments under the Hospital Value-Based Purchasing Program.
• Proposed requirements for payment adjustments to hospitals under the HAC Reduction Program for FY 2021.
• Proposed policy changes related to medical residents affected by residency program or teaching hospital closure.
• Discussion of and proposed changes relating to the implementation of the Rural Community Hospital Demonstration Program in FY 2021.
• Proposal to collect market-based rate information on the Medicare cost
In section V. of the preamble to the proposed rule, we discussed the proposed payment policy requirements for capital-related costs and capital payments to hospitals for FY 2021.
In section VI. of the preamble of the proposed rule, we discussed—
• Proposed changes to payments to certain excluded hospitals for FY 2021.
• Proposed continued implementation of the Frontier Community Health Integration Project (FCHIP) Demonstration.
In section VII. of the preamble of the proposed rule, we set forth—
• Proposed changes to the LTCH PPS Federal payment rates, factors, and other payment rate policies under the LTCH PPS for FY 2021.
• Proposed rebasing and revising of the LTCH PPS market basket.
In section VIII. of the preamble of the proposed rule, we addressed—
• Proposed requirements for the Hospital Inpatient Quality Reporting (IQR) Program.
• Proposed changes to the requirements for the quality reporting program for PPS-exempt cancer hospitals (PCHQR Program).
• Proposed changes to requirements pertaining to eligible hospitals and CAHs participating in the Medicare and Medicaid Promoting Interoperability Programs.
Section IX. of the preamble to the proposed rule included the following:
• Proposed changes pertaining to the submission format requirements and reimbursement rates for patient records sent to the Beneficiary and Family Centered Care Quality Improvement Organizations (BFCC–QIOs).
• Proposed changes pertaining to allowing for mandatory electronic filing of Provider Reimbursement Review Board appeals.
• Proposed changes pertaining to and codification of certain longstanding Medicare Bad Debt policies.
Section X. of the preamble to the proposed rule included our discussion of the MedPAC Recommendations.
Section XI. of the preamble to the proposed rule included the following:
• A descriptive listing of the public use files associated with the proposed rule.
• The collection of information requirements for entities based on our proposals.
• Information regarding our responses to public comments.
• Waiver of the 60-day delay in effective date for the final rule.
In sections II. and III. of the Addendum to the proposed rule, we set forth the proposed changes to the amounts and factors for determining the proposed FY 2021 prospective payment rates for operating costs and capital-related costs for acute care hospitals. We proposed to establish the threshold amounts for outlier cases. In addition, in section IV. of the Addendum to the proposed rule, we addressed the update factors for determining the rate-of-increase limits for cost reporting periods beginning in FY 2021 for certain hospitals excluded from the IPPS.
In section V. of the Addendum to the proposed rule, we set forth proposed changes to the amounts and factors for determining the proposed FY 2021 LTCH PPS standard Federal payment rate and other factors used to determine LTCH PPS payments under both the LTCH PPS standard Federal payment rate and the site neutral payment rate in FY 2021. We proposed to establish the adjustment for wage levels, including the proposed changes in the CBSAs based on revisions to the OMB labor market area delineations and a proposed adjustment to reflect the expected increases in wages under the IPPS low wage index hospital policy. We are proposing to establish the adjustments for the labor-related share, the cost-of-living adjustment, and high-cost outliers, including the applicable fixed-loss amounts and the LTCH cost-to-charge ratios (CCRs) for both payment rates.
In Appendix A of the proposed rule, we set forth an analysis of the impact the proposed changes would have on affected acute care hospitals, CAHs, LTCHs, PCHs and other entities.
In Appendix B of the proposed rule, as required by sections 1886(e)(4) and (e)(5) of the Act, we provided our recommendations of the appropriate percentage changes for FY 2021 for the following:
• A single average standardized amount for all areas for hospital inpatient services paid under the IPPS for operating costs of acute care hospitals (and hospital-specific rates applicable to SCHs and MDHs).
• Target rate-of-increase limits to the allowable operating costs of hospital inpatient services furnished by certain hospitals excluded from the IPPS.
• The LTCH PPS standard Federal payment rate and the site neutral payment rate for hospital inpatient services provided for LTCH PPS discharges.
Under section 1805(b) of the Act, MedPAC is required to submit a report to Congress, no later than March 15 of each year, in which MedPAC reviews and makes recommendations on Medicare payment policies. MedPAC's March 2020 recommendations concerning hospital inpatient payment policies address the update factor for hospital inpatient operating costs and capital-related costs for hospitals under the IPPS. We addressed these recommendations in Appendix B of the proposed rule. For further information relating specifically to the MedPAC March 2020 report or to obtain a copy of the report, contact MedPAC at (202) 220–3700 or visit MedPAC's website at:
The Department of Health and Human Services (HHS) has a number of initiatives designed to encourage and support the adoption of interoperable health information technology and to promote nationwide health information exchange to improve health care and patient access to their health information. The Office of the National Coordinator for Health Information Technology (ONC) and CMS work collaboratively to advance
To further interoperability in across all care settings, CMS continues to explore opportunities to advance electronic exchange of patient information across payers, providers and with patients, including developing systems that use nationally recognized health IT standards such as Logical Observation Identifier Names and Codes (LOINC), Systemized Nomenclature of Medicine-Clinical Terms (SNOMED), and Fast Healthcare Interoperability Recourses (FHIR). In addition, CMS and ONC are collaborating with industry stakeholders via the Post-Acute Care Interoperability Workgroup (PACIO) (to develop FHIR-based standards for post-acute care (PAC) assessment content, which could support the exchange and reuse of patient
In the September 30, 2019
We invite providers to learn more about these important developments and how they are likely to affect LTCHs and encourage the electronic exchange of health data across care settings and with patients.
Section 1886(d) of the Act specifies that the Secretary shall establish a classification system (referred to as diagnosis-related groups (DRGs)) for inpatient discharges and adjust payments under the IPPS based on appropriate weighting factors assigned to each DRG. (Beginning in FY 2008, CMS adopted the Medicare-Severity DRGs (MS–DRGs) to better recognize severity of illness and resource use based on case complexity.) Therefore, under the IPPS, Medicare pays for inpatient hospital services on a rate per discharge basis that varies according to the DRG to which a beneficiary's stay is assigned. The formula used to calculate payment for a specific case multiplies an individual hospital's payment rate per case by the weight of the DRG to which the case is assigned. Each DRG weight represents the average resources required to care for cases in that particular DRG, relative to the average resources used to treat cases in all DRGs. Section 1886(d)(4)(C) of the Act requires that the Secretary adjust the DRG classifications and relative weights at least annually to account for changes in resource consumption. These adjustments are made to reflect changes in treatment patterns, technology, and any other factors that may change the relative use of hospital resources.
For information on the adoption of the MS–DRGs in FY 2008, we refer readers to the FY 2008 IPPS final rule with comment period (72 FR 47140 through 47189).
For general information about the MS–DRG system, including yearly reviews and changes to the MS–DRGs, we refer readers to the previous discussions in the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43764 through 43766) and the FYs 2011 through 2020 IPPS/LTCH PPS final rules (75 FR 50053 through 50055; 76 FR 51485 through 51487; 77 FR 53273; 78 FR 50512; 79 FR 49871; 80 FR 49342; 81 FR 56787 through 56872; 82 FR 38010 through 38085, 83 FR 41158 through 41258, and 84 FR 42058 through 42165, respectively).
In the FY 2008 IPPS final rule with comment period (72 FR 47140 through 47189), we adopted the MS–DRG patient classification system for the IPPS, effective October 1, 2007, to better recognize severity of illness in Medicare payment rates for acute care hospitals. The adoption of the MS–DRG system resulted in the expansion of the number of DRGs from 538 in FY 2007 to 745 in FY 2008. By increasing the number of MS–DRGs and more fully taking into account patient severity of illness in Medicare payment rates for acute care hospitals, MS–DRGs encourage hospitals to improve their documentation and coding of patient diagnoses. In the FY 2008 IPPS final rule with comment period (72 FR 47175 through 47186), we indicated that the adoption of the MS–DRGs had the potential to lead to increases in aggregate payments without a corresponding increase in actual patient severity of illness due to the incentives for additional documentation and coding. In that final rule with comment period, we exercised our authority under section 1886(d)(3)(A)(vi) of the Act, which authorizes us to maintain budget neutrality by adjusting the national standardized amount, to eliminate the estimated effect of changes in coding or classification that do not reflect real changes in case-mix. Our actuaries estimated that maintaining budget neutrality required an adjustment of −4.8 percentage points to the national standardized amount. We
On September 29, 2007, Congress enacted the TMA [Transitional Medical Assistance], Abstinence Education, and QI [Qualifying Individuals] Programs Extension Act of 2007 (Pub. L. 110–90). Section 7(a) of Public Law 110–90 reduced the documentation and coding adjustment made as a result of the MS–DRG system that we adopted in the FY 2008 IPPS final rule with comment period to −0.6 percentage point for FY 2008 and −0.9 percentage point for FY 2009.
As discussed in prior year rulemakings, and most recently in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56780 through 56782), we implemented a series of adjustments required under sections 7(b)(1)(A) and 7(b)(1)(B) of Public Law 110–90, based on a retrospective review of FY 2008 and FY 2009 claims data. We completed these adjustments in FY 2013 but indicated in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53274 through 53275) that delaying full implementation of the adjustment required under section 7(b)(1)(A) of Public Law 110–90 until FY 2013 resulted in payments in FY 2010 through FY 2012 being overstated, and that these overpayments could not be recovered under Public Law 110–90.
In addition, as discussed in prior rulemakings and most recently in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38008 through 38009), section 631 of the American Taxpayer Relief Act of 2012 (ATRA) amended section 7(b)(1)(B) of Public Law 110–90 to require the Secretary to make a recoupment adjustment or adjustments totaling $11 billion by FY 2017. This adjustment represented the amount of the increase in aggregate payments as a result of not completing the prospective adjustment authorized under section 7(b)(1)(A) of Public Law 110–90 until FY 2013.
As stated in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56785), once the recoupment required under section 631 of the ATRA was complete, we had anticipated making a single positive adjustment in FY 2018 to offset the reductions required to recoup the $11 billion under section 631 of the ATRA. However, section 414 of the MACRA (which was enacted on April 16, 2015) replaced the single positive adjustment we intended to make in FY 2018 with a 0.5 percentage point positive adjustment for each of FYs 2018 through 2023. In the FY 2017 rulemaking, we indicated that we would address the adjustments for FY 2018 and later fiscal years in future rulemaking. Section 15005 of the 21st Century Cures Act (Pub. L. 114–255), which was enacted on December 13, 2016, amended section 7(b)(1)(B) of the TMA, as amended by section 631 of the ATRA and section 414 of the MACRA, to reduce the adjustment for FY 2018 from a 0.5 percentage point positive adjustment to a 0.4588 percentage point positive adjustment. As we discussed in the FY 2018 rulemaking, we believe the directive under section 15005 of Public Law 114–255 is clear. Therefore, in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38009) for FY 2018, we implemented the required +0.4588 percentage point adjustment to the standardized amount. In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41157) and in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42057), consistent with the requirements of section 414 of the MACRA, we implemented 0.5 percentage point positive adjustments to the standardized amount for FY 2019 and FY 2020, respectively. We indicated that the FY 2018, FY 2019, and FY 2020 adjustments were permanent adjustments to payment rates. We also stated that we plan to propose future adjustments required under section 414 of the MACRA for FYs 2021 through 2023 in future rulemaking.
Consistent with the requirements of section 414 of the MACRA, we proposed to implement a 0.5 percentage point positive adjustment to the standardized amount for FY 2021. We indicated that this would constitute a permanent adjustment to payment rates. We stated in the proposed rule that we plan to propose future adjustments required under section 414 of the MACRA for FYs 2022 through 2023 in future rulemaking.
After consideration of the public comments we received, we are finalizing our proposal to implement a 0.5 percentage point adjustment to the standardized amount for FY 2021.
As of October 1, 2015, providers use the International Classification of Diseases, 10th Revision (ICD–10) coding system to report diagnoses and procedures for Medicare hospital inpatient services under the MS–DRG system instead of the ICD–9–CM coding system, which was used through September 30, 2015. The ICD–10 coding system includes the International Classification of Diseases, 10th Revision, Clinical Modification (ICD–10–CM) for diagnosis coding and the International Classification of Diseases, 10th Revision, Procedure Coding System (ICD–10–PCS) for inpatient hospital procedure coding, as well as the ICD–10–CM and ICD–10–PCS Official Guidelines for Coding and Reporting. For a detailed discussion of the conversion of the MS–DRGs to ICD–10, we refer readers to the FY 2017 IPPS/LTCH PPS final rule (81 FR 56787 through 56789).
Given the need for more time to carefully evaluate requests and propose updates, as discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38010), we changed the deadline to request updates to the MS–DRGs to November 1 of each year, which provided an additional 5 weeks for the data analysis and review process. Interested parties had to submit any comments and suggestions for FY 2021 by November 1, 2019, and the comments that were submitted in a timely manner for FY 2021 are discussed in this section of the preamble of this final rule. As we discuss in the sections that follow, we may not be able to fully consider all of the requests that we receive for the upcoming fiscal year. We have found that, with the implementation of ICD–10, some types of requested changes to the MS–DRG classifications require more extensive research to identify and analyze all of the data that are relevant to evaluating the potential change. We note in the discussion that follows those topics for which further research and analysis are required, and which we will continue to consider in connection with future rulemaking.
We stated in the proposed rule that with the continued increase in the number and complexity of the requested changes to the MS–DRG classifications since the adoption of ICD–10 MS–DRGs, and in order to consider as many requests as possible, more time is needed to carefully evaluate the requested changes, analyze claims data, and consider any updates. Therefore, we stated that we are changing the deadline to request changes to the MS–DRGs to October 20th of each year to allow for additional time for the review and consideration of any updates. We stated that interested parties should submit any comments and suggestions for FY 2022 by October 20, 2020 via the CMS MS–DRG Classification Change Request Mailbox located at:
Based on public comments received in response to the FY 2020 IPPS/LTCH PPS proposed rule, we provided a test version of the ICD–10 MS–DRG GROUPER Software, Version 38, in connection with the FY 2021 IPPS/LTCH PPS proposed rule so that the public could better analyze and understand the impact of the proposals included in the proposed rule. We noted that this test software reflects the proposed GROUPER logic for FY 2021. Therefore, it includes the new diagnosis
The test version of the ICD–10 MS–DRG GROUPER Software, Version 38, the draft version of the ICD–10 MS–DRG Definitions Manual, Version 38, and the supplemental mapping file in Table 6P.1a of FY 2020 and FY 2021 ICD–10–CM diagnosis codes are available at
Following are the changes that we proposed to the MS–DRGs for FY 2021. We invited public comments on each of the MS–DRG classification proposed changes, as well as our proposals to maintain certain existing MS–DRG classifications discussed in the proposed rule. In some cases, we proposed changes to the MS–DRG classifications based on our analysis of claims data and consultation with our clinical advisors. In other cases, we proposed to maintain the existing MS–DRG classifications based on our analysis of claims data and consultation with our clinical advisors. For the FY 2021 IPPS/LTCH PPS proposed rule, our MS–DRG analysis was based on ICD–10 claims data from the September 2019 update of the FY 2019 MedPAR file, which contains hospital bills received through September 30, 2019, for discharges occurring through September 30, 2019. In our discussion of the proposed MS–DRG reclassification changes, we referred to these claims data as the “September 2019 update of the FY 2019 MedPAR file.”
In this FY 2021 IPPS/LTCH PPS final rule, we summarize the public comments we received on our proposals, present our responses, and state our final policies. For this FY 2021 final rule, we generally did not perform any further MS–DRG analysis of claims data. Therefore, our MS–DRG analysis is based on ICD–10 claims data from the September 2019 update of the FY 2019 MedPAR file, which contains hospital bills received through September 30, 2019, for discharges occurring through September 30, 2019, except as otherwise noted.
As explained in previous rulemaking (76 FR 51487), in deciding whether to propose to make further modifications to the MS–DRGs for particular circumstances brought to our attention, we consider whether the resource consumption and clinical characteristics of the patients with a given set of conditions are significantly different than the remaining patients represented in the MS–DRG. We evaluate patient care costs using average costs and lengths of stay and rely on the judgment of our clinical advisors to determine whether patients are clinically distinct or similar to other patients represented in the MS–DRG. In evaluating resource costs, we consider both the absolute and percentage differences in average costs between the cases we select for review and the remainder of cases in the MS–DRG. We also consider variation in costs within these groups; that is, whether observed average differences are consistent across patients or attributable to cases that are extreme in terms of costs or length of stay, or both. Further, we consider the number of patients who will have a given set of characteristics and generally prefer not to create a new MS–DRG unless it would include a substantial number of cases.
In our examination of the claims data, we apply the following criteria established in FY 2008 (72 FR 47169) to determine if the creation of a new complication or comorbidity (CC) or major complication or comorbidity (MCC) subgroup within a base MS–DRG is warranted:
• A reduction in variance of costs of at least 3 percent;
• At least 5 percent of the patients in the MS–DRG fall within the CC or MCC subgroup;
• At least 500 cases are in the CC or MCC subgroup;
• There is at least a 20-percent difference in average costs between subgroups; and
• There is a $2,000 difference in average costs between subgroups.
In the FY 2021 IPPS/LTCH PPS proposed rule, we proposed to expand the previously listed criteria to also include the NonCC subgroup. We explained that we believe that applying these criteria to the NonCC subgroup would better reflect resource stratification and also promote stability in the relative weights by avoiding low volume counts for the NonCC level MS–DRGs.
Specifically, in our analysis of the MS–DRG classification requests for FY 2021 that we received by November 1, 2019, as well as any additional analyses that were conducted in connection with those requests, we applied these criteria to each of the MCC, CC and NonCC subgroups, as described in the following table. We provided the following table to better illustrate all five criteria and how they are applied for each CC subgroup, including their application to the NonCC subgroup beginning with the FY 2021 proposed rule. We also stated we had revised the order in which the criteria are presented for illustrative purposes.
In general, once the decision has been made to propose to make further modifications to the MS–DRGs as described previously, such as creating a new base MS–DRG, or in our evaluation of a specific MS–DRG classification request to split (or subdivide) an existing base MS–DRG into severity levels, all five criteria must be met for the base MS–DRG to be split (or subdivided) by a CC subgroup. We note that in our analysis of requests to create a new MS–DRG, we evaluate the most recent year of MedPAR claims data available. For example, we stated earlier that for the FY 2021 IPPS/LTCH PPS proposed rule and this final rule, our MS–DRG analysis is based on ICD–10 claims data from the September 2019 update of the FY 2019 MedPAR file. However, in our evaluation of requests to split an existing base MS–DRG into severity levels, as noted in prior rulemaking (80 FR 49368), we analyze the most recent 2 years of data. This analysis includes 2 years of MedPAR claims data to compare the data results from 1 year to the next to avoid making determinations about whether additional severity levels are warranted based on an isolated year's data fluctuation and also, to validate that the established severity levels within a base MS–DRG are supported. The first step in our process of evaluating if the creation of a new CC subgroup within a base MS–DRG is warranted is to determine if all the criteria are satisfied for a three way split. If the criteria fail, the next step is to determine if the criteria are satisfied for a two way split. If the criteria for both of the two way splits fail, then a split (or CC subgroup) would generally not be warranted for that base MS–DRG. If the three way split fails on any one of the five criteria and all five criteria for both two way splits (1_23 and 12_3) are met, we would apply the two way split with the highest R2 value. We note that if the request to split (or subdivide) an existing base MS–DRG into severity levels specifies the request is for either one of the two way splits (1_23 or 12_3), in response to the specific request, we will evaluate the criteria for both of the two way splits, however we do not also evaluate the criteria for a three way split.
As shown in the table, under column number two (Three-Way Split), the first criterion requires “500+ cases for MCC group; and 500+ cases for CC group” and the second criterion requires “5%+ cases for MCC group; and 5%+ cases for CC group”. We note that there is no volume or percentage of cases requirement for the NonCC group under the first and second criterion for this type of severity level split under the existing criteria. We further note that the proposed expansion of the criteria to include the NonCC subgroup, as discussed in the proposed rule, is only applicable for a three-way split because as previously illustrated in the table, the criteria for the NonCC subgroup already exists in each of the options for a two-way split.
As stated previously, in the absence of applying the proposed criteria to include the NonCC subgroup, the MS–DRG related proposals for FY 2021 involving such requests to create subgroups would have similar results. For example, in response to the request under the Pre-MDC category to split MS–DRG 014 (Allogeneic Bone Marrow Transplant) into two severity levels, based on the presence of a MCC, we discussed our application of the criteria to create subgroups for each of the two-way severity level splits. We noted that the criterion that there be at least 500 cases for each subgroup (with MCC and without MCC) failed due to low volume, for both years analyzed. The analysis did not specifically rely on application of the proposed expansion of the criteria for the NonCC subgroup since the request was not for a three-way severity split and we noted there was already an insufficient volume of cases (less than 500) in the CC subgroup (CC+NonCC group). Another example under the Pre-MDC category is for the proposed new MS–DRG 018 (Chimeric Antigen Receptor (CAR) T-cell Immunotherapy), for which we received public comments regarding CC subgroups and is discussed in further detail in section II.E.2.b. of the preamble of this final rule.
We take this opportunity to clarify that there are no plans to apply the proposed expansion of the criteria to the NonCC subgroup retroactively in future rulemaking. The commenter is correct that application of the proposed NonCC subgroup criteria going forward may result in modifications to certain MS–DRGs that are currently split into three severity levels and result in MS–DRGs that are split into two severity levels under the proposed new framework. Any proposed modifications to the MS–DRGs would be addressed in future rulemaking consistent with our annual process and reflected in the Table 5—Proposed List of Medicare Severity Diagnosis Related Groups (MS–DRGs), Relative Weighting Factors, and Geometric and Arithmetic Mean Length of Stay for the applicable fiscal year.
After consideration of the public comments we received, we are finalizing our proposal to expand the previously listed criteria to also include the NonCC subgroup.
We are making the FY 2021 ICD–10 MS–DRG GROUPER and Medicare Code Editor (MCE) Software Version 38, the ICD–10 MS–DRG Definitions Manual files Version 38 and the Definitions of Medicare Code Edits Manual Version 38 available to the public on our CMS website at:
As discussed in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32473 through 32475), we received two separate requests that involve the MS–
With regard to the first request, the requestor noted that the logic for MS–DRG 014 consists of ICD–10–PCS procedure codes describing allogeneic bone marrow transplants that are designated as non-operating room (non-O.R.) procedures. The requestor also noted that the logic for MS–DRGs 016 and 017 includes ICD–10–PCS procedure codes describing autologous bone marrow transplants where certain procedure codes are designated as O.R. and other procedure codes are designated as non-O.R. procedures. The requestor stated that redesignating the bone marrow transplant MS–DRGs from surgical to medical would clinically align with the resources utilized in the performance of these procedures.
The requestor is correct that bone marrow transplant procedures are currently assigned to MS–DRGs 014, 016, and 017 which are classified as surgical MS–DRGs under the Pre-MDC category for the ICD–10 MS–DRGs. The requestor is also correct that the logic for MS–DRG 014 consists of ICD–10–PCS procedure codes describing allogeneic bone marrow transplants that are designated as non-operating room (non-O.R.) procedures and that the logic for MS–DRGs 016 and 017 includes ICD–10–PCS procedure codes describing autologous bone marrow transplants where certain procedure codes are designated as O.R. procedures and other procedure codes are designated as non-O.R. procedures. We refer the reader to the ICD–10 MS–DRG Definitions Manual Version 37 which is available via the internet on the CMS website at:
As noted in the proposed rule, we consulted with our clinical advisors and they agreed that bone marrow transplant procedures are similar to a blood transfusion procedure, do not utilize the resources of an operating room, and are not surgical procedures. Our clinical advisors concurred that bone marrow transplants are medical procedures and it is more accurate to designate the MS–DRGs to which these procedures are assigned as medical MS–DRGs versus surgical MS–DRGs. Therefore, we proposed to redesignate MS–DRGs 014, 016, and 017 as medical MS–DRGs effective October 1, 2020 for FY 2021.
As noted previously, the logic for MS–DRGs 016 and 017 includes ICD–10–PCS procedure codes describing autologous bone marrow transplants and related procedures where certain procedure codes are designated as O.R. and other procedure codes are designated as non-O.R. procedures. We stated in the proposed rule that during our review of the bone marrow transplant procedures assigned to these MS–DRGs, we identified the following 8 procedure codes that are currently designated as O.R procedures.
In connection with our proposal to designate the MS–DRGs to which these procedures are assigned as medical, as well as for clinical consistency with the other procedure codes describing bone marrow transplant procedures, we proposed to redesignate the listed ICD–10–PCS procedure codes from O.R. to non-O.R. procedures, affecting their current MS–DRG assignment for MS–DRGs 016 and 017, effective October 1, 2020 for FY 2021.
As discussed in the proposed rule and noted earlier in this section, we also received a request to split MS–DRG 014 (Allogeneic Bone Marrow Transplant) into two severity levels, based on the presence of a MCC. For FY 2020, the requestor had requested that MS–DRG 014 be split into two new MS–DRGs according to donor source. For the reasons discussed in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19176 through 19180) and the FY 2020 IPPS/LTCH PPS final rule (84 FR 42067 through 42072), we did not propose to split MS–DRG 014 into two new MS–DRGs according to donor source. However, according to the requestor, a single (base) MS–DRG for allogeneic bone marrow and stem cell transplants continues to not be as clinically or resource homogeneous as it could be. The requestor conducted its own analysis and stated the results revealed it was appropriate to split MS–DRG 014 based on the presence of a MCC.
We noted in the proposed rule that we examined claims data from the September 2019 update of the FY 2019 MedPAR file for MS–DRG 014. There were 962 cases found in MS–DRG 014 with an average length of stay of 26.7 days and average costs of $89,586.
As stated in the proposed rule, consistent with our established process, we conducted an analysis of MS–DRG 014 to determine if the criteria to create subgroups were met. The process for conducting this type of analysis includes examining 2 years of MedPAR claims data to compare the data results
We applied the criteria to create subgroups for each of the two-way severity level splits. As discussed in section II.D.1.b., in the FY 2021 IPPS/LTCH PPS proposed rule, we proposed to expand the previously listed criteria to also include the NonCC group. The criterion that there be at least 500 cases for each subgroup failed due to low volume, as shown in the table for both years. Specifically, for the “with MCC” and “without MCC” (CC+NonCC) split, there were only 183 (141+42) cases in the “without MCC” subgroup based on the data in the FY 2019 MedPAR file and only 175 (140+35) cases in the “without MCC” subgroup based on the data in the FY 2018 MedPAR file. For the “with CC/MCC” and “without CC/MCC” (NonCC) split, there were only 42 cases in the NonCC subgroup based on the data in the FY 2019 MedPAR file and only 35 cases in the NonCC subgroup based on the data in the FY 2018 MedPAR file. The claims data do not support a two-way severity level split for MS–DRG 014, therefore, we proposed to maintain the current structure of MS–DRG 014 for FY 2021.
Commenters also supported retaining the structure of MS–DRG 014 and not creating a two-way severity level split based on the data and information provided. A commenter stated they understood and did not dispute CMS' logic based on the criteria to create subgroups, however, they suggested that when proposals from the comprehensive CC/MCC analysis are finalized that this MS–DRG be reevaluated given the variation in the “with CC/MCC” and “without CC/MCC” subgroups ($90,924 versus $60,277, respectively) displayed in the CMS data analysis. In addition, this commenter noted that the FY 2020 proposals related to the CC/MCC analysis involved redesignating the neoplasm codes from CC to NonCC and stated their belief that facilities addressing the costly and unavoidable consequences of allogeneic bone marrow transplants should be compensated for providing the care.
In response to the commenter who recommended that CMS remove the procedure codes describing an allogeneic or autologous bone marrow transplant with an open approach from the classification, we thank the commenter for their suggestion and note that proposed changes to these procedure codes can be considered at an ICD–10 Coordination and Maintenance Committee meeting. As discussed in section II.E.16. of the preamble of this final rule, we encourage commenters to submit proposals for procedure coding changes via Email to:
With regard to the commenter who suggested that MS–DRG 014 be reevaluated when proposals from the comprehensive CC/MCC analysis are finalized due to the variation in the “with CC/MCC” and “without CC/MCC” subgroups as displayed in the CMS data analysis, we note that we will evaluate and analyze data for all the MS–DRGs consistent with our annual process.
After consideration of the public comments that we received, we are finalizing our proposal to redesignate MS–DRGs 014, 016, and 017 from surgical to medical MS–DRGs under the Pre-MDC category and finalizing our proposal to redesignate the eight ICD–10–PCS procedure codes listed in the previous table from O.R. to non-O.R. procedures, affecting their current MS–DRG assignment for MS–DRGs 016 and 017 for FY 2021. We are also finalizing our proposal to maintain the current structure of MS–DRG 014 for FY 2021.
In the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32475 through 32476), we discussed several requests we received to create a new MS–DRG for procedures involving CAR T-cell therapies. The requestors stated that creation of a new MS–DRG would improve payment for CAR T-cell therapies in the inpatient setting. Some requestors noted that cases involving CAR T-cell therapies will no longer be eligible for new technology add-on payments in FY 2021 and that this would significantly reduce the overall payment for cases involving CAR T-cell therapies. Some requestors also noted that in the absence of the creation of a new MS–DRG for procedures involving CAR T-cell therapies, outlier payments for these cases would increase significantly, which would increase the share of total outlier payments that are attributable to CAR T-cell therapies.
The requestors stated that the new MS–DRG for CAR T-cell therapies should include cases that report ICD–10–PCS procedure codes XW033C3 (Introduction of engineered autologous chimeric antigen receptor t-cell immunotherapy into peripheral vein, percutaneous approach, new technology group 3) or XW043C3 (Introduction of engineered autologous chimeric antigen receptor t-cell immunotherapy into central vein, percutaneous approach, new technology group 3).
Given the high cost of the CAR T-cell product, some requestors provided recommendations related to the differential treatment of cases where the CAR T-cell product was provided without cost as part of a clinical trial to ensure that the payment amount for the newly created MS–DRG for CAR T-cell therapy cases would appropriately reflect the average cost hospitals incur for providing CAR T-cell therapy outside of a clinical trial. For example, some requestors suggested that CMS make minor adjustments to its usual ratesetting methodology to exclude clinical trial claims from the calculation of the relative weight for any MS–DRG for CAR T-cell therapies. One requestor noted that these adjustments are consistent with CMS' general authority under sections 1886(d)(4)(B) and (C) of the Act. Some requestors also suggested that CMS apply an offset to the MS–DRG payment in cases where the provider does not incur the cost of the CAR T-cell therapy.
Currently, procedures involving CAR T-cell therapies are identified with ICD–10–PCS procedure codes XW033C3 and XW043C3, which became effective October 1, 2017. In the FY 2019 IPPS/LTCH PPS final rule, we finalized our proposal to assign cases reporting these ICD–10–PCS procedure codes to Pre-MDC MS–DRG 016 for FY 2019 and to revise the title of this MS–DRG to “Autologous Bone Marrow Transplant with CC/MCC or T-cell Immunotherapy”. We refer readers to section II.F.2.d. of the preamble of the FY 2019 IPPS/LTCH PPS final rule for a complete discussion of these final policies (83 FR 41172 through 41174).
As noted, the current procedure codes for CAR T-cell therapies both became effective October 1, 2017. In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41172 through 41174), we indicated that we believed we should collect more comprehensive clinical and cost data before considering assignment of a new MS–DRG to these therapies. We stated in the FY 2020 IPPS/LTCH PPS proposed rule that, while the September 2018 update of the FY 2018 MedPAR data file does contain some claims that include those procedure codes that identify CAR T-cell therapies, the number of cases is limited, and the submitted costs vary widely due to differences in provider billing and charging practices for this therapy. Therefore, while those claims could potentially be used to create relative weights for a new MS–DRG, we stated that we did not have the comprehensive clinical and cost data that we generally believe are needed to do so. Furthermore, we stated in the FY 2020 IPPS/LTCH PPS proposed rule that given the relative newness of CAR T-cell therapy and our proposal to continue new technology add-on payments for FY 2020 for the two CAR T-cell therapies that currently have FDA approval (KYMRIAH
We stated in the FY 2021 IPPS/LTCH PPS proposed rule that we now have more data upon which to evaluate a new MS–DRG specifically for cases involving CAR T-cell therapies. We stated that we agree with the requestors it is appropriate to consider the development of a new MS–DRG using the data that is now available. We examined the claims data from the September 2019 update of the FY 2019 MedPAR data file for cases that reported ICD–10–PCS procedure codes XW033C3 or XW043C3. For purposes of this analysis, we identified clinical trial cases as claims with ICD–10–CM diagnosis code Z00.6 (Encounter for examination for normal comparison and control in clinical research program) which is reported only for clinical trial cases, or with standardized drug charges of less than $373,000, which is the average sales price of KYMRIAH and YESCARTA, which are the two CAR T-cell medicines approved to treat relapsed/refractory diffuse large B-cell lymphoma as of the time of the development of the proposed rule and this final rule. We stated that we
*We note that we included 18 cases that were flagged as statistical outliers in our trim methodology due to the mix of CAR T- cell therapy and non-CAR T—cell therapy cases in the current MS–DRG.
As shown in the table, we found 2,212 cases in MS–DRG 016, with an average length of stay of 18.2 days and average costs of $55,001. Of these 2,212 cases, 262 cases reported ICD–10–PCS procedure codes XW033C3 or XW043C3; these cases had an average length of stay of 16.3 days and average costs of $127,408. Of these 262 cases, 94 were identified as non-clinical trial cases; these cases had an average length of stay of 17.2 days and average costs of $274,952. The remaining 168 cases were identified as clinical trial cases; these cases had an average length of stay of 15.8 days and average costs of $44,853.
The data indicate that the average costs for the non-clinical trial cases that reported ICD–10–PCS procedure codes XW033C3 or XW043C3 are almost five times higher than the average costs for all cases in MS–DRG 016. We stated that our clinical advisors also believe that the cases reporting ICD–10–PCS procedure codes XW033C3 or XW043C3 can be clinically differentiated from other cases that group to MS–DRG 016, which includes procedures involving autologous bone marrow transplants, once the CAR T-cell therapy itself is taken into account in the comparison.
As described earlier in this section, in deciding whether to propose to make modifications to the MS–DRGs for particular circumstances brought to our attention, we consider a variety of factors pertaining to resource consumption and clinical characteristics. We stated in the proposed rule that while we generally prefer not to create a new MS–DRG unless it would include a substantial number of cases, our clinical advisors believe that the vast discrepancy in resource consumption as reflected in the claims data analysis and the clinical differences warrant the creation of a new MS–DRG. We therefore proposed to assign cases reporting ICD–10–PCS procedure codes XW033C3 or XW043C3 to a new MS–DRG 018 (Chimeric Antigen Receptor (CAR) T-cell Immunotherapy).
We stated in the proposed rule that if additional procedure codes describing CART- cell therapies are approved and finalized, we would use our established process to assign these procedure codes to the most appropriate MS–DRG. Because these cases would no longer group to MS–DRG 016, we proposed to revise the title for MS–DRG 016 from “Autologous Bone Marrow Transplant with CC/MCC or T-cell Immunotherapy” to “Autologous Bone Marrow Transplant with CC/MCC”.
We note that commenters also raised some concerns about outpatient billing instructions with respect to billing for outpatient cell collection and cell processing charges on the inpatient claim, payment issues for TEFRA hospitals, and questions regarding the MedPAR data dictionary. While we consider these comments about outpatient billing instructions and TEFRA hospitals outside of the scope of the proposals in the proposed rule, we will take these comments into consideration when developing policies and program requirements for future years. With respect to comments about the MedPAR data dictionary, we anticipate that the issues will be addressed in future MedPAR releases.
After consideration of public comments received, we are finalizing our proposal to assign cases reporting ICD–10–PCS procedure codes XW033C3 or XW043C3 to a new MS–DRG 018 (Chimeric Antigen Receptor (CAR) T-cell Immunotherapy) and to revise the title for MS–DRG 016 from “Autologous Bone Marrow Transplant with CC/MCC or T-cell Immunotherapy” to “Autologous Bone Marrow Transplant with CC/MCC”. We refer readers to section II.E.2.b. of the preamble of this final rule for a discussion of the relative weight calculation for the new MS–DRG 018 for CAR T-cell therapy, and to section IV.I. of the preamble of this final rule for a discussion of the payment adjustment for CAR T-cell clinical trial and expanded access use immunotherapy cases.
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42078), we finalized our proposal to reassign 96 ICD–10–PCS procedure codes describing dilation of carotid artery with an intraluminal device(s) from MS–DRGs 037, 038, and 039 (Extracranial Procedures with MCC, with CC, and without CC/MCC, respectively) to MS–DRGs 034, 035, and 036 (Carotid Artery Stent Procedures with MCC, with CC, and without CC/MCC, respectively). As discussed in the FY 2021 IPPS/LTCH proposed rule (85
The logic for case assignment to MS–DRGs 034, 035, and 036 as displayed in the ICD–10 MS–DRG Version 37 Definitions Manual, available via the internet on the CMS website at:
In response to the request, we first examined claims data from the September 2019 update of the FY 2019 MedPAR file for MS–DRGs 034, 035, and 036 which only include those procedure codes that describe procedures that involve dilation of a carotid artery with an intraluminal device. Our findings are reported in the following table.
As shown in the table, we found a total of 1,259 cases in MS–DRG 034 with an average length of stay of 6.9 days and average costs of $28,668. We found a total of 3,367 cases in MS–DRG 035 with an average length of stay of 3.0 days and average costs of $17,114. We found a total of 4,769 cases in MS–DRG 036 with an average length of stay of 1.4 days and average costs of $13,501.
We then examined claims data from the September 2019 update of the FY 2019 MedPAR file for MS–DRGs 037, 038, and 039 and identified cases reporting any one of the 6 procedure codes listed in the table previously to determine the volume of cases impacted and if the average length of stay and average costs are consistent with the average length of stay and average costs for MS–DRGs 034, 035 and 036. Our findings are shown in the following table.
As shown in the table, we found a total of 3,331 cases with an average length of stay of 7.3 days and average costs of $24,155 in MS–DRG 037. There were 6 cases reporting at least one of the 6 procedure codes that describe dilation of the carotid artery with an intraluminal device using an open approach in MS–DRG 037 with an average length of stay of 7 days and average costs of $22,272. For MS–DRG 038, we found a total of 11,021 cases with an average length of stay of 3 days and average costs of $12,306. There were 33 cases reporting at least one of the 6 procedure codes that describe dilation of the carotid artery with an intraluminal device in MS–DRG 038 with an average length of stay of 2.3 days and average costs of $16,777. For MS–DRG 039, we found a total of 20,854 cases with an average length of stay of 1.4 days and average costs of $8,463. There were 26 cases reporting at least one of the 6 procedure codes that describe dilation of the carotid artery with an intraluminal device in MS–DRG 039 with an average length of stay of 1.2 days and average costs of $14,981.
The data analysis shows that for the cases in MS–DRGs 037, 038, and 039 reporting ICD–10–PCS codes 037H04Z, 037J04Z, 037K04Z, 037L04Z, 037M04Z, or 037N04Z, the average length of stay is shorter and the average costs are higher than the average length of stay and average costs (with the exception of the average costs for the 6 cases in MS–DRG 037 which are slightly less) in the FY 2019 MedPAR file for MS–DRGs 037, 038, and 039 respectively. The data analysis also shows for the cases in MS–DRGs 037, 038, and 039 reporting ICD–10–PCS codes 037H04Z, 037J04Z, 037K04Z, 037L04Z, 037M04Z, and 037N04Z the average length of stay and the average costs are in-line with the average length of stay and average costs in the FY 2019 MedPAR file for MS–DRGs 034, 035, and 036 respectively.
As noted in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19184) and final rule (84 FR 42077), our clinical advisors stated that MS–DRGs 034, 035 and 036 are defined to include only those procedure codes that describe procedures that involve dilation of a carotid artery with an intraluminal device.
Therefore, we proposed to reassign the procedure codes listed in the table from MS–DRGs 037, 038, and 039 that describe procedures that involve dilation of the carotid artery with an intraluminal device to MS–DRGs 034, 035, and 036.
In addition to our analysis of the claims data from the September 2019 MedPAR file for MS–DRGs 037, 038 and 039, we conducted an examination of all the MS–DRGs where any one of the 6 procedure codes listed previously were also reported to determine if any one of the 6 procedure codes were included in any other MS–DRG outside of MDC 01, to further assess the current MS–DRG assignments. Our findings are shown in the following table.
As shown in the table, we found one case reporting any one of these 6 procedure codes in each of MS–DRGs 023, 027, 035, 219, 233, 235 and 252. We noted that all of the listed MS–DRGs were assigned to MDC 01 with one exception: MS–DRG 252 (Other Vascular Procedures with MCC) in MDC05 (Diseases and Disorders of the Circulatory System). As a result, we reviewed the logic list for MS–DRGs 252, 253, and 254 (Other Vascular Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 05 and found 36 ICD–10–PCS codes for procedures that describe dilation of the carotid artery with an intraluminal device with an open approach that were not currently assigned in MDC 01. The 36 ICD–10–PCS codes are listed in the following table.
We then examined the claims data to determine if there were other MS–DRGs in which one of the 36 procedure codes listed in the table were reported. We found 8 cases that grouped to MS–DRGs 981, 982, and 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) when a principal diagnosis from MDC 01 was reported with one of the procedure codes in the table that describes dilation of a carotid artery with an intraluminal device, open approach.
As noted previously, in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19184) and final rule (84 FR 42077), our clinical advisors stated that MS–DRGs 034, 035, and 036 are defined to include those procedure codes that describe procedures that involve dilation of a carotid artery with an intraluminal device. As a result, our clinical advisors supported adding the 36 ICD–10–PCS codes identified in the table to MS–DRGs 034, 035, and 036 in MDC 01 for consistency to align with the definition of MS–DRGs 034, 035, and 036 and also to permit proper case assignment when a principal diagnosis from MDC 01 is reported with one of the procedure codes in the table that describes dilation of a carotid artery with an intraluminal device, open approach.
Therefore, for FY 2021, we also proposed to add the 36 ICD–10–PCS codes identified in the table that are currently assigned in MDC 05 to MS–
After consideration of the public comments we received, we are finalizing our proposal to reassign the 6 procedure codes discussed above from MS–DRGs 037, 038, and 039 to MS–DRGs 034, 035, and 036 because the 6 procedure codes are consistent with the other procedures describing dilation of a carotid artery with an intraluminal device that are currently assigned to
MS–DRGs 034, 035, and 036. Additionally, we are finalizing our proposal to add the 36 ICD–10–PCS codes identified in the table that are currently assigned in MDC 05 to MS–DRGs 252, 253, and 254 to the GROUPER logic for MS–DRGs 034, 035, and 036 in MDC 01.
As discussed in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32481), we received a request to reassign cases describing the insertion of a neurostimulator generator into the skull in combination with the insertion of a neurostimulator lead into the brain from MS–DRG 023 (Craniotomy with Major Device Implant or Acute Complex Central Nervous System (CNS) Principal Diagnosis (PDX) with MCC or Chemotherapy Implant or Epilepsy with Neurostimulator) to MS–DRG 021 (Intracranial Vascular Procedures with PDX Hemorrhage with CC) or to reassign these cases to another MS–DRG for more appropriate payment. The Responsive Neurostimulator (RNS
We stated that as discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38015 through 38019), we finalized our proposal to reassign all cases with a principal diagnosis of epilepsy and one of the following ICD–10–PCS code combinations capturing cases with a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain (including cases involving the use of the RNS
• 0NH00NZ (Insertion of neurostimulator generator into skull, open approach), in combination with 00H00MZ (Insertion of neurostimulator lead into brain, open approach).
• 0NH00NZ (Insertion of neurostimulator generator into skull, open approach), in combination with 00H03MZ (Insertion of neurostimulator lead into brain, percutaneous approach).
• 0NH00NZ (Insertion of neurostimulator generator into skull, open approach), in combination with 00H04MZ (Insertion of neurostimulator lead into brain, percutaneous endoscopic approach).
We also finalized our change to the title of MS–DRG 023 from “Craniotomy with Major Device Implant or Acute Complex Central Nervous System (CNS) Principal Diagnosis (PDX) with MCC or Chemo Implant” to “Craniotomy with Major Device Implant or Acute Complex Central Nervous System (CNS) Principal Diagnosis (PDX) with MCC or Chemotherapy Implant or Epilepsy with Neurostimulator” to reflect the modifications to the MS–DRG structure.
As noted in the proposed rule, the requestor acknowledged the refinements made to MS–DRG 023 effective for FY 2018, but stated that despite the previously-stated changes, cases describing the insertion of a neurostimulator generator into the skull in combination with the insertion of a neurostimulator lead into the brain continue to be underpaid. The requestor performed its own analysis and stated that it found that the average costs of cases describing the insertion of the RNS
We first examined claims data from the September 2019 update of the FY 2019 MedPAR file for all cases in MS–DRG 023 and compared the results to cases representing a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain (including cases involving the use of the RNS
As shown in the table, for MS–DRG 023, we identified a total of 11,938 cases, with an average length of stay of 9.8 days and average costs of $40,264. Of the 11,938 cases in MS–DRG 023, there were 81 cases describing a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain (including cases involving the use of the RNS
We also examined the reassignment of cases describing a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain (including cases involving the use of the RNS
As shown in the table, for MS–DRG 020, there were a total of 1,623 cases with an average length of stay of 16.1 days and average costs of $75,668. For MS–DRG 021, there were a total of 409 cases with an average length of stay of 12.3 days and average costs of $55,123. For MS–DRG 022, there were a total of 131 cases with an average length of stay of 6.3 days and average costs of $35,599.
We stated in the proposed rule that while the cases in MS–DRG 023 describing a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain (including cases involving the use of the RNS
We then explored alternative options, as was requested. We noted that the 81 cases describing a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain (including cases involving the use of the RNS
We further analyzed the data to identify those cases describing a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain (including cases involving the use of the RNS
We also reviewed the cases reporting procedures describing a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain (including cases involving the use of the RNS
While the results of the claims analysis as previously summarized indicate that the average costs of cases reporting a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain (including cases involving the use of the RNS
In summary, we stated that we believe that further analysis of cases reporting a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain (including cases involving the use of the RNS
Although supporting the decision to not reassign cases reporting the use of an RNS
We also appreciate the commenters' suggestions regarding other potential changes to the current MS–DRG assignments for CMS's consideration. We continue to be attuned to the requestors' and commenters' concerns about reimbursement for cases describing the insertion of the RNS
In the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32484 through 32490), we discussed a request we received to consider reassignment of ICD–10–PCS procedure codes 0RRC0JZ (Replacement of right temporomandibular joint with synthetic substitute, open approach) and 0RRD0JZ (Replacement of left temporomandibular joint with synthetic substitute, open approach) from MS–DRGs 133 and 134 (Other Ear, Nose, Mouth and Throat O.R. Procedures with and without CC/MCC, respectively) to MS–DRGs 131 and 132 (Cranial and Facial Procedures with and without CC/MCC, respectively) in MDC 03.
The requestor stated that it is inaccurate for procedure codes 0RRC0JZ and 0RRD0JZ that identify and describe replacement of the temporomandibular joint (TMJ), which involves excision of the TMJ followed by replacement with a prosthesis, to group to MS–DRGs 133 and 134 while excision of the TMJ alone, identified by procedure codes 0RBC0ZZ (Excision of right temporomandibular joint, open approach) and 0RBD0ZZ (Excision of left temporomandibular joint, open approach), groups to the higher weighted MS–DRGs 131 and 132. According to the requestor, reassignment of procedure codes 0RRC0JZ and 0RRD0JZ to the higher weighted MS–DRGs 131 and 132 is reasonable and the MS–DRG title of “Cranial and Facial Procedures” is more appropriate. However, the requestor also stated that the cost of the prosthesis would continue to be underpaid, despite that recommended reassignment. As an alternative option, the requestor suggested CMS analyze if there may be other higher weighted MS–DRGs that could more appropriately compensate providers for a TMJ replacement with prosthesis procedure.
In addition, the requestor recommended that we analyze all procedures involving the mandible and maxilla and consider reassignment of those procedure codes from MS–DRGs 129 (Major Head and Neck Procedures with CC/MCC or Major Device) and 130 (Major Head and Neck Procedures without CC/MCC) to MS–DRGs 131 and 132 because the codes describe procedures that are performed on facial and cranial structures. Finally, the requestor also suggested another option that included modifying the surgical hierarchy for MDC 03 by sequencing MS–DRGs 131 and 132 above MS–DRGs 129 and 130, which the requestor
In the proposed rule, we discussed these separate but related requests that involve procedures currently assigned to MS–DRGs 129, 130, 131, 132, 133 and 134 in MDC 03.
As discussed in the proposed rule, in our analysis of the request involving temporomandibular joint replacements, we first identified the ICD–10–PCS procedure codes that describe the excision or replacement of a temporomandibular joint as shown in the following table.
In the proposed rule we noted that the requestor is correct that procedure codes 0RRC0JZ and 0RRD0JZ that describe replacement of the right and left TMJ with a prosthesis (synthetic substitute) by an open approach group to MS–DRGs 133 and 134 and procedure codes 0RBC0ZZ and 0RBD0ZZ that describe excision of the right and left TMJ alone by an open approach group to the higher weighted MS–DRGs 131 and 132. We also noted that the corresponding related codes as previously listed in the table that describe different approaches (excision procedures) or different types of tissue substitute (replacement procedures) are also assigned to the same respective MS–DRGs.
We stated in the proposed rule that we examined claims data from the September 2019 update of the FY 2019 MedPAR file for MS–DRGs 133 and 134 to identify cases reporting ICD–10–PCS codes 0RRC0JZ or 0RRD0JZ. Our findings are shown in the following table.
In MS–DRG 133, we found a total of 1,757 cases with an average length of stay of 5.6 days and average costs of $15,337. Of those 1,757 cases, there were 13 cases reporting ICD–10–PCS code 0RRC0JZ or 0RRD0JZ, with an average length of stay of 3.1 days and average costs of $21,677. In MS–DRG 134, we found a total of 849 cases with an average length of stay of 2.5 days and average costs of $9,512. Of those 849 cases, there were 23 cases reporting ICD–10–PCS code 0RRC0JZ or 0RRD0JZ, with an average length of stay of 2.1 days and average costs of $20,430. The analysis shows that cases reporting ICD–10–PCS procedure codes 0RRC0JZ or 0RRD0JZ in MS–DRGs 133 and 134 have higher average costs ($21,677 versus $15,337 and $20,430 versus $9,512, respectively) and shorter lengths of stay (3.1 days versus 5.6 days and 2.1 days versus 2.5 days, respectively) compared to all the cases in their assigned MS–DRG.
We also examined claims data from the September 2019 update of the FY 2019 MedPAR file for MS–DRGs 131 and 132. Our findings are shown in the following table.
In MS–DRG 131, we found a total of 1,181 cases with an average length of stay of 5.4 days and average costs of $18,875. In MS–DRG 132, we found a total of 464 cases with an average length of stay of 2.5 days and average costs of $11,558.
We stated in the proposed rule that overall, the data analysis shows that the average costs for the cases reporting procedure codes 0RRC0JZ and 0RRD0JZ in MS–DRGs 133 and 134 are more aligned with the average costs for all the cases in MS–DRG 131 ($21,677 and $20,430, respectively versus $18,875) compared to MS–DRG 132 where the average costs are not significantly different than the average costs of all the cases in MS–DRG 134 ($11,558 versus $9,512). We stated that our clinical advisors agreed that the replacement of a TMJ with prosthesis procedures (codes 0RRC0JZ or 0RRD0JZ) are more resource intensive and are clinically distinct from the cases reporting procedure codes 0RBC0ZZ and 0RBD0ZZ that involve excision of the TMJ alone. They also agreed that procedure codes 0RRC0JZ and 0RRD0JZ should be reassigned to a higher weighted MS–DRG. However, they recommended we conduct further claims analysis to identify if there are other MS–DRGs in MDC 03 where cases reporting these procedure codes may also be found and to compare that data.
As previously noted, the requestor had also recommended that we analyze all procedures involving the mandible and maxilla and consider reassignment of those procedure codes from MS–DRGs 129 and 130 to MS–DRGs 131 and 132. The requestor did not provide a specific list of the procedure codes involving the mandible and maxilla, therefore, we reviewed the list of procedure codes in MS–DRGs 129 and 130 and identified the following 26 procedure codes describing procedures performed on the mandible. There were no procedure codes describing procedures performed on the maxilla in MS–DRGs 129 and 130.
As noted in the proposed rule, based on the advice of our clinical advisors as previously discussed, we conducted additional analyses for MDC 03 using the same FY 2019 MedPAR data file and found cases reporting procedure code 0RRC0JZ or 0RRD0JZ for the replacement of a TMJ with prosthesis procedure in MS–DRGs 129, 130, 131, and 132. As discussed in section II.D.15. of the proposed rule and section II.E.15. of this final rule, cases with multiple procedures are assigned to the highest surgical class in the hierarchy to which one of the procedures is assigned. For example, if procedure code 0RRC0JZ which is assigned to the logic for MS–DRGs 133 and 134 is reported on a claim with procedure code 0NSR04Z (Reposition maxilla with internal fixation device, open approach), which
As shown in the table, for MS–DRG 129, there was a total of 2,080 cases with average length of stay of 5.2 days and average costs of $18,091. Of these 2,080 cases, there were 3 cases reporting a TMJ replacement with prosthesis procedure (code 0RRC0JZ or 0RRD0JZ) with an average length of stay of 3 days and average costs of $33,581 and 592 cases reporting a mandible procedure with average length of stay of 6.9 days and average costs of $21,258. For MS–DRG 130, there was a total of 948 cases with average length of stay of 2.7 days and average costs of $11,092. Of these 948 cases, there were there were 5 cases reporting a TMJ replacement with prosthesis procedure (code 0RRC0JZ or 0RRD0JZ) with an average length of stay of 3.4 days and average costs of $27,396 and 202 cases reporting a mandible procedure with average length of stay of 3.5 days and average costs of $14,712. For MS–DRG 131, there was a total of 1,181 cases with average length of stay of 5.4 days and average costs of $18,875. Of these 1,181 cases there were 4 cases reporting a TMJ replacement with prosthesis procedure (code 0RRC0JZ or 0RRD0JZ) with an average length of stay of 7.3 days and average costs of $31,151. For MS–DRG 132, there was a total of 464 cases with average length of stay of 2.5 days and average costs of $11,558. Of these 464 cases, there were 10 cases reporting a TMJ replacement with prosthesis procedure (code 0RRC0JZ or 0RRD0JZ) with an average length of stay of 3.1 days and average costs of $24,099.
The data analysis demonstrates that the average costs of cases reporting procedure code 0RRC0JZ or 0RRD0JZ for the replacement of a TMJ with prosthesis procedure in MS–DRGs 129, 130, 131, and 132 and the cases reporting procedures performed on the mandible in MS–DRGs 129 and 130 have higher average costs compared to all the cases in their assigned MS–DRGs. While the volume of the cases reporting procedure code 0RRC0JZ or 0RRD0JZ was low with a total of 22 cases across MS–DRGs 129, 130, 131, and 132, similar to the analysis results for MS–DRGs 133 and 134 described earlier, the average costs for the cases are higher ($33,581 versus $18,091; $27,396 versus $11,092; $31,151 versus $18,875; and $24,099 versus $11,558) affirming that replacement of a TMJ with prosthesis procedures are more costly. The analysis also demonstrates that the average length of stay for cases reporting procedure code 0RRC0JZ or 0RRD0JZ across MS–DRGs 130, 131, and 132 is longer (3.4 days versus 2.7 days; 7.3 days versus 5.4 days; and 3.1 days versus 2.5 days) compared to all the cases in their assigned MS–DRGs. For MS–DRG 129, we found that the average length of stay was shorter (3 days versus 5.2 days) for cases reporting procedure code 0RRC0JZ or 0RRD0JZ. The data demonstrated similar results for the cases reporting procedures performed on the mandible in MS–DRGs 129 and 130, where the average costs for the cases are higher ($21,258 versus $18,091 and $14,712 versus $11,092, respectively) and the average length of stay was longer (6.9 days versus 5.2 days and 3.5 days versus 2.7 days, respectively) compared to all the cases in their assigned MS–DRG.
The analysis of MS–DRGs 129, 130, 131, and 132 further demonstrated that the average length of stay and average costs for all cases were almost identical for each of the subgroups. For example, MS–DRG 129 is defined as “with CC/MCC or major device” and MS–DRG 131 is defined as “with CC/MCC” while MS–DRGs 130 and 132 are both defined as “without CC/MCC”. For all of the cases in MS–DRG 129, we found that the average length of stay was 5.2 days with an average cost of $18,091, and for all of the cases in MS–DRG 131, the average length of stay was 5.4 days with an average cost of $18,875. Similarly, for all of the cases in MS–DRG 130, we found that the average length of stay was 2.7 days with an average cost of $11,092, and for MS–DRG 132, we found the average length of stay was 2.5 days with an average cost of $11,558.
We noted in the proposed rule that as a result of the data analysis performed for MS–DRGs 129, 130, 131, and 132, including the analysis of the procedures describing replacement of a TMJ with prosthesis in MS–DRGs 133 and 134, as well as considering the requestor's suggestion that we examine the appropriateness of modifying the surgical hierarchy for MDC 03 by sequencing MS–DRGs 131 and 132
As noted in the proposed rule, we examined claims data from the September 2019 update of the FY 2019 MedPAR file for cases reporting any of the procedure codes that are currently assigned to MS–DRGs 129, 130, 131, 132, 133, or 134. We refer the reader to Table 6P.2d associated with the proposed rule (which is available via the internet on the CMS website at
The data analysis shows that there is wide variation in the volume, length of stay, and average costs of cases reporting procedures currently assigned to MS–DRGs 129, 130, 131, 132, 133, and 134. There were several instances in which only one case was found to report a procedure code from MS–DRG 129, 130, 131, 132, 133, or 134, and the average length of stay for these specific cases ranged from 1 day to 31 days. For example, in MS–DRG 131, we found one case reporting procedure code 0NB70ZZ (Excision of occipital bone, open approach) with an average length of stay of 31 days which we consider to be an outlier in comparison to all the other cases reported in that MS–DRG with an average length of stay of 5.4 days. Overall, the average costs of cases in MS–DRGs 129 and 130 range from $4,970 to $38,217, the average costs of cases in MS–DRGs 131 and 132 range from $4,022 to $69,558 and the average costs of cases in MS–DRGs 133 and 134 range from $1,089 to $87,569. As noted previously, the data demonstrate there appear to be similar utilization of hospital resources specifically for cases reported in MS–DRGs 129, 130, 131 and 132.
The highest volume of cases was reported in MS–DRGs 129 and 130 for the procedure codes describing resection of the right and left neck lymphatic. For MS–DRG 129, there was a total of 750 cases reporting procedure code 07T10ZZ (Resection of right neck lymphatic, open approach) with an average length of stay of 4.7 days and average costs of $17,155 and there was a total of 679 cases reporting procedure code 07T20ZZ (Resection of left neck lymphatic, open approach) with an average length of stay of 4.8 days and average costs of $17,857. For MS–DRG 130, there was a total of 358 cases reporting procedure code 07T10ZZ with an average length of stay of 2.6 days and average costs of $10,432 and there was a total of 331 cases reporting procedure code 07T20ZZ with an average length of stay of 2.5 days and average costs of $10,467. For MS–DRGs 131 and 132, the highest volume of cases was reported for the procedure codes describing repositioning of the maxilla with internal fixation and repositioning of the right and left mandible with internal fixation. For MS–DRG 131, there was a total of 186 cases reporting procedure code 0NSR04Z (Reposition maxilla with internal fixation device, open approach) with an average length of stay of 5.1 days and average costs of $20,500; a total of 114 cases reporting procedure code 0NST04Z (Reposition right mandible with internal fixation device, open approach) with an average length of stay of 5.7 days and average costs of $18,710, and a total of 219 cases reporting procedure code 0NSV04Z (Reposition left mandible with internal fixation device, open approach) with an average length of stay of 6.0 days and average costs of $20,202. For MS–DRG 132, there was a total of 84 cases reporting procedure code 0NSR04Z with an average length of stay of 2.1 days and average costs of $12,991 and a total of 101 cases reporting procedure code 0NSV04Z with an average length of stay of 2.8 days and average costs of $11,386. For MS–DRGs 133 and 134, the highest volume of cases was reported for the procedure codes describing excision of the facial nerve or nasal turbinate. For MS–DRG 133, there was a total of 60 cases reporting procedure code 09BL8ZZ (Excision of nasal turbinate, via natural or artificial opening endoscopic) with an average length of stay of 6.6 days and average costs of $21,253 and for MS–DRG 134, there was a total of 50 cases reporting procedure code 00BM0ZZ (Excision of facial nerve, open approach) with an average length of stay of 1.4 days and average costs of $8,048.
Our clinical advisors reviewed the procedures currently assigned to MS–DRGs 129, 130, 131, 132, 133, and 134 to identify the patient attributes that currently define each of these procedures and to group them with respect to complexity of service and resource intensity. For example, procedures that we believe represent greater treatment difficulty and reflect a class of patients who are similar clinically with regard to consumption of hospital resources were grouped separately from procedures that we believe to be less complex but still reflect patients who are similar clinically with regard to consumption of hospital resources. This approach differentiated the more complex and invasive procedures, such as resection of cervical lymph nodes, repositioning of facial bones, and excision of mandible procedures from the less complex and less invasive procedures such as excisions (biopsies) of lymph nodes and facial nerves, drainage procedures of the upper respiratory system, and tonsillectomies.
We stated in the proposed rule that after this comprehensive review of all the procedures currently assigned to MS–DRGs 129, 130, 131, 132, 133, and 134, in combination with the results of the data analysis discussed previously, our clinical advisors support distinguishing the procedures currently assigned to those MS–DRGs by clinical intensity, complexity of service and resource utilization and also support restructuring of these MS–DRGs accordingly. We noted that during the analysis of the procedures currently assigned to MS–DRGs 129 and 130, we recognized the special logic defined as “Major Device Implant” for MS–DRG 129 that identifies procedures describing the insertion of a cochlear implant or other hearing device. We stated that our clinical advisors supported the removal of this special logic from the definition for assignment to any modifications to the MS–DRGs, noting the costs of the device have stabilized over time and the procedures can be appropriately grouped along with other procedures involving devices in any restructured MS–DRGs. We also identified 2 procedure codes currently assigned to MS–DRGs 131 and 132, 00J00ZZ (Inspection of brain, open approach) and 0WJ10ZZ (Inspection of cranial cavity, open approach), that our clinical advisors agreed should not be included in any modifications to the MS–DRGs in MDC 03, stating that they are appropriately assigned to MS–DRGs
As a result of our review, we proposed the deletion of MS–DRGs 129, 130, 131, 132, 133, and 134, and the creation of six new MS–DRGs. Currently, MS–DRGs 129, 131, and 133 are defined as base MS–DRGs, each of which is split by a two-way severity level subgroup. Our proposal includes the creation of two new base MS–DRGs with a three-way severity level split. As discussed in the proposed rule, our clinical advisors suggested that based on the analysis of procedures currently assigned to MS–DRGs 129, 130, 131, 132, 133, and 134 as described previously, only 2 base MS–DRGs were needed, each divided into 3 levels according to the presence of a CC or MCC. The MS–DRGs were developed consistent with the analysis to differentiate the more complex and invasive procedures from the less complex and less invasive procedures. As noted previously, our analysis of MS–DRGs 129, 130, 131, and 132 demonstrated that the average length of stay and average costs for all cases were almost identical for each of the severity level subgroups and therefore, the procedures assigned to these MS–DRGs were initially reviewed together as one clinical group and then evaluated further in comparison to the procedures currently assigned to MS–DRGs 133 and 134. The objective was to better differentiate procedures by treatment difficulty, clinical similarity, and resource use, and to propose a more appropriate restructuring. For example, based on this analysis, in some instances, we proposed to reassign procedures described by procedure codes that are currently assigned to MS–DRGs 129 and 130 or MS–DRGs 131 and 132 to what is being defined as the less complex MS–DRGs. We stated that we believe the resulting MS–DRG assignments are more clinically homogeneous, coherent and better reflect hospital resource use.
We applied the criteria to create subgroups for the three-way severity level split for the proposed new MS–DRGs and found that all five criteria were met. We stated that for the proposed new MS–DRGs, there is at least (1) 500 cases in the MCC group, the CC group and the NonCC group; (2) 5 percent of the cases in the MCC group, the CC group and the NonCC group; (3) a 20 percent difference in average costs between the MCC group, the CC group and the NonCC group; (4) a $2,000 difference in average costs between the MCC group, the CC group and the NonCC group; and (5) a 3-percent reduction in cost variance, indicating that the severity level splits increase the explanatory power of the base MS–DRG in capturing differences in expected cost between the MS–DRG severity level splits by at least 3 percent and thus improve the overall accuracy of the IPPS payment system. The following table reflects our simulation for the proposed new MS–DRGs with a three-way severity level split. We stated that our findings represent what we would expect under the proposed modifications and proposed new MS–DRGs, based on claims data in the FY 2019 MedPAR file.
We proposed to create two new base MS–DRGs, 140 and 143, with a three-way severity level split for proposed new MS–DRGs 140, 141, and 142 (Major Head and Neck Procedures with MCC, with CC, and without CC/MCC, respectively) and proposed new MS–DRGs 143, 144, and 145 (Other Ear, Nose, Mouth And Throat O.R. Procedures with MCC, with CC, and without CC/MCC, respectively).
We referred the reader to Table 6P. 2a and Table 6P.2b associated with the proposed rule for the list of procedure codes we proposed for reassignment from MS–DRGs 129, 130, 131, 132, 133, and 134 to each of the new MS–DRGs. As noted, we also proposed the removal of procedure codes 00J00ZZ and 0WJ10ZZ, and the 338 procedure codes listed in Table 6P. 2c associated with the proposed rule from the logic for MDC 03.
Another commenter stated there is not a clear understanding of the scope of the proposed changes because the MedPAR data included in the proposed rule referred to temporomandibular joint replacements; however, the procedure listing for the MS–DRGs extended beyond those procedures. The commenter stated that tables 6P.2a and
A commenter acknowledged that CMS proposed removing a number of ICD–10–PCS procedure codes from the MDC 03 logic that had been inadvertently included as a result of replication during the transition from ICD–9- to ICD–10-based MS–DRGs. However, according to the commenter there are additional procedure codes not included on CMS' list shown in table 6P.2c that should also be removed from the MDC 03 logic. The commenter noted an example of where some codes for procedures on the esophagus have been proposed for removal from the MDC 03 logic, while other procedures performed on the esophagus are still proposed for inclusion in the GROUPER logic. The commenter also noted that procedures performed on the heart, carotid artery, chest, back abdomen, buttock, liver, and leg are not ear, nose, mouth, or throat procedures, but they are included in the proposed GROUPER logic for proposed new MS–DRGs 143, 144, and 145 (Other Ear, Nose, Mouth and Throat O.R. Procedures with MCC, with CC, and without CC/MCC, respectively). The commenter stated that procedures on the chest, back, and abdomen are not head or neck procedures, but they are included in the proposed GROUPER logic for proposed new MS–DRGs 140, 141, and 142 (Major Head and Neck Procedures with MCC, with CC, and without CC/MCC, respectively). In addition, the commenter stated that while CMS proposed reassigning procedure code 0WJ10ZZ (Inspection of cranial cavity, open approach) from MDC 03 (Diseases and Disorders of Ear, Nose and Throat) to MDC 01 (Diseases and Disorders of the Nervous System), codes for other procedures performed on the cranial cavity are proposed to be included in the GROUPER logic for proposed new MS–DRGs 140, 141, and 142. The commenter recommended that CMS review the procedure codes listed in tables 6P.2a and 6P.2b to identify all of the procedure codes that should be removed from the GROUPER logic for proposed new MS–DRGs 140, 141, 142, 143, 144, and 145. Lastly, the commenter suggested that CMS consider whether proposed new MS–DRGs 140, 141, and 142 (Major Head and Neck Procedures with MCC, with CC, and without CC/MCC, respectively) belong in MDC 03 or whether the title of the MDC should be changed since, according to the commenter, the MDC 03 description “Diseases and Disorders of Ear, Nose and Throat” covers a more limited set of anatomic sites than the “major head and neck procedures” included in proposed new MS–DRGs 140, 141, and 142.
In response to the commenter who stated there is not a clear understanding of the scope of the proposed changes because the MedPAR data included in the proposed rule referred to other procedure codes in addition to the procedure code for temporomandibular joint replacements, we note that as discussed in the proposed rule (85 FR 32484 through 32490), this was a multi-part request involving the reassignment of ICD–10–PCS procedure codes 0RRC0JZ and 0RRD0JZ that describe replacement of the right and left temporomandibular joint from MS–DRGs 133 and 134 to MS–DRGs 131 and 132, the reassignment of the procedures involving the mandible and maxilla identified with procedure codes from MS–DRGs 129 and 130 to MS–DRGs 131 and 132, and modifying the surgical hierarchy for MS–DRGs 131, 132, 133, and 134. We stated that we examined claims data for all the procedures identified by procedure codes currently assigned to MS–DRGs 129, 130, 131, 132, 133, and 134 and we provided our claims analysis in Table 6P.2d associated with the proposed rule as well as discussion of our analysis and the basis for our proposals. In response to the comments regarding Tables 6P.2a and 6P.2b that included proposals for procedure codes describing procedures on vessels, lymphatic and other organs in the head and neck across multiple MS–DRGs such as 853, 857, 856, 571, 264, 570, 463, and 902 we note that this is because certain procedure codes are currently assigned to multiple MDCs and MS–DRGs as shown in Appendix E-Operating Room Procedures and Procedure Code/MS–DRG Index of the ICD–10 MS–DRGs Definitions Manual. For example, procedure code 07B00ZZ (Excision of head lymphatic, open approach) which is listed in Table
We encourage the commenter to review Appendix E of the ICD–10 MS–DRG Definitions Manual for further clarification and understanding of how each procedure code may be assigned to multiple MDCs and MS–DRGs under the IPPS.
In response to the commenter who stated their belief that there are additional codes that should also be removed from the MDC 03 logic, such as other procedures performed on the esophagus that were proposed to be included in the GROUPER logic, and procedures performed on the heart, carotid artery, chest, back abdomen, buttock, liver, and leg that are not ear, nose, mouth, or throat procedures, but were included in the proposed GROUPER logic for MS–DRGs 143, 144, and 145 (Other Ear, Nose, Mouth And Throat O.R. Procedures with MCC, with CC, and without CC/MCC, respectively), we note that, as stated in the ICD–10 MS–DRG Definitions Manual, “In each MDC there is usually a medical and a surgical class referred to as “other medical diseases” and “other surgical procedures,” respectively. The “other” medical and surgical classes are not as precisely defined from a clinical perspective. The other classes would include diagnoses or procedures which were infrequently encountered or not well defined clinically. For example, the “other” medical class for the Respiratory System MDC would contain the diagnoses “other somatoform disorders” and “congenital malformation of the respiratory system,” while the “other” surgical class for the female reproductive MDC would contain the surgical procedures “excision of liver” (liver biopsy in ICD–9–CM) and “inspection of peritoneal cavity” (exploratory laparotomy in ICD–9–CM). The “other” surgical category contains surgical procedures which, while infrequent, could still reasonably be expected to be performed for a patient in the particular MDC. There are, however, also patients who receive surgical procedures which are completely unrelated to the MDC to which the patient was assigned. An example of such a patient would be a patient with a principal diagnosis of pneumonia whose only surgical procedure is a destruction of prostate (transurethral prostatectomy in ICD–9–CM). Such patients are assigned to a surgical class referred to as “unrelated operating room procedures.” These patients are ultimately never assigned to a well-defined DRG.” With regard to the comment that procedures on the chest, back, and abdomen were included in the proposed GROUPER logic for proposed new MS–DRGs 140, 141, and 142 (Major Head and Neck Procedures with MCC, with CC, and without CC/MCC, respectively), we note that the commenter did not provide the specific procedure codes for CMS to review and therefore we were unable to evaluate the commenter's concerns for FY 2021, however, we will take these comments under consideration for future rulemaking. In response to the commenter's statement that codes for other procedures performed on the cranial cavity were proposed to be included in the GROUPER logic for proposed new MS–DRGs 140, 141, and 142, we note that the logic for proposed new MS–DRGs 140, 141, and 142 is comprised of a subset of procedure codes describing procedures performed on the cranial cavity that are currently assigned to MS–DRGs 131 and 132 (Cranial and Facial Procedures with and without CC/MCC, respectively). Our clinical advisors reviewed the list of procedures currently assigned to those MS–DRGs and believed that procedure codes 00J00ZZ and 0WJ10ZZ could be removed from the logic based on the analysis of all the procedure codes and because these codes are currently assigned to MS–DRGs in MDC 01 which they stated is clinically more appropriate. With respect to the commenter's suggestion that CMS consider whether proposed new MS–DRGs 140, 141, and 142 (Major Head and Neck Procedures with MCC, with CC, and without CC/MCC, respectively) belong in MDC 03 or whether the title of the MDC should be changed since, according to the commenter, the MDC 03 description “Diseases and Disorders of Ear, Nose and Throat” covers a more limited set of anatomic sites than the “major head and neck procedures” included in proposed new MS–DRGs 140, 141, and 142, we will take this under consideration for future rulemaking.
After consideration of the comments we received, we are finalizing our proposal to create two new base MS–DRGs, 140 and 143, with a three-way severity level split for new MS–DRGs 140, 141, and 142 and new MS–DRGs 143, 144, and 145 and we are also finalizing our proposal to delete MS–
In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49363 through 49367), we finalized our proposal to create two new MS–DRGs to classify percutaneous intracardiac procedures. Specifically, we created MS–DRGs 273 and 274 (Percutaneous Intracardiac Procedures with and without MCC, respectfully) for cases reporting procedure codes describing cardiac ablation and other percutaneous intracardiac procedures. In that discussion, as FY 2016 was the first year of our transition from the ICD–9 based MS–DRGs to the ICD–10 based MS–DRGs, we provided a list of the ICD–9–CM procedure codes that identify and describe the cardiac ablation procedures and other percutaneous intracardiac procedures that were the subject of that MS–DRG classification change request, one of which was ICD–9–CM procedure code 37.90 (Insertion of left atrial appendage device).
Separately, we also discussed a request that we received for new technology add-on payments for the WATCHMAN
As discussed in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32490 through 324950), we received two separate, but related requests involving the procedure codes that describe the technology that is utilized in the performance of LAAC procedures. The first request was to reassign ICD–10–PCS procedure code 02L73DK (Occlusion of left atrial appendage with intraluminal device, percutaneous approach) that identifies the WATCHMAN
We stated in the proposed rule that according to the requestor's analysis, the average cost for LAAC procedures reporting ICD–10–PCS procedure code 02L73DK is $3,405 higher than the average cost for all cases in MS–DRG 274. The requestor stated that based on its analysis, this requested reassignment would have minimal impact on MS–DRGs 273 and 274 and would ensure adequate payments and better resource coherency. The requestor stated that cases reporting procedure codes describing a LAAC procedure with procedure code 02L73DK within MS–DRG 274 are more clinically similar and costs are more closely aligned to cases within MS–DRG 273.
As indicated in the proposed rule, in response to the first request, we examined claims data from the September 2019 update of the FY 2019 MedPAR file for MS–DRGs 273 and 274 to identify cases reporting ICD–10–PCS procedure code 02L73DK. Our findings are shown in the following table.
In MS–DRG 273, we found a total of 7,048 cases with an average length of stay of 6.1 days and average costs of $28,100. Of those 7,048 cases, there were 1,126 cases reporting ICD–10–PCS procedure code 02L73DK, with an average length of stay of 2.7 days and average costs of $29,504. In MS–DRG 274, we found a total of 24,319 cases with an average length of stay of 2.0 days and average costs of $24,048. Of those 24,319 cases, there were 13,423 cases reporting ICD–10–PCS procedure code 02L73DK, with an average length of stay of 1.2 days and average costs of $25,846.
The data analysis demonstrates that the average costs of the cases reporting procedure code 02L73DK in MS–DRG 274 are slightly higher than the average costs of all the cases in MS–DRG 274 ($25,846 versus $24,048), with a difference of approximately $1,798, however, the average length of stay for cases reporting procedure code 02L73DK in MS–DRG 274 is shorter compared to all the cases in MS–DRG
In the proposed rule we also discussed a second request that we received to create a new MS–DRG specific to all left atrial appendage closure (LAAC) procedures or to map all LAAC procedures to a different cardiovascular MS–DRG that has payment rates aligned with procedural costs. The requestor stated that by creating a new MS–DRG specific to all LAAC procedures or mapping all LAAC procedures to a different cardiovascular MS–DRG, the MS–DRG would more appropriately recognize the clinical characteristics and cost differences in LAAC cases.
The 9 ICD–10–PCS procedure codes that describe LAAC procedures and their corresponding MS–DRG assignment are listed in the following table.
Currently, the MS–DRG assignments for these procedure codes are based on the surgical approach: open approach, percutaneous approach, or percutaneous endoscopic approach. Procedures describing an open approach are assigned to MS–DRGs 250 and 251 (Percutaneous Cardiovascular Procedures without Coronary Artery Stent with and without MCC, respectively); while procedures describing a percutaneous or percutaneous endoscopic approach are assigned to MS–DRGs 273 and 274 (Percutaneous Intracardiac Procedures with and without MCC, respectfully). Of the nine listed ICD–10–PCS procedure codes, three (02L70CK, 02L70DK, and 02l70ZK) describe an open approach and are currently assigned to MS–DRG 250 and 251, and six (02L73CK, 02L73DK, 02L73ZK, 02L74CK, 02L74DK, 02L74ZK) describe a percutaneous or percutaneous endoscopic approach and are currently assigned to MS–DRG 273 and 274.
As indicated in the proposed rule, we examined claims data from the September 2019 update of the FY 2019 MedPAR file for cases reporting LAAC procedures with an open approach in MS–DRGs 250 and 251. Our findings are shown in the following table.
In MS–DRG 250, we found a total of 4,192 cases with an average length of stay of 5.0 days and average costs of $18,807. Of those 4,192 cases, there were 21 cases reporting a LAAC procedure with an open approach, with an average length of stay of 7.0 days and average costs of $44,012. In MS–DRG 251, we found a total of 4,941 cases with an average length of stay of 2.6 days and average costs of $12,535. Of those 4,941 cases, there were 74 cases reporting a LAAC procedure with an open approach, with an average length of stay of 3.4 days and average costs of $22,711. The analysis shows that the cases reporting a LAAC procedure with an open approach in MS–DRGs 250 and 251 have higher average costs compared to all cases in MS–DRGs 250 and 251 ($44,012 versus $18,807 and $22,711 versus $12,535, respectively). The analysis also shows that the average length of stay for cases reporting a LAAC procedure with an open approach in MS–DRGs 250 and 251 is longer compared to all cases in MS–DRGs 250 and 251 (7.0 days versus 5.0 days and 3.4 days versus 2.6 days, respectively). Overall, there were a total of 95 (21+74) cases reporting a LAAC procedure with an open approach in MS–DRGs 250 and 251 with an average length of stay of 4.2 days and average costs of $27,420. Based on the results of the claims data described previously, we conducted further analysis for the 95 cases reporting a LAAC procedure with an open approach in MS–DRGs 250 and 251 to determine if there were additional factors that may be contributing to the higher average costs and longer length of stay. Of those 95 cases, we found a total of 20 cases in which there was another O.R. procedure reported on the claim that is also currently assigned to MS–DRGs 250 and MS–DRG 251 and believed to be influencing the average costs and average length of stay, as shown in the following tables.
As shown in the table, for MS–DRG 250, there were a total of 8 cases reporting another O.R. procedure with a LAAC procedure with an open approach with an average length of stay of 8.9 days and average costs of $63,653. The data shows that the average length of stay for these 8 cases range from 4.0 days to 15.0 days and the average costs range from $20,650 to $235,720.
As indicated in the proposed rule, overall, the data demonstrates that the 8 cases reporting another O.R. procedure with a LAAC procedure with an open approach in MS–DRG 250 have a longer length of stay (8.9 days versus 7 days) and higher average costs ($63,653 versus $44,012) compared to all 21 cases reporting a LAAC procedure with an open approach in MS–DRG 250.
As shown in the table, for MS–DRG 251, there were a total of 12 cases reporting another O.R. procedure with a LAAC procedure with an open approach with an average length of stay of 6.5 days and average costs of $31,560. The data shows that the average length of stay for these 12 cases range from 1.0 day to 18.0 days and the average costs range from $11,052 to $89,682.
As indicated in the proposed rule, the data demonstrates that the 12 cases reporting another O.R. procedure with a LAAC procedure with an open approach in MS–DRG 251 have a longer average length of stay (6.5 days versus 3.4 days) and higher average costs ($31,560 versus $22,711) compared to all 74 cases reporting a LAAC procedure with an open approach in MS–DRG 251. The results of our claims analysis for the 20 cases reporting a LAAC procedure with an open approach and another O.R. procedure in MS–DRGs 250 and 251 indicate that the longer average length of stay and higher average costs of the 95 cases reporting a LAAC procedure with an open approach in MS–DRGs 250 and 251 may be attributed to the resource consumption of the additional O.R. procedures reported in the subset of 20 cases. The claims analysis also shows that the majority of the cases reporting a LAAC procedure with an open approach in MS–DRGs 250 and 251 (75 cases out of 95 cases) were without another O.R. procedure.
As noted previously, with respect to the first LAAC MS–DRG request, our analysis of MS–DRG 273 found a total of 7,048 cases with an average length of stay of 6.1 days and average costs of $28,100 and our analysis of MS–DRG 274 found a total of 24,319 cases with an average length of stay of 2.0 days and average costs of $24,048. The average costs and average length of stay for cases reporting a LAAC procedure with an open approach in MS–DRGs 250 and 251 ($44,012 and $22,711, respectively) and (7.0 days and 3.4 days, respectively) appear to be generally more aligned with the average costs and average length of stay for all cases in MS–DRGs 273 and 274 ($28,100 and $24,048, respectively) and (6.1 days and 2.0 days, respectively) as compared to all cases in MS–DRGs 250 and 251 with average costs of $18,807 and $12,535, respectively and an average length of stay of 5.0 days and 2.6 days, respectively. In addition, as also noted previously, the second LAAC MS–DRG request was to create a new MS–DRG specific to all left atrial appendage closure (LAAC) procedures or to map all LAAC procedures to a different cardiovascular MS–DRG that has payment rates aligned with procedural costs. We stated in the proposed rule that our clinical advisors suggested that because our review of the cases reporting a LAAC procedure with an open approach in MS–DRGs 250 and 251 demonstrated that these procedures are primarily performed in the absence of another O.R. procedure and generally are not performed with a more intensive
As indicated in the proposed rule, we then examined claims data from the September 2019 update of the FY 2019 MedPAR file for cases reporting LAAC procedures with a percutaneous or percutaneous endoscopic approach in MS–DRGs 273 and 274. Our findings are shown in the following table.
In MS–DRG 273, we found a total of 7,048 cases with an average length of stay of 6.1 days and average costs of $28,100. Of those 7,048 cases, there were 1,180 cases reporting a LAAC procedure with a percutaneous or percutaneous endoscopic approach, with an average length of stay of 2.9 days and average costs of $29,591. In MS–DRG 274, we found a total of 24,319 cases with an average length of stay of 2.0 days and average costs of $24,048. Of those 24,319 cases, there were 13,774 cases reporting a LAAC procedure with a percutaneous or percutaneous endoscopic approach, with an average length of stay of 1.2 days and average costs of $25,765.
The analysis shows that the cases reporting a LAAC procedure with a percutaneous or percutaneous endoscopic approach in MS–DRGs 273 and 274 have very similar average costs compared to all the cases in MS–DRGs 273 and 274 ($29,591 versus $28,100 and $25,765 versus $24,048, respectively). The analysis also shows that the average length of stay for cases reporting a LAAC procedure with a percutaneous or percutaneous endoscopic approach in MS–DRGs 273 and 274 is shorter compared to all cases in MS–DRGs 273 and 274 (2.9 days versus 6.1 days and 1.2 days versus 2.0 days, respectively). Overall, there were a total of 14,954 (1,180 + 13,774) cases reporting a LAAC procedure with a percutaneous or percutaneous endoscopic approach in MS–DRGs 273 and 274 with an average length of stay of 1.3 days and average costs of $26,067.
We stated in the proposed rule that our clinical advisors did not support creating a new MS–DRG for all LAAC procedures for FY 2021. Rather, our clinical advisors believe that ICD–10–PCS codes 02L70CK, 02L70DK, and 02L70ZK that describe a LAAC procedure with an open approach are more suitably grouped to MS–DRGs 273 and 274. As indicated in the proposed rule our clinical advisors stated that this reassignment would allow all LAAC procedures to be grouped together under the same MS–DRGs and would improve clinical coherence. We noted that all the procedure codes describing LAAC procedures are designated as non-O.R. procedures that affect the MS–DRG to which they are assigned. Therefore, in the proposed rule, we proposed to reassign ICD–10–PCS codes 02L70CK, 02L70DK, and 02L70ZK from MS–DRGs 250 and 251 (Percutaneous Cardiovascular Procedures without Coronary Artery Stent with and without MCC, respectively) to MS–DRGs 273 and 274 (Percutaneous Intracardiac Procedures with and without MCC, respectively).
Another commenter stated they understood CMS' rationale for not proposing to create a separate MS–DRG for the insertion of WATCHMAN
After consideration of the public comments that we received, we are finalizing our proposal to reassign ICD–10–PCS procedure codes 02L70CK, 02L70DK, and 02L70ZK from MS–DRGs 250 and 251 to MS–DRGs 273 and 274, and are finalizing a revision to the titles for MS–DRG 273 and 274 to Percutaneous and Other Intracardiac Procedures with and without MCC, respectively to reflect this reassignment for FY 2021.
In the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32495 through 32496), we discussed a request we received to revise MS–DRGs 266 and 267 (Endovascular Cardiac Valve Replacement and Supplement Procedures with and without MCC, respectively) by removing the current two-way severity level split and creating a base MS–DRG without any severity level splits. According to the requestor, patients treated with an endovascular cardiac valve replacement procedure have severe heart failure due to a valvular disorder, which may be documented as either an exacerbation of heart failure or as chronic severe heart failure.
The requestor noted that in the cases reporting an endovascular cardiac valve replacement procedure, a secondary diagnosis code describing the specific type of heart failure may be the only MCC reported on the claim and in instances where the heart failure diagnosis code is reported as the principal diagnosis on a claim, it is disregarded from acting as a MCC. In both scenarios, the requestor reported that the heart failure is treated with the endovascular cardiac valve replacement procedure, fluid balance, and medication.
The requestor also stated that providers are challenged in reaching a consensus regarding this subset of patients' symptoms that may be helpful in establishing a diagnosis for exacerbation of heart failure versus chronic severe heart failure and stated that a single, base MS–DRG would assist in the calculation of costs and charges more reliably, regardless of the diagnosis reported in combination with the endovascular cardiac valve replacement procedure.
We noted in the proposed rule that we examined claims data from the September 2019 update of the FY 2019 MedPAR file for MS–DRGs 266 and 267. Our findings are shown in the following table.
As shown in the table, there was a total of 19,012 cases with an average length of stay of 5.3 days and average costs of $50,879 in MS–DRG 266. For MS–DRG 267, there was a total of 27,084 cases with an average length of stay of 2.1 days and average costs of $40,471.
As indicated in the proposed rule, to evaluate the request to create a single MS–DRG for cases reporting endovascular cardiac valve procedures, we conducted an analysis of base MS–DRG 266. This analysis includes 2 years of MedPAR claims data to compare the data results from 1 year to the next to avoid making determinations about whether additional severity levels are warranted based on an isolated year's data fluctuation and also, to validate that the established severity levels within a base MS–DRG are supported. Therefore, we reviewed the claims data for base MS–DRG 266 using the September 2018 update of the FY 2018 MedPAR file and the September 2019 update of the FY 2019 MedPAR file, which were used in our analysis of claims data for MS–DRG reclassification requests for FY 2020 and FY 2021. Our findings are shown in the table.
As shown in the table, the data reflect that the criteria for a two-way split (“with MCC” and “without MCC”) are satisfied using both the data from the September 2018 update of the FY 2018 MedPAR file and the data from the September 2019 update of the FY 2019 MedPAR file: (1) At least 500 cases are in the MCC group and in the without MCC subgroup; (2) at least 5 percent of the cases in the MS–DRG are in the MCC group and in the without MCC subgroup; (3) at least a 20 percent difference in average costs between the MCC group and the without MCC group; (4) at least a $2,000 difference in average costs between the MCC group and the without MCC group; and (5) at least a 3-percent reduction in cost variance, indicating that the current severity level splits increase the explanatory power of the base MS–DRG in capturing differences in expected cost between the current MS–DRG severity level splits by at least 3 percent and thus improve the overall accuracy of the IPPS payment system. We stated in the proposed rule that our clinical advisors also did not agree with the requestor's assertion that a single, base MS–DRG would assist in calculating costs more reliably. As shown in the claims data and stated previously, the criteria are satisfied for the current two-way split. We further noted that the basis for the MS–DRGs is to better recognize severity and complexity of services, which is accomplished through the CC subgroups.
Based on the results of our analysis, for FY 2021, we proposed to maintain the current structure of MS–DRGs 266 and 267 with a two-way severity level split and not create a single, base MS–DRG.
• Allow all acute heart failure codes to be sequenced as a principal diagnosis to serve as its own MCC in the same manner that acute cor pulmonale serves as an MCC when sequenced as a principal diagnosis with acute pulmonary embolism.
• Amend the CC Exclusion List as to eliminate list 682 for all the ICD–10–CM codes listed in this section of this rule and place all of them in list 2025. The commenter stated that if CMS chooses not to do this, it recommends that CMS transition the I50.23, I50.33, I50.41 and I50.43 diagnosis codes into the 2025 category so that all acute AND acute on chronic heart failure (I50.21, I50.23, I50.31, I50.33, I50.41, I50.43) codes are treated equally.
The commenter also suggested that CMS, as a member of the ICD–10 Coordination and Maintenance Committee, advocate to expand ICD–10–CM diagnosis code I50.9 Heart failure, unspecified, and assign CC and MCC status to these suggested expanded codes, consistent with how the I50.2-, I50.3- and I50.4- series are assigned.
According to the commenter, this action would sufficiently eliminate the administrative burden to providers regarding querying the physician for the specific type of heart failure.
After consideration of the public comments that we received, we are finalizing our proposal to maintain the structure of MS–DRGs 266 and 277 for FY 2021.
As discussed in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32496), we received a request to review the MS–DRG assignment for cases that identify patients who receive a cardiac contractility modulation (CCM) device system for congestive heart failure. CCM is indicated for patients with moderate to severe heart failure resulting from either ischemic or non-ischemic cardiomyopathy. CCM utilizes electrical signals which are intended to enhance the strength of the heart and overall cardiac performance. CCM delivery device systems consist of a programmable implantable pulse generator (IPG) and three leads which are implanted in the heart. One lead is implanted into the right atrium and the other two leads are inserted into the right ventricle. The lead in the right atrium detects atrial electric signals and transmits them to the IPG. The IPG, which is usually implanted into the subcutaneous pocket of the pectoral region and secured to the fascia with a non-absorbable suture, processes the atrial signal and generates the CCM signals which are transmitted to the right ventricle via the two ventricular leads. According to the requestor, MS–DRGs 222, 223, 224, 225, 226, and 227 (Cardiac Defibrillator Implant with and without Cardiac Catheterization with and without AMI/HF/Shock with and without MCC, respectively) include code combinations or “code pairs” describing the insertion of contractility modulation devices. Currently however, the MS–DRG GROUPER logic requires the combination of the CCM device codes and a left ventricular lead to map to MS–DRGs 222, 223, 224, 225, 226 and 227. The requestor stated the CCM device is contraindicated in patients with a left ventricular lead. Therefore, using the current V37 MS–DRG GROUPER logic, no case involving insertion of the CCM system can be appropriately mapped to MS–DRGs 222, 223, 224, 225, 226 and 227. Instead, the cases map to MS–DRG 245 (AICD Generator Procedures). According to the requestor, to date, the procedure has been performed on an outpatient basis, but it is expected that some Medicare patients will receive CCM devices on an inpatient basis. The requestor asked that CMS revise the MS–DRG GROUPER logic to group cases reporting the use of the CCM device appropriately.
As noted in the proposed rule, the ICD–10–PCS procedure code pairs currently assigned to MS–DRGs 222, 223, 224, 225, 226 and 227 that identify the insertion of contractility modulation devices are shown in the following table:
We stated in the proposed rule that based on our analysis of cases reporting ICD–10–PCS procedure codes for CCM device systems, we agreed with the requestor that a procedure code pair for the insertion of a CCM device and right ventricular and/or right atrial lead does not exist in the logic for MS–DRGs 222, 223, 224, 225, 226 and 227. We also noted that our analysis indicated that the ICD–10–PCS procedure code combinations for right ventricular and/or right atrial lead insertion with insertion of contractility modulation devices were inadvertently excluded from MS–DRGs 222, 223, 224, 225, 226 and 227 as a result of replicating the ICD–9 based MS–DRGs.
We then examined claims data from the September 2019 update of the FY 2019 MedPAR file for MS–DRG 245 and identified the subset of cases within MS–DRG 245 reporting procedure codes for the insertion of a rechargeable CCM device and the insertion of right ventricular and/or right atrium lead. We found zero cases in MS–DRG 245 reporting a procedure code combination that identifies the insertion of contractility modulation device and the insertion of a cardiac lead into the right ventricle and/or right atrium lead.
We stated that our clinical advisors agreed that the insertion of a rechargeable CCM system always involves placement of a right-sided lead, and that the code combinations that currently exist in the MS–DRG GROUPER logic are considered clinically invalid. We examined claims data from the September 2019 update of the FY 2019 MedPAR file for MS–DRGs 222, 223, 224, 225, 226 and 227 for this subset of cases to determine if there were any cases that reported one of the 12 clinically invalid code combinations that exist in the GROUPER logic. Because the combinations of codes that describe the insertion of a rechargeable CCM device and the insertion of left ventricular lead are considered clinically invalid procedures, we stated we would not expect these code combinations to be reported in any claims data. We found zero cases across MS–DRGs 222, 223, 224, 225, 226 and 227 reporting the clinically invalid procedure code combination that identifies the insertion of contractility modulation device and the insertion of a cardiac lead into the left ventricle.
We noted that while our analysis did not identify any cases reporting a procedure code combination for the insertion of contractility modulation device and the insertion of a cardiac lead into right ventricle or right atrium, recognizing that it is expected that some Medicare patients will receive CCM devices on an inpatient basis, we proposed to add the following 24 ICD–10–PCS code combinations to MS–DRGs 222, 223, 224, 225, 226 and 227.
In response to the commenter that questioned why cardiac contractility modulation devices qualify for MS–DRGs 222, 223, 224, 225, 226 and 227 and cardiac resynchronization therapy pacemakers do not, procedures involving CRT–P are assigned to a number of MS–DRGs. Specifically, in MDC 05 (Diseases and Disorders of the Circulatory System), procedures involving these pacemakers are assigned to MS–DRGs 242, 243, and 244 (Permanent Cardiac Pacemaker Implant with MCC, with CC, and without CC/MCC, respectively), MS–DRGs 258 and 259 (Cardiac Pacemaker Device Replacement with MCC and without MCC, respectively), and MS–DRGs 260, 261 and 262 (Cardiac Pacemaker Revision Except Device Replacement with MCC, with CC, and without CC/MCC, respectively).
Procedures codes describing the insertion of total contractility modulation device systems have been assigned to MS–DRGs 222, 223, 224, 225, 226 and 227 since the initial implementation of these procedure codes in FY 2010 under ICD–9–CM, recognizing that insertion of the CCM device might occur alone, in the presence of a pre-existing automatic implantable cardioverter-defibrillator (AICD), or in a combined implantation with an AICD. As stated in the proposed rule, the ICD–10–PCS procedure code combinations for right ventricular and/or right atrial lead insertion with insertion of contractility modulation devices were inadvertently excluded from MS–DRGs 222, 223, 224, 225, 226 and 227 as a result of replicating the ICD–9 based MS–DRGs. Recognizing that clinical practice might have changed since the creation of codes for CCM devices, our clinical advisors believe additional analyses are needed in MDC 05, specifically for cases reporting both contractility modulation device systems and pacemakers, as part of our efforts toward a broader approach to refining MS–DRGs and to address the commenters' request. As such, we also do not believe conforming changes to the titles of MS–DRGs 222, 223, 224, 225, 226 and 227 are warranted at this time until further review is complete.
CMS also will monitor claims data for unintended consequences as a result of the deletion of the 12 clinically invalid code combinations from the GROUPER logic as we continue our comprehensive analysis in future rulemaking. Therefore, after consideration of the public comments we received, we are finalizing our proposal to add the 24 ICD–10–PCS code combinations as previously listed to MS–DRGs 222, 223, 224, 225, 226 and 227. We are also finalizing our proposal to delete the 12 clinically invalid code combinations from the GROUPER logic of MS–DRGs 222, 223, 224, 225, 226 and 227 that describe the insertion of contractility modulation device and the insertion of a cardiac lead into the left ventricle under the ICD–10 MS–DRGs Version 38, effective October 1, 2020.
In the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32500 through 32503), we discussed a request that we received to add ICD–10–CM diagnosis code K35.20 (Acute appendicitis with generalized peritonitis, without abscess) to the list of complicated principal diagnoses that group to MS–DRGs 338, 339 and 340 (Appendectomy with Complicated Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) so that all ruptured/perforated appendicitis codes in MDC 06 (Diseases and Disorders of the Digestive System) group to MS–DRGs 338, 339, and 340. ICD–10–CM diagnosis code K35.20 currently groups to MS–DRGs 341, 342, and 343 (Appendectomy without Complicated Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively). Under current coding conventions, the following inclusion term for subcategory K35.2 (Acute appendicitis with generalized peritonitis) is: Appendicitis (acute) with generalized (diffuse) peritonitis following rupture or perforation of the appendix. The requestor also noted that diagnosis code K35.32 (Acute appendicitis with perforation and localized peritonitis, without abscess) currently groups to MS–DRGs 338, 339, and 340, however, diagnosis code K35.20 which describes a generalized, more extensive form of peritonitis does not. The requestor stated that ICD–10–CM diagnosis code K35.20 is the only ruptured appendicitis code not included in the list of complicated principal diagnosis codes for MS–DRGs 338, 339 and 340 and stated that it is clinically appropriate for all ruptured/perforated appendicitis diagnosis codes to group to MS–DRGs 338, 339 and 340.
As indicated in the FY 2021 IPPS/LTCH PPS proposed rule, we analyzed claims data from the September 2019 update of the FY 2019 MedPAR file for cases in MS–DRGs 341, 342, and 343 and claims reporting ICD–10–CM diagnosis code K35.20 as a principal diagnosis. Our findings are shown in the following table.
As shown in the table, we found a total of 718 cases with an average length of stay of 5.9 days and average costs of $17,270 in MS–DRG 341. Of those 718 cases, there were 62 cases reporting a principal diagnosis code of K35.20 with
As indicated in the proposed rule, we also analyzed claims data from the September 2019 update of the FY 2019 MedPAR file for MS–DRGs 338, 339, and 340. Our findings are shown in the following table.
As shown in the table, we found a total of 685 cases with an average length of stay of 8.1 days and average costs of $20,930 in MS–DRG 338. We found a total of 2,245 cases with an average length of stay of 5.0 days and average costs of $12,705 in MS–DRG 339. We found a total of 1,840 cases, average length of stay 2.9 days, and average costs of $9,101 in MS–DRG 340.
We stated in the proposed rule that our clinical advisors agreed that the presence of an abscess would clinically determine whether a diagnosis of acute appendicitis would be considered a complicated principal diagnosis. As diagnosis code K35.20 is described as “without” an abscess, we stated our clinical advisors recommended that it not be added to the list of principal diagnoses for MS–DRGS 338, 339, and 340 (Appendectomy with Complicated Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively). We stated in the proposed rule, that we believe that while the average costs for cases reporting diagnosis code K35.20 are similar to the cases in MS–DRGs 338, 339, and 340, diagnosis codes describing acute appendicitis that do not indicate the presence of an abscess should remain in MS–DRGs 341, 342, and 343 (Appendectomy without Complicated Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively). Therefore, we did not propose to reassign diagnosis code K35.20 from MS–DRGs 341, 342, and 343 to MS–DRGs 338, 339, and 340.
As noted previously, the requestor pointed out that diagnosis K35.32 (Acute appendicitis with perforation and localized peritonitis, without abscess) currently groups to MS–DRGs 338, 339, and 340 (Appendectomy with Complicated Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively). Therefore, in the proposed rule, we identified all the diagnosis codes describing acute appendicitis within the ICD–10–CM classification under subcategory K35.2 (Acute appendicitis with generalized peritonitis) and subcategory K35.3 (Acute appendicitis with localized peritonitis) and reviewed their respective MS–DRG assignments for clinical coherence. The diagnosis codes in these subcategories are shown in the following table.
As indicated in the proposed rule, we analyzed claims data from the September 2019 update of the FY 2019 MedPAR file for cases reporting any one of the ICD–10–CM diagnosis codes as previously listed as a principal diagnosis in MS–DRGs 338, 339, 340, 341, 342, and 343. Our findings are shown in the following table.
As shown in the table, the diagnosis codes describing “with abscess” (K35.21 and K35.33) are currently assigned to MS–DRGs 338, 339, and 340. In addition, the diagnosis codes describing “without abscess” (K35.20, K35.30, and K35.31) are currently assigned to MS–DRGs 341, 342, and 343. We stated in the proposed rule, that our clinical advisors believe that cases reporting ICD–10–CM diagnosis codes describing “with abscess” are associated with higher severity of illness and resource consumption because of extended lengths of stay and treatment with intravenous antibiotics. Therefore, in the proposed rule, we noted that our clinical advisors determined that diagnosis code K35.32 should also be assigned to MS–DRGs 341, 342, and 343 for clinical consistency.
Accordingly, in the proposed rule, we proposed to reassign diagnosis code K35.32 to MS–DRGs 341, 342, and 343 (Appendectomy without Complicated Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively).
As also noted in the proposed rule, the ICD–10 MS–DRG Version 37 Definitions Manual currently lists the following ICD–10–CM diagnosis codes as Complicated Principal Diagnoses in MS–DRGs 338, 339, 340, 341, 342, and 343: C18.1 (Malignant neoplasm of appendix); C7A.020 (Malignant carcinoid tumor of the appendix); K35.21 (Acute appendicitis with generalized peritonitis, with abscess); K35.32 (Acute appendicitis with perforation and localized peritonitis, without abscess) and K35.33 (Acute appendicitis with perforation and localized peritonitis, with abscess). For the same reasons discussed previously, we proposed to remove diagnosis code K35.32 from the complicated principal diagnosis list to be clinically consistent.
Therefore, for the reasons discussed, in the proposed rule, we proposed to (1) maintain the current assignment of diagnosis code K35.20 (Acute appendicitis with generalized peritonitis, without abscess) in MS–DRGs 341, 342, and 343 (Appendectomy without Complicated Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively); (2) reassign diagnosis code K35.32 from MS–DRGs 338, 339 and 340 to MS–DRGs 341, 342, and 343; and (3) remove diagnosis code K35.32 from the complicated principal diagnosis list in MS–DRGs 338, 339, and 340 as listed in the ICD–10 MS–DRG Version 37 Definitions Manual.
Other commenters did not support the proposal to reassign diagnosis code K35.32 from MS–DRGs 338, 339 and 340 to MS–DRGs 341, 342, and 343 and urged CMS to reconsider reassigning diagnosis code K35.32. A commenter stated that the condition described by ICD–10–CM diagnosis code K35.32 (Acute appendicitis with perforation and localized peritonitis, without abscess) represents a complicated diagnosis, and asked CMS to maintain the current complicated diagnosis classification for code K35.32. Another commenter analyzed data from their facility and found claims reporting a principal diagnosis of K35.32 in MS–DRGs 338, 339 and 340 had an average LOS of 4.18 days and average charges of $60,000. This commenter stated when compared to claims at their facility grouped to MS–DRGs 341, 342 and 343, which had an average length of stay of 1.91 days and average charges of $42,000, claims reporting principal diagnosis ICD–10–CM diagnosis code K35.32 were more congruent with MS–DRG's 338–340. This commenter also stated it was the professional opinion of the critical care surgical staff of the facility that the presence of appendiceal perforations resulting in peritonitis (with or without abscess) requires longer hospitalizations and increased resources, such as peritoneal washings, intravenous antibiotics, and intravenous hydration to care for the increased severity of illness.
While our clinical advisors continue to believe that when peritonitis develops in a patient with acute appendicitis, the degree and severity of the peritonitis can vary greatly, we concur that the expansion of diagnosis codes K35.2 and K35.3 to introduce additional clinical concepts effective October 1, 2018 significantly changed the scope and complexity of the diagnosis codes for this subset of patients. As noted in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41236), when we consulted with the staff at the Centers for Disease Control's (CDC's) National Center for Health Statistics (NCHS), because NCHS has the lead responsibility for maintaining the ICD–10–CM diagnosis codes, the NCHS' staff acknowledged the clinical concerns based on the manner in which diagnosis codes K35.2 and K35.3 were expanded and confirmed that they would consider further review of these newly expanded codes with respect to the clinical concepts. As such, we believe it would be appropriate to maintain the current assignments at this time in order to further examine the relevant clinical factors and similarities in resource consumption in order to best represent this subset of patients within the MS–DRG classification. Therefore, after consideration of the public comments we received, and for the reasons discussed, diagnosis code K35.20 (Acute appendicitis with generalized peritonitis, without abscess) will be maintained in MS–DRGs 341, 342, and 343 (Appendectomy without Complicated Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) for FY 2021. We are not finalizing our proposal to reassign diagnosis code K35.32 (Acute appendicitis with perforation and localized peritonitis, without abscess) to MS–DRGs 341, 342, and 343; and we are not finalizing our proposal to remove diagnosis code K35.32 from the complicated principal diagnosis list in MS–DRGs 338, 339, and 340. Accordingly, the assignment of ICD–10–CM code K35.32 will be maintained in MS–DRGs 338, 339, and 340 (Appendectomy with Complicated Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) and
As discussed in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32503 through 32505), we received a request to reassign ICD–10–CM diagnosis codes M54.11 (Radiculopathy, occipito-atlanto-axial region), M54.12 (Radiculopathy, cervical region) and M54.13 (Radiculopathy, cervicothoracic region) from MDC 01 (Diseases and Disorders of the Nervous System) to MDC 08 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue). The requestor stated that when one of these diagnosis codes describing radiculopathy in the cervical/cervicothoracic area of the spine is reported as a principal diagnosis in combination with a cervical spinal fusion procedure code, the case currently groups to MDC 01 in MS–DRG 028 (Spinal Procedures with MCC), MS–DRG 029 (Spinal Procedures with CC or Spinal Neurostimulators), and MS–DRG 030 (Spinal Procedures without CC/MCC). The requestor acknowledged that radiculopathy results from nerve impingement, however, the requestor noted it typically also results from a musculoskeletal spinal disorder such as spondylosis or stenosis. According to the requestor, the underlying musculoskeletal cause should be reported as the principal diagnosis if documented. The requestor stated that when the medical record documentation to support a musculoskeletal cause is not available, cases reporting a cervical spinal fusion procedure with a principal diagnosis of cervical radiculopathy would be more consistent with other cervical spinal fusion procedures if they grouped to MDC 08 in MS–DRGs 471, 472, and 473 (Cervical Spinal Fusion with MCC, with CC, and without CC/MCC, respectively). The requestor stated that the following diagnosis codes describing radiculopathy of the thoracic and lumbar areas of the spine are currently assigned to MDC 08 and therefore, group appropriately to the spinal fusion MS–DRGs in MDC 08.
We noted that the requestor is correct that when diagnosis codes M54.11, M54.12 or M54.13 are reported as a principal diagnosis in combination with a cervical spinal fusion procedure, the case currently groups to MDC 01 in MS–DRG 028, MS–DRG 029, and MS–DRG 030. This grouping occurs because the diagnosis codes describing radiculopathy in the cervical/cervicothoracic area of the spine are assigned to MDC 01 and the procedure codes describing a cervical spinal fusion procedure are assigned to MDC 01 in MS–DRGs 028, 029 and 030. We further noted that the requestor is also correct that diagnosis codes describing radiculopathy of the thoracic and lumbar areas of the spine (M54.14, M54.15, M54.16 and M54.17) are currently assigned to MDC 08 and therefore, group to the spinal fusion MS–DRGs in MDC 08 consistent with the GROUPER logic definitions. The MS–DRGs that involve spinal fusion procedures of the cervical or lumbar regions that are currently assigned in MDC 01 and MDC 08 are listed in the following table.
We referred the reader to the ICD–10 MS–DRG Version 37 Definitions Manual (which is available via the internet on the CMS website at:
As indicated in the FY 2021 IPPS/LTCH PPS proposed rule, we examined claims data from the September 2019 update of the FY 2019 MedPAR file for all cases in MS–DRGs 028, 029, and 030 and for cases reporting any one of the diagnosis codes describing radiculopathy of the cervical/cervicothoracic area of the spine (M54.11, M54.12, or M54.13) in combination with a cervical spinal fusion procedure. We refer the reader to Table 6P.1b associated with the proposed rule and this final rule (which is available via the internet on the CMS website at:
As shown in the table, there were a total of 2,105 cases with an average length of stay of 11.9 days and average costs of $40,866 in MS–DRG 028. Of those 2,105 cases, there were 22 cases reporting a principal diagnosis of cervical radiculopathy with a cervical spinal fusion procedure with an average length of stay of 8.2 days and average costs of $44,980. For MS–DRG 029, there were a total of 3,574 cases with an average length of stay of 6 days and
We also reviewed the claims data for MS–DRGs 471, 472, and 473. Our findings are shown in the following table.
As shown in the table, there were a total of 3,327 cases with an average length of stay of 9 days and average costs of $36,941 in MS–DRG 471. There were a total of 15,298 cases with an average length of stay of 3.3 days and average costs of $22,539 in MS–DRG 472. There were a total of 11,144 cases with an average length of stay of 2 days and average costs of $18,748 in MS–DRG 473.
Based on the claims data, the average costs of the cases reporting a principal diagnosis of cervical radiculopathy with a cervical spinal fusion procedure are consistent with the average costs of all the cases in MS–DRGs 028, 029, and 030 in MDC 01. We also noted that the average costs of all the cases in MS–DRGs 028, 029, and 030 in MDC 01 are also comparable to the average costs of all the cases in MS–DRGs 471, 472, and 473, respectively; ($40,886 versus $36,941; $24,026 versus $22,539; and $17,393 versus $18,748).
We stated that our clinical advisors do not support reassigning diagnosis codes M54.11, M54.12, and M54.13 that describe radiculopathy in the cervical/cervicothoracic area of the spine from MDC 01 to MDC 08 until further analysis of the appropriate assignment of these and other diagnosis codes describing radiculopathy. As the requestor pointed out, the diagnosis codes describing radiculopathy of the thoracic and lumbar areas of the spine (M54.14, M54.15, M54.16 and M54.17) are currently assigned to MDC 08. We noted that there are also two other codes to identify radiculopathy within the classification, diagnosis code M54.10 (Radiculopathy, site unspecified) and M54.18 (Radiculopathy, sacral and sacrococcygeal region), both of which are currently assigned to MDC 01. We stated that our clinical advisors recommended maintaining the current assignment of diagnosis codes describing cervical radiculopathy in MDC 01 until further analysis of whether all the diagnosis codes describing radiculopathy of a specified or unspecified site should be assigned to the same MDC and if so, whether those codes should be assigned to MDC 01 or MDC 08. As part of this analysis, they also recommended soliciting further input from the public on the appropriate assignment for all of the diagnosis codes describing radiculopathy, including from professional societies and national associations for neurology and orthopedics. For these reasons, we did not propose to reassign diagnosis codes M54.11, M54.12, and M54.13 from MDC 01 to MDC 08 at this time.
After consideration of the public comments that we received, we are maintaining the current assignment of diagnosis codes M54.11, M54.12, and M54.13 describing cervical radiculopathy in MDC 01 for FY 2021, and as discussed intend to further review and analyze all the diagnosis codes describing radiculopathy of a specified or unspecified site to determine if they should be assigned to the same MDC, and if so, whether those codes should be assigned to MDC 1 or MDC 8.
In the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32505 through 32510), we discussed a request we received to restructure the MS–DRGs for total joint arthroplasty that utilize an oxidized zirconium bearing surface implant in total hip replacement and total knee replacement procedures. According to the requestor, several international joint replacement registries, retrospective claims review, and published clinical studies show compelling short-term, mid-term and long-term clinical outcomes for patients receiving these implants. The requestor stated that without specific MS–DRGs, beneficiary access to these implants is restricted and the benefit to patients and cost savings cannot be recognized.
The requestor noted that effective October 1, 2017, new ICD–10–PCS procedure codes describing hip and knee replacement procedures with an oxidized zirconium bearing surface implant were established, which allow greater specificity and provide the ability to track costs and clinical outcomes for the patients who receive the implant. The requestor provided 3 options for CMS to consider as part of its request which are summarized in this section of this rule.
The first option provided by the requestor was to create a new MS–DRG by reassigning cases reporting a hip or knee replacement procedure with an oxidized zirconium bearing surface implant from MS–DRG 470 (Major Hip and Knee Joint Replacement or Reattachment of Lower Extremity without MCC) to the suggested new MS–DRG. The requestor conducted its own analysis and noted that there were approximately 18,000 cases reporting a hip or knee replacement with an oxidized zirconium bearing surface implant and the average length of stay for these cases was shorter in comparison to the cases reporting hip and knee replacement procedures without an oxidized zirconium bearing surface implant. The requestor suggested that patients receiving an oxidized zirconium bearing surface implant may be walking earlier after surgery and the risk of infection may be reduced as a result of the shorter hospitalization.
The requestor stated that separating out these cases reporting the use of an oxidized zirconium bearing surface implant is clinically justified because the implants are designed for increased longevity. The requestor also stated that oxidized zirconium is an entirely distinct material from traditional ceramic or metal implants, as it is made through a unique thermal oxidation process which creates a ceramicised surface while maintaining the biocompatible zirconium alloy substrate. According to the requestor, this process creates an implant with the unique properties of both metals and ceramics: Durability, strength and friction resistance. Conversely, the requestor stated that cobalt chrome used in metal implants contains up to 143x more nickel (<0.5% vs <0.0035%) than oxidized zirconium and that nickel is the leading cause of negative reactions in patients with metal sensitivities.
The requestor asserted that creating a new MS–DRG for hip and knee replacement procedures with an oxidized zirconium bearing surface implant would be a logical extension of the unique procedure codes that CMS finalized and stated that other countries have established higher government reimbursement for these implants to reflect the increased value of the technology. The requestor also asserted that multiple joint replacement registries have reported excellent hip replacement results, including a statistically significant 33 percent reduced risk of revision (p<0.001) for oxidized zirconium on highly cross-linked polyethylene (XLPE), from three months compared to the most common bearing surface of metal/XLPE.
Lastly, the requestor stated that multiple U.S. data sources, including Medicare claims, show strong short-term outcomes, reduced 30-day readmissions, fewer discharges to skilled nursing facilities (SNFs), shorter LOS, and more frequent discharges to home, resulting in less costly post-acute care.
The second option provided by the requestor was to create a new MS–DRG by reassigning all cases in MS–DRG 470 reporting a hip replacement procedure (excluding those with an oxidized zirconium bearing surface implant) with a principal diagnosis of hip fracture and all hip replacement procedures with an oxidized zirconium bearing surface implant, with or without a principal diagnosis of hip fracture to the suggested new MS–DRG. The requestor stated that based on its own analysis, this new MS–DRG would have approximately 58,000 cases with an estimated relative weight between the current MS–DRGs for total joint arthroplasty (MS–DRGs 469 and 470) to reflect the increased resource consumption of total hip replacement procedures performed due to a hip fracture, while also reflecting a higher resource grouping for oxidized zirconium bearing surface implants used in total hip replacement procedures, and lastly, to reflect statistically significant reductions in revision of total hip replacement procedure rates.
The requestor also indicated that a new MS–DRG for total hip replacement procedures with a hip fracture would correspond to differentials recognized in the Comprehensive Care for Joint Replacement (CJR) model, which established a separate target 90-day episode price for total hip replacement procedures performed due to hip fracture cases, as these are typically higher severity patients with longer lengths of stay than hip replacement procedures absent a hip fracture.
The requestor conducted its own analysis of Medicare claims data (Q4 2017–Q3 2018) for total hip replacement procedures and compared cases with an oxidized zirconium bearing surface implant to cases without an oxidized zirconium bearing surface implant. The requestor reported that it found statistically reduced SNF costs, hospital length of stay, 90-day episode costs, and 55% decreased mortality at 180 days for the oxidized zirconium bearing surface implant cases. The requestor urged CMS to recognize this technology with a differentiated payment in the form of a new MS–DRG, based on its findings of excellent clinical outcomes for total hip replacement procedures that utilize an oxidized zirconium bearing surface implant.
The third option provided by the requestor was to reassign all cases reporting a total hip replacement procedure using an oxidized zirconium bearing surface implant with a principal diagnosis of hip fracture from MS–DRG 470 (Major Hip and Knee Joint Replacement or Reattachment of Lower Extremity without MCC) to MS–DRG 469 (Major Hip and Knee Joint Replacement or Reattachment of Lower Extremity with MCC or Total Ankle Replacement). The requestor stated this option would maintain the two existing MS–DRGs for total joint arthroplasty and would only involve moving a small
The requestor acknowledged that the third option was more limited than the first two options, however, the requestor stated that it was the least disruptive since the two MS–DRGs and estimated relative weights would remain essentially the same. The requestor also stated that reassigning cases reporting a total hip replacement procedure using an oxidized zirconium bearing surface implant with a principal diagnosis of hip fracture from MS–DRG 470 to MS–DRG 469 would encourage hospitals to use these high-quality, proven implants.
The requestor also asserted that the third option focuses the suggested payment changes on the population of patients that benefit the most from the technology. According to the requestor, the analysis of Medicare claims data suggests that there is potential to improve care for the older population of patients who receive a total hip replacement by encouraging providers to use an oxidized zirconium bearing surface implant for hip fracture cases. In addition, the requestor stated that long-term Medicare solvency concerns impel consideration of incentives as a means to drive better outcomes at lower cost. Specifically, the requestor asserted that if all of the approximately 150,000 total hip replacement procedures performed annually in the U.S. for hip fracture achieved 90-day episode cost savings observed in Medicare claims for oxidized zirconium bearing surface implants, based on the requestor's analysis, potential annual savings of more than $650 million could be realized, in addition to longer-term savings achieved through reduced revisions.
The requestor also welcomed additional analysis by CMS of the claims data and consideration of alternative configurations that might better align patient severity, clinical value and payment.
As indicated by the requestor, October 1, 2017, new ICD–10–PCS procedure codes describing hip and knee replacement procedures with an oxidized zirconium bearing surface implant were created. The procedure codes are as follows:
We indicated in the FY 2021 IPPS/LTCH PPS proposed rule that we examined claims data from the September 2019 update of the FY 2019 MedPAR file for MS–DRGs 469 and 470 where hip and knee replacement procedures are currently assigned for cases reporting the use of an oxidized zirconium bearing surface implant to address the three options provided by the requestor.
To evaluate the first option provided by the requestor, we analyzed the cases reporting a total hip or total knee replacement procedure with an oxidized zirconium bearing surface implant in MS–DRG 470 to determine if a new MS–DRG is warranted. To evaluate the second option provided by the requestor, we analyzed the cases reporting a total hip replacement procedure without an oxidized zirconium bearing surface implant with a principal diagnosis of hip fracture and
As shown in the table, there was a total of 25,701 cases with an average length of stay of 5.9 days and average costs of $22,126 in MS–DRG 469. For MS–DRG 470, there was a total of 386,221 cases with an average length of stay of 2.3 days and average costs of $14,326. Of those 386,221 cases in MS–DRG 470, there was a total of 18,898 cases reporting a total hip replacement or total knee replacement procedure with an oxidized zirconium bearing surface implant with an average length of stay of 2.1 days and average costs of $14,808; a total of 47,316 cases reporting a total hip replacement procedure with a principal diagnosis of hip fracture with an average length of stay of 4.5 days and average costs of $16,077; a total of 7,241 cases reporting a total hip replacement procedure with an oxidized zirconium bearing surface implant with or without a principal diagnosis of hip fracture with an average length of stay of 1.9 days and average costs of $13,875; and a total of 316 cases reporting a total hip replacement procedure with an oxidized zirconium bearing surface implant with a principal diagnosis of hip fracture with an average length of stay of 4 days and average costs of $18,304.
We noted that the data analysis performed to evaluate the first option provided by the requestor indicated that the 18,898 cases reporting a total hip replacement or total knee replacement procedure with an oxidized zirconium bearing surface implant in MS–DRG 470 have a similar average length of stay (2.1 days versus 2.3 days) and similar average costs ($14,808 versus $14,326) compared to all the cases in MS–DRG 470. The results are also consistent with the requestor's findings that there were approximately 18,000 cases reporting a hip or knee replacement with an oxidized zirconium bearing surface implant. Based on the claims analysis, our clinical advisors stated that the data does not support creating a new MS–DRG for these procedures. We stated that our clinical advisors also believed that the characteristics of the patients
The data analysis performed to evaluate the second option provided by the requestor indicated that the 47,316 cases reporting a total hip replacement procedure without an oxidized zirconium bearing surface implant with a principal diagnosis of hip fracture have an average length of stay that is longer than the average length of stay for all the cases in MS–DRG 470 (4.5 days versus 2.3 days) and the average costs are higher when compared to all the cases in MS–DRG 470 ($16,077 versus $14,326). For the 7,241 cases reporting a total hip replacement procedure with an oxidized zirconium bearing surface implant with or without a principal diagnosis of hip fracture, the average length of stay is shorter than the average length of stay for all the cases (1.9 days versus 2.3 days) and the average costs are slightly lower when compared to all the cases in MS–DRG 470 ($13,875 versus $14,326). Our analysis of the combined total number of cases identified for the second option provided by the requestor indicated that the 54,557 cases (47,316 + 7,241) have a longer average length of stay compared to the average length of stay for all the cases in MS–DRG 470 (4.2 days versus 2.3 days) and the average costs are slightly higher ($15,785 versus $14,326) when compared to all the cases in MS–DRG 470. The results are also consistent with the requestor's findings that there were approximately 58,000 cases reporting a total hip replacement procedure without an oxidized zirconium bearing surface implant with a principal diagnosis of hip fracture or a total hip replacement procedure with an oxidized zirconium bearing surface implant with or without a principal diagnosis of hip fracture. We stated that our clinical advisors believed that the data does not support creating a new MS–DRG for the subset of cases as suggested by the requestor. They noted the variation in the volume (47,316 cases and 7,241 cases), average length of stay (4.5 days and 1.9 days), and the average costs ($16,077 and $13,875) for each subset of option 2 and that the total average cost for the combined cases identified for the second option ($15,785) is very similar to the costs of all the cases in MS–DRG 470 ($14,326). Therefore, in consideration of the second option provided by the requestor, we did not propose to create a new MS–DRG for cases reporting a total hip replacement procedure without an oxidized zirconium bearing surface implant with a principal diagnosis of hip fracture and cases reporting a total hip replacement procedure with an oxidized zirconium implant with or without a principal diagnosis of hip fracture.
The data analysis performed to evaluate the third option provided by the requestor indicated that the 316 cases reporting a total hip replacement procedure with an oxidized zirconium bearing surface implant with a principal diagnosis of hip fracture have a longer average length of stay (4.0 days versus 2.3 days) and higher average costs ($18,304 versus $14,326) compared to all the cases in MS–DRG 470. The results are also consistent with the requestor's findings that there were approximately 300 cases reporting a total hip replacement procedure with an oxidized zirconium bearing surface implant with a principal diagnosis of hip fracture. Our clinical advisors noted that while the data shows a longer length of stay and higher average costs for these cases under option 3, the analysis of the cases reporting a total hip replacement procedure without an oxidized zirconium bearing surface implant with a principal diagnosis of hip fracture under option 2 also demonstrated a longer length of stay and higher average costs. They therefore recommended we conduct further review specifically of those cases reporting a total hip replacement procedure with a principal diagnosis of hip fracture, with or without an oxidized zirconium bearing surface implant.
As indicated in the proposed rule, based on the advice of our clinical advisors and in connection with the request for CMS to examine the claims data and consider alternative configurations, we performed additional analysis of those cases reporting a total hip replacement procedure with a principal diagnosis of hip fracture for both MS–DRGs 469 and 470. We stated that the procedure codes for the hip replacement procedures included in this additional analysis are displayed in Table 6P.1d associated with the proposed rule and the diagnosis codes for hip fracture included in this additional analysis are displayed in Table 6P.1e associated with the proposed rule. Our findings are shown in the following table.
As shown in the table, there was a total of 14,163 cases reporting a total hip replacement procedure with a principal diagnosis of hip fracture with an average length of stay of 7.2 days and average costs of $21,951 in MS–DRG 469. There was a total of 47,632 cases reporting a total hip replacement procedure with a principal diagnosis of hip fracture with an average length of stay of 4.5 days and average costs of $16,092 in MS–DRG 470. The average length of stay for the cases reporting a total hip replacement procedure with a principal diagnosis of hip fracture in MS–DRGs 469 and 470 were longer (7.2 days versus 5.9 days and 4.5 versus 2.3 days, respectively) compared to all the cases in their assigned MS–DRGs. The average costs of the cases reporting a total hip replacement procedure with a principal diagnosis of hip fracture in MS–DRG 469 were approximately $175 less when compared to the average costs of all cases in MS–DRG 469 ($21,951 versus $22,126) and slightly more for MS–DRG 470 ($16,092 versus $14,326). Our clinical advisors supported differentiating the cases reporting a total hip replacement procedure with a principal diagnosis of hip fracture from those cases without a hip fracture by assigning them to a new MS–DRG. They noted that clinically, individuals who undergo hip replacement following hip fracture tend to require greater resources for effective treatment than those without hip fracture. They further noted that the increased complexity associated with hip fracture patients can be attributed to the post traumatic state and the stress of pain, possible peri-articular bleeding, and the fact that this subset of patients, most of whom have fallen as the cause for their fracture, may be on average more frail than those who require hip replacement because of degenerative joint disease.
We applied the criteria to create subgroups in a base MS–DRG as discussed in section II.D.1.b. of the FY 2021 IPPS/LTCH PPS proposed rule and section II.E.1.b. of this final rule. We noted that, as shown in the table that follows, a three-way split of this base MS–DRG failed to meet the criterion that there be at least a 20% difference in average costs between the CC and NonCC subgroup and also failed to meet the criterion that there be at least a $2,000 difference in average costs between the CC and NonCC subgroup. The following table illustrates our findings.
We then applied the criteria for a two-way split for the “with MCC and without MCC” subgroups and found that all five criteria were met. We stated that for the proposed new MS–DRGs, there is at least (1) 500 cases in the MCC subgroup and 500 cases in the without MCC subgroup; (2) 5 percent of the cases in the MCC group and 5 percent in the without MCC subgroup; (3) a 20 percent difference in average costs between the MCC group and the without MCC group; (4) a $2,000 difference in average costs between the MCC group and the without MCC group; and (5) a 3-percent reduction in cost variance, indicating that the severity level splits increase the explanatory power of the base MS–DRG in capturing differences in expected cost between the MS–DRG severity level splits by at least 3 percent and thus improve the overall accuracy of the IPPS payment system. The following table illustrates our findings.
For FY 2021, we proposed to create new MS–DRG 521 (Hip Replacement with Principal Diagnosis of Hip Fracture with MCC) and new MS–DRG 522 (Hip Replacement with Principal Diagnosis of Hip Fracture without MCC). We referred the reader to Table 6P.1d associated with this proposed rule for the list of procedure codes describing hip replacement procedures and to Table 6P.1e associated with the proposed rule for the list of diagnosis codes describing hip fracture diagnoses that we proposed to define in the logic for these new MS–DRGs.
However, a couple commenters who supported the concept of the proposal to create proposed new MS–DRGs 521 and 522 recommended that CMS not finalize the proposal until further analysis could be conducted. The commenters expressed concern that the relative weight and the average length of stay for proposed new MS–DRG 521 did not appear to align with clinical experience and underlying data since it is lower than the relative weight and average length of stay for MS–DRG 469. The commenters suggested that CMS re-evaluate and provide clarification on the data analysis.
A commenter expressed appreciation for the consideration CMS provided in response to the request to create MS–DRGs specifically for oxidized zirconium implants utilized in hip and knee replacement procedures. The commenter stated that although CMS' proposal did not explicitly focus on oxidized zirconium implants, an alternative option for the joint replacement procedures was examined and presented, resulting in the proposed new MS–DRGs 521 and 522. The commenter stated that these proposed MS–DRGs would improve distinguishing this subset of patients with a hip fracture who undergo a hip replacement procedure, however, the ability to differentiate meaningful parameters of care quality is not realized since the proposal treats all implants the same, despite what the commenter stated were the important clinical improvements demonstrated in the Medicare claims data for oxidized zirconium implants used for hip fracture patients. As a result, the commenter stated its belief that CMS should revise its proposal and adopt a specific MS–DRG for patients with a principal diagnosis of hip fracture receiving an oxidized zirconium bearing surface implant in a hip replacement procedure. According to the commenter, this would reflect an improvement over the proposed MS–DRGs 521 and 522, and best advance CMS policy and patient care objectives by creating incentives that appropriately encourage the use of a technology that has been shown to have substantial cost-saving and quality of care benefits. In addition, the commenter asserted that CMS stated a separate MS–DRG for oxidized zirconium is not warranted because certain criteria for establishing MS–DRG CC subgroups are not met. The commenter indicated CMS has broad statutory authority in the design of the Medicare inpatient payment system and is not required to limit its MS–DRG subgroups exclusively to be based on severity of co-morbidities or complications. The commenter remarked CMS should also not be limited to its five-step criteria for CC subgroups and by allowing for the creation of MS–DRG subgroups where there is clear evidence of a substantial clinical improvement will give CMS significantly greater flexibility to accomplish its goals of transformative quality improvement and cost-savings. The commenter stated that CMS has the ability and authority to make payment policy decisions that it believes will advance care and the Social Security Act grants CMS broad authority to establish a classification of inpatient hospital discharges by diagnosis-related groups and a methodology for classifying specific hospital discharges within these groups. The commenter maintained that nothing in the statute prohibits CMS from creating MS–DRG groups or sub-groups based partly upon other important policy criteria, such as actual improved patient outcomes. According to the commenter, CMS should use its exceptions and adjustments authority to accomplish this objective. The commenter provided the example that although CMS did not propose to create a new MS–DRG for
Lastly, the commenter expressed its appreciation for the analytical work and extensive consideration CMS provided to the request and acknowledged oxidized zirconium implants are only used in a very small portion of total hip replacement with hip fracture cases. The commenter stated its belief that the proposed MS–DRGs 521 and 522 would improve the ability to clinically distinguish hip fracture cases treated with a hip replacement from elective hip replacement procedures if CMS continues to believe a specific MS–DRG for hip fracture patients treated with an oxidized zirconium implant is not warranted.
Another commenter stated the proposal to create proposed new MS–DRGs 521 and 522 to account for differences in the cost of the THA procedure for a hip fracture appeared to be a neutral act in terms of cost. The commenter recommended that the proposal not be adopted as final policy since the current THA MS–DRGs 469 and 470 already provide similar reimbursement for the procedures through associated diagnostic codes, and the added expense of treating hip fractures is accounted for in the Comprehensive Care for Joint Replacement (CJR) Model. This commenter stated their belief that it would be inappropriate to make such a substantive change to the MS–DRG system without a strong body of evidence to support proposals which directly benefit one device over another. The commenter also stated they are not aware of any high-quality randomized controlled trials which report beneficial effects of the oxidized zirconium bearing surface. According to the commenter, any reported beneficial effect is most likely due to selection bias (that is, choosing younger, healthier patients for the oxidized zirconium bearings), rather than any real difference in performance. The commenter stated that this is true for registry data as well as clinical cohort studies. In addition, the commenter noted that among their society's hip replacement experts, the superiority of oxidized zirconium-alloy bearings is not a generally accepted fact. The commenter stated that they support higher reimbursement for hip replacements with a fracture in the existing MS–DRGs 469 and 470, however, they currently do not support creating the new MS–DRGs as proposed.
In response to the commenters who supported the concept of the proposal however recommended that CMS conduct further analysis for proposed new MS–DRG 521 because the proposed relative weight and average length of stay did not appear to align with clinical experience and underlying data in comparison to MS–DRG 469, we note that effective October 1, 2017 (FY 2018) the logic for MS–DRG 469 includes total ankle replacement procedures, therefore, the average length of stay, the average costs, and the relative weight of MS–DRG 469 continue to reflect the resource utilization associated with total ankle replacement procedures. In addition, total knee replacement procedures with a MCC are also included in the logic for MS–DRG 469.
The procedure codes identifying a total ankle replacement or total knee replacement are as follows:
We analyzed data from the September 2019 update of the FY 2019 MedPAR file for cases reporting a total ankle replacement procedure or a total knee replacement procedure in MS–DRG 469 for comparison to proposed MS–DRG 521. Our findings are shown in the following tables.
We found a total of 25,701 cases in MS–DRG 469 with an average length of stay of 5.9 days and average costs of $22,126. Of those 25,701 cases, we found a total of 2,819 cases reporting a total ankle replacement procedure with an average length of stay of 1.7 days and average costs of $22,327 and a total of 4,617 cases reporting a total knee replacement procedure with an average length of stay of 4.9days and average costs of $21,626.
As discussed in the proposed rule and shown in the table above, for proposed MS–DRG 521, the average length of stay is 7.2 days which is longer than the average length of stay of 5.9 days for MS–DRG 469, and the average costs for proposed MS–DRG 521 are slightly lower ($175) compared to the average costs of MS–DRG 469 ($21,951 versus $22,126, respectively).
The data demonstrates that the average costs of the total ankle replacement procedures in MS–DRG 469 are slightly higher than the average costs of all the cases in MS–DRG 469 ($22,327 versus $22,126). The proposal to reassign cases reporting a total hip replacement procedure with a principal diagnosis of a hip fracture from MS–DRG 469 to proposed new MS–DRG 521 includes the reassignment of 14,163 cases out of the 25,701 cases resulting in a total of 11,538 cases proposed to remain in MS–DRG 469. Of those 11,538 cases remaining in MS–DRG 469, a total of 2,819 cases reflect a higher utilization of resources, thereby continuing to impact the relative weight of MS–DRG 469 such that it is slightly higher than the proposed relative weight for proposed MS–DRG 521 (3.0844 versus 3.0634). Therefore, the data appears to reflect that the difference in the relative weights can be attributed to the fact that the total ankle replacement procedures continue to have an impact for MS–DRG 469.
In response to the commenter who stated that CMS should revise its proposal and adopt a specific MS–DRG for patients with a principal diagnosis of hip fracture receiving an oxidized zirconium bearing surface implant in a hip replacement procedure, we note that, our clinical advisors do not support the creation of a separate, specific MS–DRG for oxidized zirconium bearing surface implants for reasons previously discussed in the FY 2021 IPPS/LTCH PPS proposed rule. As the commenter stated in its own comments, CMS organizes MS–DRGs on the basis of resource usage and clinical coherence. Consistent with our annual process of evaluating MS–DRG classification requests, we performed a thorough review of the claims data for oxidized zirconium bearing surface implants utilized in a hip replacement procedure and provided a summary of that analysis, including input from our clinical advisors, as discussed in the proposed rule. Our clinical advisors believe that hip replacement procedures performed for a hip fracture demonstrate similar and predictable resource demands, regardless of the type of bearing surface implant used in the performance of the procedure. Therefore, we proposed to create new MS–DRGs 521 and 522, consistent with our efforts to continually refine the ICD–10 MS–DRGs while maintaining clinically coherent groups that also more accurately stratify Medicare patients with varying levels of severity. Therefore, with respect to the commenter's statement that CMS has broad authority to make policy changes, including the special exceptions and adjustment authority, we do not believe such changes would be appropriate or necessary for this group of hip replacement patients that receive an oxidized zirconium bearing surface implant. We can consider the commenter's suggestions to incorporate additional considerations into our analysis of MS–DRG classification requests in future rulemaking. We also wish to clarify for the commenter that the criteria to create subgroups within a base MS–DRG was not applied in evaluating the request to create a new MS–DRG. In other words, the criteria to create subgroups is only applied after the decision to propose to create a base MS–DRG is made.
Finally, in response to the commenter's statement that CMS should expand its use of the substantial clinical improvement standard as an alternative pathway when evaluating certain MS–DRG subgroup requests similar to the new technology add-on payment policy process, we will take this into future consideration.
In response to the commenter who stated their belief that it would be inappropriate to make a substantive change to the MS–DRG system without a strong body of evidence to support proposals which directly benefit one device over another and that they are not aware of any high-quality randomized controlled trials which report beneficial effects of the oxidized zirconium bearing surface, we wish to clarify that the CMS proposal did not involve proposing to directly benefit the oxidized zirconium bearing surface implant over other bearing surface implants. The CMS proposal presented was an alternative option to what the requestor submitted for CMS' consideration. Specifically, the CMS proposal was to group together all hip replacement procedures performed to treat a hip fracture, regardless of the type of bearing surface implant used, and the resulting MS–DRG assignment would be further differentiated based on the presence of a MCC, hence the proposal to create proposed new MS–DRGs 521 and 522 (Hip Replacement with Principal Diagnosis of Hip Fracture with and without MCC, respectively).
After consideration of the comments we received, for the reasons previously discussed, we are finalizing our
In the FY 2021 IPPS/LTCH PPS proposed rule, we also noted that the Comprehensive Care for Joint Replacement (CJR) model includes episodes triggered by MS–DRG 469 with hip fracture and MS–DRG 470 with hip fracture. Given the proposal to create new MS–DRG 521 and MS–DRG 522, we sought public comment on the effect this proposal would have on the CJR model and whether to incorporate MS–DRG 521 and MS–DRG 522, if finalized, into the CJR model's proposed extension to December 31, 2023. As discussed in the CJR proposed rule “Comprehensive Care for Joint Replacement Model Three-Year Extension and Changes to Episode Definition and Pricing” (85 FR 10516), we proposed to extend the duration of the CJR model. We stated that this extension, if finalized, would revise certain aspects of the CJR model including, but not limited to, the episode of care definition, the target price calculation, the reconciliation process, the beneficiary notice requirements and the appeals process. Additionally, we stated that the CJR proposed rule would allow time to test the changes by extending the length of the CJR model through December 31, 2023, for certain participant hospitals. The comment period for the CJR proposed rule closed on June 23, 2020 (
As discussed in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32510), we received two separate but related requests to review the MS–DRG assignment for procedures describing the transplantation of kidneys. The first request was to designate kidney transplants as a Pre-MDC MS–DRG in the same manner that other organ transplants are. The requestor performed its own analysis and stated that it found that cases with a principal diagnosis from MDC 05 (Diseases and Disorders of the Circulatory System), for example I13.2 (Hypertensive heart and chronic kidney disease with heart failure and with stage 5 chronic kidney disease, or end stage renal disease), reported with a kidney transplant from MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract), grouped to MS–DRG 981(Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC). The requestor stated it did not appear appropriate that a kidney transplant would group to MS–DRG 981 when diagnosis code I13.2 is a legitimate principal diagnosis for this procedure. This requestor also suggested that if there was a proposal for designating the MS–DRG for kidney transplants as a Pre-MDC MS–DRG, that a severity level split should also be considered.
As discussed in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42128 through 42129), during our review of cases that group to MS–DRGS 981 through 983, we noted that when procedures describing transplantation of kidneys (ICD–10–PCS procedure codes 0TY00Z0 (Transplantation of right kidney, allogeneic, open approach) and 0TY10Z0 (Transplantation of left kidney, allogeneic, open approach) are reported in conjunction with ICD–10–CM diagnosis codes in MDC 05 (Diseases and Disorders of the Circulatory System), the cases group to MS–DRGs 981 through 983. For the reasons discussed, we proposed to add ICD–10–PCS procedure codes 0TY00Z0 and 0TY10Z0 to MS–DRG 264 in MDC 05. As summarized in the FY 2020 IPPS/LTCH PPS final rule, commenters opposed our proposal to add ICD–10–PCS procedure codes 0TY00Z0 and 0TY10Z0 to MS–DRG 264 in MDC 05. Commenters suggested that CMS instead assign these cases to MS–DRG 652, noting that the length of stay for the vast majority of kidney transplant cases involving serious cardiac conditions approximates the length of stay for kidney transplants in general. After consideration of public comments, we did not finalize our proposal to add ICD–10–PCS procedure codes 0TY00Z0 and 0TY10Z0 to MS–DRG 264 in MDC 05. We stated that we believed it would be appropriate to take additional time to review the concerns raised by commenters consistent with the President's Executive Order on Advancing American Kidney Health (see
In the proposed rule, we stated in response to these public comments and the request we received on this topic for FY 2021 consideration, we examined claims data from the September 2019 update of the FY 2019 MedPAR file for MS–DRG 652. In MS–DRG 652, there were 11,324 cases reporting one of the procedure codes listed describing a kidney transplant procedure, with an average length of stay of 6 days and average costs of $25,424.
We then analyzed claims data for cases reporting one of the procedure codes listed describing the transplantation of kidney reported in MS–DRGs 981, 982, and 983. We did not find any such cases in MS–DRG 983.
Of the 366 cases reporting procedures describing kidney transplants in MS–DRGs 981 and 982, all of the cases reported a principal diagnosis from MDC 05. The diagnoses reported are reflected in the table.
Our clinical advisors reviewed these data. As indicated previously, in MS–DRG 652, there were 11,324 cases reporting one of the procedure codes listed describing a kidney transplant procedure, with an average length of stay of 6 days and average costs of $25,424. Our clinical advisors noted that the average costs for cases reporting transplantation of kidney with a diagnosis from MDC 05 listed previously are generally similar to the average costs of cases in MS–DRG 652. The diagnoses assigned to MDC 05 reflect conditions associated with the circulatory system. We stated that our clinical advisors agreed that although these diagnoses might also be a reasonable indication for kidney transplant procedures, it would not be appropriate to move these diagnoses into MDC 11 because it could inadvertently cause cases reporting these same MDC 05 diagnoses with a circulatory system procedure to be assigned to an unrelated MS–DRG.
To further examine the impact of moving MDC 05 diagnoses into MDC 11, we analyzed claims data for cases reporting a circulatory system O.R. procedure and MDC 05 ICD–10–CM diagnosis code I13.2 (Hypertensive heart and chronic kidney disease with heart failure and with stage 5 chronic kidney disease, or end stage renal disease). Diagnosis code I13.2 was selected since this diagnosis was the MDC 05 diagnosis most frequently reported with kidney transplant procedures. Our findings are reflected in the following table:
As shown in the table, if we were to move diagnosis code I13.2 to MDC 11, 4,366 cases would be assigned to the surgical class referred to as “unrelated operating room procedures” as an unintended consequence. Therefore, as an alternate option, we proposed to modify the GROUPER logic for MS–DRG 652 by allowing the presence of a procedure code describing transplantation of the kidney to determine the MS–DRG assignment independent of the MDC of the principal diagnosis in most instances. The logic for MDC 24 (Multiple Significant Trauma) and MDC 25 (Human Immunodeficiency Virus Infections) will remain unchanged, meaning there would be two exceptions to the modification of the GROUPER logic for MS–DRG 652. If a principal diagnosis of trauma and at least two significant traumas of different body sites are present, the appropriate MS–DRG in MDC 24 would be assigned based on the principal diagnosis and procedures reported, instead of MS–DRG 652. Also, if either a principal diagnosis of HIV infection or a secondary diagnosis of HIV infection with a principal diagnosis of a significant HIV related condition are present, the appropriate MS–DRG in MDC 25 would be assigned based on the principal diagnosis and procedures reported instead of MS–DRG 652. The diagram found towards the end of this discussion illustrates how the MS–DRG logic for MS–DRG 652 (Kidney Transplant) would function.
We stated we recognized MS–DRG 652 is one of the only transplant MS–DRGs not currently defined as a Pre-MDC. Pre-MDCs were an addition to Version 8 of the Diagnosis Related Groups. This proposal was the first departure from the use of principal diagnosis as the initial variable in DRG and subsequently MS–DRG assignment. For Pre-MDC DRGs, the initial step in DRG assignment is not the principal diagnosis, but instead certain surgical procedures with extremely high costs such as heart transplant, liver transplant, bone marrow transplant, and tracheostomies performed on patients on long-term ventilation. When added in Version 8, these types of services were viewed as being very resource intensive. Our clinical advisors have noted, however, that treatment practices have shifted since the inception of Pre-MDCs. We stated that the current proposed refinements to MS–DRG 652 represent the first step in investigating how we may consider introducing this concept of allowing certain procedures to affect the MS–DRG assignment regardless of the MDC from which the diagnosis is reported in the future, with the possibility of removing the Pre-MDC category entirely. In other words, we would consider having the resource intensive procedures currently assigned to the Pre-MDC MS–DRGs determine assignment to MS–DRGs within the clinically appropriate MDC. We are making concerted efforts to continue refining the ICD–10 MS–DRGs and we believe that it is important to include the Pre-MDC category as part of our comprehensive review.
We stated in the proposed rule, in response to the request for a severity level split, since the request to designate kidney transplants as a Pre-MDC MS–DRG did not involve a revision of the existing GROUPER logic for MS–DRG 652, we applied the five criteria as described in section II.E.1.b. of the preamble of this final rule to determine if it would be appropriate to subdivide cases currently assigned to MS–DRG 652 into severity levels. This analysis includes 2 years of MedPAR claims data to compare the data results from 1 year to the next to avoid making determinations about whether additional severity levels are warranted based on an isolated year's data fluctuation and also, to validate that the established severity levels within a base MS–DRG are supported. Therefore, we reviewed the claims data for base MS–DRG 652 using the September 2018 update of the FY 2018 MedPAR file and the September 2019 update of the FY 2019 MedPAR file, which were used in our analysis of claims data for MS–DRG reclassification requests for FY 2020 and FY 2021. Our findings are shown in the table:
We applied the criteria to create subgroups for the three-way severity level split. As discussed in section II.D.1.b. of the proposed rule and section II.E.1.b. of this final rule, we proposed, and are finalizing, the expansion of the previously listed criteria to also include the NonCC group. We found that the criterion that there be at least a 20% difference in average costs between subgroups failed for the average costs between the MCC and CC subgroups based on the data in both the FY 2018 and FY 2019 MedPAR files. The criterion that there be at least 500 cases for each subgroup also was not met, as shown in the table for both years. Specifically, for the “with MCC”, “with CC”, and “without CC/MCC” split, there were only 356 cases in the “without CC/MCC” subgroup based on the data in the FY 2019 MedPAR file and only 464 cases in the “without CC/MCC” subgroup based on the data in the FY 2018 MedPAR file. We then applied the criteria to create subgroups for the two-way severity level splits and found that the criterion that there be at least a 20 percent difference in average costs between the “with MCC” subgroup and the “without MCC” group failed for both years. The criterion that there be at least a 3-percent reduction in cost variance between the “with CC/MCC” and “without CC/MCC” subgroups also failed for both years, indicating that the current base MS–DRG 652 maintains the overall accuracy of the IPPS payment system. The claims data do not support a three-way or a two-way severity level split for MS–DRG 652, therefore for FY 2021, we did not propose to subdivide MS–DRG 652 into severity levels.
After consideration of public comments, we are finalizing the proposal to not subdivide MS–DRG 652 into severity levels. We refer the reader to section II.E.1.b. of this final rule for the comments regarding our proposal to expand the previously listed subgroup criteria to also include the NonCC group, as well as our finalization of that proposal.
As discussed in the proposed rule and earlier in this section we received two separate but related requests. The second request was that a new MS–DRG be created for kidney transplant cases where the patient received dialysis during the inpatient stay and after the date of the transplant. According to the requestor, transplant hospitals incur higher costs related to post-transplant care of patients who receive kidneys from “medically complex donors” (defined by the requestor as coming from organ donors over aged 60 and donors after circulatory death). The requestor also stated that their research indicated that studies consistently identified organ donors over the age of 60 and donors after circulatory death as the most significant areas for growth in increasing the number of organ transplantations, but this growth is hampered by the underutilization of these types of organs. The requestor performed its own data analysis and stated that total standardized costs were 32 percent higher for cases where the beneficiary received dialysis during the inpatient stay and after the date of transplant compared to all other kidney transplant cases currently in MS–DRG 652 (Kidney Transplant), with the additional costs serving as a disincentive to the use of viable kidneys for donation. The requestor asserted that this financially disadvantages transplant centers from using such organs, contributing to the kidney discard rate.
The following ICD–10–PCS procedure codes identify the performance of hemodialysis.
We stated that we acknowledged that the request was to review the costs of dialysis performed after kidney transplantation during the same inpatient admission, however our clinical advisors pointed out, that while not routine, it is not uncommon for a patient to require dialysis while admitted for kidney transplantation before the procedure is performed due to factors related to the availability of the organ, nor is it uncommon for a kidney that has been removed from the donor, transported, and then implanted to require dialysis before it returns to optimal function. Therefore, we examined claims data from the September 2019 update of the FY 2019 MedPAR file for all cases in MS–DRG 652 and compared the results to cases representing kidney transplantation with dialysis performed during the same inpatient admission either before or after the date of kidney transplantation. The following table shows our findings:
As shown by the table, for MS–DRG 652, we identified a total of 11,324 cases, with an average length of stay of 6.0 days and average costs of $25,424. Of the 11,324 cases in MS–DRG 652, there were 3,254 cases describing the performance of hemodialysis in an admission where the patient received a kidney transplant with an average length of stay of 7.6 days and average costs of $30,606. Our clinical advisors noted that the average length of stay and average costs of cases in MS–DRG 652 describing the performance of hemodialysis in an admission where the patient received a kidney transplant were higher than the average length of stay and average costs for all cases in the same MS–DRG.
We stated in further analyzing this issue, noting that patients can require a simultaneous pancreas/kidney transplant procedure, we also examined claims data from the September 2019 update of the FY 2019 MedPAR file for all cases in Pre-MDC MS–DRG 008 (Simultaneous Pancreas/Kidney Transplant) and compared the results to cases representing simultaneous pancreas/kidney transplantation with dialysis performed during the same inpatient admission either before or after the date of kidney transplantation. The following table shows our findings:
As shown by the table, for Pre-MDC MS–DRG 008, we identified a total of 374 cases, with an average length of stay of 10.9 days and average costs of $41,926. Of the 374 cases in Pre-MDC MS–DRG 008, there were 84 cases describing the performance of hemodialysis during an admission where the patient received a simultaneous pancreas/kidney transplant with an average length of stay of 13.4 days and average costs of $49,001. We stated our clinical advisors again noted that the average length of stay and average costs of cases in Pre-MDC MS–DRG 008 describing the performance of hemodialysis during an admission where the patient received a simultaneous pancreas/kidney transplant were higher than the average length of stay and average costs for all cases in the same Pre-MDC MS–DRG.
In the proposed rule, we stated our clinical advisors believe that these hemodialysis procedures either performed before or after kidney transplant or before or after simultaneous pancreas/kidney transplant contribute to increased resource consumption for these
As stated in the proposed rule, to compare and analyze the impact of our suggested modifications, we ran a simulation using the Version 37 ICD–10 MS–DRG GROUPER and the claims data from the September 2019 update of the FY 2019 MedPAR file. The following table reflects our findings for all 3,254 cases representing kidney transplantation with dialysis performed during the same inpatient admission either before or after the date of kidney transplantation with a two-way severity level split.
As shown in the table, there was a total of 2,195 cases for the kidney transplant with hemodialysis with MCC subgroup, with an average length of stay of 8.0 days and average costs of $32,360. There was a total of 1,059 cases for the kidney transplant with hemodialysis without MCC subgroup, with an average length of stay of 6.8 days and average costs of $26,972. We applied the criteria to create subgroups for the two-way severity level split for the proposed MS–DRGs, including our expansion of the criteria to also include the nonCC group, and found that all five criteria were met. For the proposed MS–DRGs, there is (1) at least 500 cases in the MCC subgroup and in the without MCC subgroup; (2) at least 5 percent of the cases are in the MCC subgroup and in the without MCC subgroup; (3) at least a 20 percent difference in average costs between the MCC subgroup and the without MCC subgroup; (4) at least a $2,000 difference in average costs between the MCC subgroup and the without MCC subgroup; and (5) at least a 3-percent reduction in cost variance, indicating that the proposed severity level splits increase the explanatory power of the base MS–DRG in capturing differences in expected cost between the proposed MS–DRG severity level splits by at least 3 percent and thus improve the overall accuracy of the IPPS payment system.
For the cases describing the performance of hemodialysis during an admission where the patient received a simultaneous pancreas/kidney transplant, we identified a total of 84 cases, so the criterion that there are at least 500 or more cases in any subgroup could not be met. Therefore, for FY 2021, we did not propose to subdivide the proposed new Pre-MDC MS–DRG for the performance of hemodialysis in an admission where the patient received a simultaneous pancreas/kidney transplant into severity levels.
In summary, in the FY 2021 proposed rule, taking into consideration that it clinically requires greater resources to perform hemodialysis during an admission where the patient received a kidney or simultaneous pancreas/kidney transplant, we proposed to create a new Pre-MDC MS–DRG for cases describing the performance of hemodialysis during an admission where the patient received a simultaneous pancreas/kidney transplant. We also proposed to create two new MS–DRGs with a two-way severity level split for cases describing the performance of hemodialysis in an admission where the patient received a kidney transplant in MDC 11. These proposed new MS–DRGs are new Pre-MDC MS–DRG 019 (Simultaneous Pancreas/Kidney Transplant with Hemodialysis), new MS–DRG 650 (Kidney Transplant with Hemodialysis with MCC) and new MS–DRG 651 (Kidney Transplant with Hemodialysis without MCC). We proposed to add the procedure codes from current Pre-MDC MS–DRG 008 to the proposed new Pre-MDC MS–DRG 019 with the procedure codes describing a hemodialysis procedure. Similarly, we also proposed to add the procedure codes from current MS–DRG 652 to the proposed new MS–DRGs 650 and 651 with the procedure codes describing a hemodialysis procedure. In the proposed rule, we noted that the procedure codes describing hemodialysis procedures are designated as non-O.R. procedures, therefore, as part of the logic for these proposed new MS–DRGs, we also proposed to designate these codes as non-O.R. procedures affecting the MS–DRG.
Therefore, after consideration of the public comments received, and for the reasons stated above, we are finalizing our proposal to create new Pre-MDC MS–DRG 019 (Simultaneous Pancreas/Kidney Transplant with Hemodialysis) for cases describing the performance of hemodialysis during an admission where the patient received a simultaneous pancreas/kidney transplant. We are also finalizing our proposal to create new MS–DRG 650 (Kidney Transplant with Hemodialysis with MCC) and new MS–DRG 651 (Kidney Transplant with Hemodialysis without MCC) for cases describing the performance of hemodialysis in an admission where the patient received a kidney transplant in MDC 11. Accordingly, we are also finalizing our proposal to designate procedure codes 5A1D70Z, 5A1D80Z, and 5A1D90Z that describe hemodialysis as non-O.R. procedures affecting the MS–DRG.
The diagram illustrates how the MS–DRG logic for Kidney Transplants will function. The diagram (Diagram 1.), which is the same Diagram 1 included in the proposed rule, begins by asking if the criteria for a Pre-MDC MS–DRG is met. If yes, the logic asks if the criteria for Pre-MDC MS–DRGs 018, 001–006, 014 or 007 is met. If yes, the logic directs the case to either Pre-MDC MS–DRG 018, 001–006, 014 or 007 based on the principal diagnosis and/or procedures reported. If no, the logic asks if there is a simultaneous pancreas/kidney transplant with a qualifying diagnosis reported on the claim. If no, the logic directs the case to either Pre-MDC MS–DRGs 016, 017, or 010–013 based on the principal diagnosis and/or procedures reported. If yes, the logic asks if there was a hemodialysis procedure reported on the claim. If yes, the logic assigns the case to new Pre-MDC MS–DRG 019 (Simultaneous Pancreas/Kidney Transplant with Hemodialysis). If no, the logic assigns the case to existing Pre-MDC MS–DRG 008 (Simultaneous Pancreas/Kidney Transplant).
If the criteria for a Pre-MDC MS–DRG were not met at the first step, the GROUPER logic asks if there was a principal diagnosis of trauma and at least two significant traumas of different body sites. If yes, the logic directs the case to the appropriate MS–DRG in MDC 24 based on the principal diagnosis and procedures reported. If no, the logic asks if there was either a principal diagnosis of HIV infection or a secondary diagnosis of HIV infection with a principal diagnosis of a significant HIV related condition. If yes, the logic directs the case to the appropriate MS–DRG in MDC 25 based on the principal diagnosis and procedures reported. If no, the logic asks if there is kidney transplant procedure reported on the claim. If no, the logic directs the case to the appropriate MDC and MS–DRG based on the principal diagnosis and procedures reported. If yes, the logic asks if there was a hemodialysis procedure reported on the claim. If yes, the logic assigns the case to new MS–DRGs 650 or 651 (Kidney Transplant with Hemodialysis with MCC or without MCC, respectively). If no, the logic assigns the case to existing MS–DRG 652 (Kidney Transplant).
We also received public comments regarding a number of kidney and hemodialysis related MS–DRG issues that were outside the scope of the proposals included in the FY 2021 IPPS/LTCH PPS proposed rule. These comments were as follows:
• One commenter requested that CMS establish a new MS–DRG for Continuous Renal Replacement Therapy (CRRT).
• One commenter requested that CMS review other transplant cases that end up in MS–DRGs 981 through 983 for reassignment to a more appropriate MS–DRG.
• Two commenters requested that CMS evaluate and make modifications to any MS–DRG related to the delivery of dialysis.
Because we consider these public comments to be outside the scope of the proposed rule, we are not addressing them in this final rule. As stated in section II.E.1.b. of the preamble of this final rule, we encourage individuals with comments about MS–DRG classification to submit these comments no later than November 1, 2020 so that they can be considered for possible inclusion in the annual proposed rule. We will consider these public comments for possible proposals in future rulemaking as part of our annual review process.
As discussed in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32519), we received a request to add 29 ICD–10–CM diagnosis codes to the list of principal diagnoses assigned to MS–DRGs 673, 674, and 675 (Other Kidney and Urinary Tract Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract) when reported with procedure codes describing the insertion of totally implantable vascular access devices (TIVADs) and tunneled vascular access devices. The list of 29 ICD–10–CM diagnosis codes submitted by the requestor, as well as their current MDC assignments, are found in the table:
The requestor stated that by adding the codes listed, cases reporting principal diagnosis codes describing complications of dialysis access sites and principal diagnosis codes describing kidney disease in the setting of diabetes or hypertension, would group to MS–DRGs 673, 674, and 675 when a TIVAD or tunneled vascular access device is inserted. The requestor stated that patients who have kidney transplant complications or dialysis catheter complications typically also have chronic kidney disease, end stage renal disease (ESRD) or resolving acute tubular necrosis (ATN) but ICD–10–CM coding guidelines require a complication code to be sequenced first. The requester stated that when reporting a diagnosis code describing ESRD and diabetes, a diabetes code from ICD–10–CM Chapter 4 (Endocrine, Nutritional and Metabolic Diseases) must be sequenced first and when coding ESRD, hypertension, and heart failure, the combination code I13.2 (Hypertensive heart and chronic kidney disease with heart failure and with stage 5 chronic kidney disease or end stage renal disease) must be sequenced first per coding guidelines. The requestor pointed out that code I13.11 (Hypertensive heart and chronic kidney disease without heart failure with stage 5 CKD or ESRD) is currently one of the qualifying principal diagnoses in MS–DRGs 673, 674, and 675 when reported with procedure codes describing the insertion of TIVADs or tunneled vascular access devices; therefore, according to the requestor, diagnosis code I13.2 should reasonably be added.
As discussed in the proposed rule, to begin our analysis, we reviewed the GROUPER logic for MS–DRGs 673, 674, and 675 including the special logic in MS–DRGs 673, 674, and 675 for certain MDC 11 diagnoses reported with
We next reviewed the 29 ICD–10–CM codes submitted by the requestor. In the proposed rule, we stated our clinical advisors noted that ICD–10–CM diagnosis codes E10.21, E11.21, and E13.21 describing diabetes mellitus with diabetic nephropathy; codes E10.29, E11.29, and E13.29 describing diabetes mellitus with other diabetic kidney complication; T80.211A, T80.212A, and T80.218A describing infection due to central venous catheters; and codes T82.7XXA, T82.818A, T82.828A, T82.838A, T82.848A, T82.858A, T82.868A, and T82.898A describing complications of cardiac and vascular prosthetic devices, implants and grafts, are not necessarily indicative of a patient having renal (kidney) failure requiring the insertion of a TIVAD or a tunneled vascular access device to allow access to the patient's blood for hemodialysis purposes. TIVADs and tunneled vascular access devices are widely used to provide central venous access for the administration of intravenous antibiotics, chemotherapeutic agents, parenteral nutrition and other treatments. They are used in a variety of disease groups, and in both children and adults. We stated in the proposed rule that as such, our clinical advisors do not support adding these diagnoses to the list of principal diagnosis codes in MS–DRG 673, 674, and 675 when reported with procedure codes describing the insertion of TIVADs and tunneled vascular access devices. They noted that TIVADs and tunneled vascular access devices may be inserted for a variety of principal diagnoses, and that adding these 17 diagnoses that are not specific to renal failure would not maintain the clinical coherence with other cases in this subset of cases in MS–DRGs 673, 674, and 675.
We further stated that our clinical advisors also did not support adding ICD–10–CM diagnosis code I13.2 (Hypertensive heart and chronic kidney disease with heart failure and with stage 5 chronic kidney disease, or end stage renal disease) to the special logic in MS–DRGs 673, 674, and 675. As discussed previously, code I13.2 is assigned to MDC 05 (Diseases and Disorders of the Circulatory System). Our clinical advisors agreed it would not be appropriate to move this diagnosis into MDC 11 because it would inadvertently cause cases reporting this same MDC 05 diagnosis with circulatory system procedures to be assigned to an unrelated MS–DRG.
Therefore, for the reasons described previously, we did not propose to add the following 18 ICD–10–CM codes to the list of principal diagnosis codes for MS–DRGs 673, 674, and 675 when reported with a procedures code describing the insertion of a TIVAD or a tunneled vascular access device: E10.21, E10.29, E11.21, E11.29, E13.21, E13.29, I13.2, T80.211A, T80.212A, T80.218A, T82.7XXA, T82.818A, T82.828A, T82.838A, T82.848A, T82.858A, T82.868A, and T82.898A.
After consideration of the public comments received, we are finalizing our proposal to not add the following 18 ICD–10–CM codes to the list of principal diagnosis codes for MS–DRGs 673, 674, and 675 when reported with a procedures code describing the insertion of a TIVAD or a tunneled vascular access device: E10.21, E10.29, E11.21, E11.29, E13.21, E13.29, I13.2, T80.211A, T80.212A, T80.218A, T82.7XXA, T82.818A, T82.828A, T82.838A, T82.848A, T82.858A, T82.868A, and T82.898A.
We then reviewed the remaining 11 diagnosis codes submitted by the requestor. Codes T82.41XA, T82.42XA, T82.43XA and T82.49XA describe mechanical complications of vascular dialysis catheters. We stated in the proposed rule that our clinical advisors believe the insertion of TIVADs or tunneled vascular access devices for the purposes of hemodialysis is clearly clinically related to diagnosis codes describing a mechanical complication of a vascular dialysis catheter and that for clinical coherence, these cases should be grouped with the subset of cases that report the insertion of totally implantable vascular access devices or tunneled vascular access devices as an inpatient procedure for the purposes of hemodialysis for renal failure.
As discussed in the proposed rule, codes T82.41XA, T82.42XA, T82.43XA and T82.49XA that describe mechanical complications of vascular dialysis catheters are currently assigned to MDC 05 and would require reassignment to MDC 11 in MS–DRGs 673, 674, and 675 to group with the subset of cases that report the insertion of totally implantable vascular access devices or tunneled vascular access devices as an inpatient procedure for the purposes of hemodialysis for renal failure. We examined claims data from the September 2019 update of the FY 2019 MedPAR file for all cases reporting procedures describing the insertion of TIVADs or tunneled vascular access devices with a principal diagnosis from the T82.4- series in MDC 05 and compared this data to cases in MS–DRGs 673, 674 and 675. The following table shows our findings:
As shown in the table, there were 13,068 cases in MS–DRG 673 with an average length of stay of 11 days and average costs of $26,528. There were 1,025 cases reporting a principal diagnosis describing a mechanical complication of vascular dialysis catheter, with a secondary diagnosis of MCC, and a procedure code for the insertion of a TIVAD or tunneled vascular access device with an average length of stay of 4.6 days and average costs of $14,882. There were 6,592 cases in MS–DRG 674 with an average length of stay of 7.6 days and average costs of $17,491. There were two cases reporting a principal diagnosis describing a mechanical complication of vascular dialysis catheter, with a secondary diagnosis of CC, and a procedure code for the insertion of a TIVAD or tunneled vascular access device with an average length of stay of 6 days and average costs of $15,016. There were 437 cases in MS–DRG 675 with an average length of stay of 3.4 days and average costs of $12,506. There was one case reporting a principal diagnosis describing a mechanical complication of vascular dialysis catheter, without a secondary diagnosis of CC or MCC, and a procedure code for the insertion of a TIVAD or tunneled vascular access device with a length of stay of 3 days and costs of $9,317. Our clinical advisors noted that the average length of stay and average costs of cases reporting a diagnosis describing a mechanical complication of a vascular dialysis catheter and the insertion of a TIVAD or a tunneled vascular access device are lower than for all cases in MS–DRGs 673, 674, and 675, respectively.
For the reasons discussed, we stated in the proposed rule that our clinical advisors believe that it is clinically appropriate for the four ICD–10–CM diagnosis codes describing a mechanical complication of a vascular dialysis catheter to group to the subset of GROUPER logic that recognizes the insertion of totally implantable vascular access devices or tunneled vascular access devices as an inpatient procedure for the purposes of hemodialysis. Therefore, we proposed to reassign ICD–10–CM diagnosis codes T82.41XA, T82.42XA, T82.43XA, and T82.49XA from MDC 05 in MS–DRGs 314, 315, and 316 (Other Circulatory System Diagnoses with MCC, with CC, and without CC/MCC, respectively) to MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract) assigned to MS–DRGs 673, 674, and 675 (Other Kidney and Urinary Tract Procedures with MCC, with CC, and without CC/MCC, respectively) and 698, 699, and 700 (Other Kidney and Urinary Tract Diagnoses with MCC, with CC, and without CC/MCC, respectively).
As discussed in the proposed rule, the procedure code for the insertion of totally implantable vascular access devices was originally added to the GROUPER logic of DRG 315 (Other Kidney and Urinary Tract O.R. Procedures), the predecessor DRG of MS–DRGs 673, 674, and 675, when combined with principal diagnoses specifically describing renal failure, recognizing that these devices are inserted as an inpatient procedure for the purposes of hemodialysis. Our clinical advisors believe the four ICD–10–CM diagnosis codes describing a mechanical complication of a vascular dialysis catheter are clearly clinically related to diagnosis codes that describe renal failure because the complicated vascular dialysis catheter described by these diagnosis codes would not be in place if hemodialysis was not indicated. Therefore, our clinical advisors believe that it is clinically appropriate for the four ICD–10–CM diagnosis codes describing a mechanical complication of a vascular dialysis catheter to group to
After consideration of the public comments received, we are finalizing our proposal to reassign ICD–10–CM diagnosis codes T82.41XA, T82.42XA, T82.43XA, and T82.49XA from MDC 05 in MS–DRGs 314, 315, and 316 (Other Circulatory System Diagnoses with MCC, with CC, and without CC/MCC, respectively) to MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract) assigned to MS–DRGs 673, 674, and 675 (Other Kidney and Urinary Tract Procedures with MCC, with CC, and without CC/MCC, respectively) and 698, 699, and 700 (Other Kidney and Urinary Tract Diagnoses with MCC, with CC, and without CC/MCC, respectively) under the ICD–10 MS–DRGs Version 38, effective October 1, 2020.
In reviewing ICD–10–CM codes E10.22, E11.22, and E13.22 describing diabetes mellitus with diabetic chronic kidney disease, we noted that related ICD–10–CM diagnosis code E09.22 (Drug or chemical induced diabetes mellitus with diabetic chronic kidney disease) is also not included in the current list of diagnosis codes included in the special logic in MS–DRGs 673, 674, and 675 for certain MDC 11 diagnoses reported with procedure codes for the insertion of tunneled or totally implantable vascular access devices, and therefore we included E09.22 in our review. ICD–10–CM assumes a causal relationship between diabetes mellitus and chronic kidney disease. According to the ICD–10–CM Official Guidelines for Coding and Reporting, the word “with” or “in” should be interpreted to mean “associated with” or “due to” when it appears in a code title, the Alphabetic Index (either under a main term or subterm), or an instructional note in the Tabular List, meaning these conditions should be coded as related even in the absence of provider documentation explicitly linking them, unless the documentation clearly states the conditions are unrelated. To code diabetic chronic kidney disease in ICD–10–CM, instructional notes direct to “code first any associated diabetic chronic kidney disease” (that is, E09.22, E10.22, E11.22, and E13.22) with a second code from subcategory of N18 listed after the diabetes code to specify the stage of chronic kidney disease. Recognizing that coding guidelines instruct to code E09.22, E10.22, E11.22, and E13.22 before codes that specify the stage of chronic kidney disease, our clinical advisors recommended adding diabetic codes E09.22, E10.22, E11.22, and E13.22 when reported with a secondary diagnosis of either N18.5 Chronic kidney disease, stage 5) or N18.6 (End stage renal disease) to the special logic in MS–DRGs 673, 674, and 675 since these diagnosis code combinations describe an indication that could require the insertion of a totally implantable vascular access device or a tunneled vascular access device to allow access to the patient's blood for hemodialysis purposes.
ICD–10–CM codes T86.11, T86.12, T86.13, and T86.19 describe complications of kidney transplant and are currently assigned to MDC 11. We stated our clinical advisors believe these diagnoses are also indications for hemodialysis and these cases represent a distinct, recognizable clinical group similar to those cases in the subset of cases assigned to the special logic in MS–DRGs 673, 674, and 675 when reported with procedure codes describing the insertion of totally implantable vascular access devices or tunneled vascular access devices for hemodialysis.
To summarize, we proposed to add ICD–10–CM codes E09.22, E10.22, E11.22, and E13.22, when reported with a secondary diagnosis of N18.5 or N18.6, to the list of principal diagnosis codes in the subset of GROUPER logic in MS–DRGs 673, 674, and 675 that recognizes the insertion of totally implantable vascular access devices or tunneled vascular access devices as an inpatient procedure for the purposes of hemodialysis. We also proposed to add ICD–10–CM codes T86.11, T86.12, T86.13, and T86.19 to the list of principal diagnosis codes in this subset of GROUPER logic in MS–DRGs 673, 674, and 675.
After consideration of the public comments received, we are finalizing our proposal to add ICD–10–CM codes E09.22, E10.22, E11.22, and E13.22, when reported with a secondary diagnosis of N18.5 or N18.6, to the list of principal diagnosis codes in the subset of GROUPER logic in MS–DRGs 673, 674, and 675. We are also finalizing our proposal to add ICD–10–CM codes T86.11, T86.12, T86.13, and T86.19 to the list of principal diagnosis codes in this subset of GROUPER logic in MS–DRGs 673, 674, and 675.
Lastly, we reviewed the current list of 20 MDC 11 diagnoses assigned to the special logic in MS–DRGs 673, 674, and 675 when reported with procedure codes for the insertion of tunneled or totally implantable vascular access devices. The list of MDC 11 diagnosis codes currently included in the special logic of MS–DRGs 673, 674, and 675 are found in the following table:
As stated in the proposed rule, our clinical advisors pointed out that ICD–10–CM codes I12.9, I13.10, N18.1, N18.2, N18.3, N18.4, and N18.9 do not describe renal failure and they do not describe indications that would generally require the insertion of totally implantable vascular access devices or tunneled vascular access devices for the purposes of hemodialysis. Our advisors noted hemodialysis replicates the function of the kidneys. In cases of acute kidney failure and anuria, hemodialysis is indicated to prevent urea and other waste material from building up in the blood until the kidneys return to normal function. A diagnosis of chronic kidney disease stages 1 through 4, however, means the kidneys still have the ability to filter waste and extra fluid out of the blood. Dialysis is not often initiated in chronic kidney disease until the chronic kidney disease progresses to stage 5 or ESRD, which is defined as when kidney function drops to 15 percent or less. Our clinical advisors stated that these seven codes do not describe indications requiring the insertion of totally implantable vascular access devices or tunneled vascular access devices for hemodialysis and recommended these codes be removed from the special logic in MS–DRGs 673, 674, and 675.
We examined claims data from the September 2019 update of the FY 2019 MedPAR file for MS–DRGs 673, 674, and 675 for this subset of cases to determine if there were any cases that reported one of the seven ICD–10–CM codes in the special logic of MS–DRGs 673, 674, and 675 that do not necessarily describe indications requiring the insertion of totally implantable vascular access devices or tunneled vascular access devices for hemodialysis, the frequency with which they were reported and the relative resource use as compared with all cases assigned to the special logic in MS–DRGs 673, 674, and 675. The following table shows our findings:
As shown by the table, for MS–DRG 673, we identified a total of 7,391 cases assigned to the special logic within this MS–DRG with an average length of stay of 12.1 days and average costs of $28,273. Of these 7,391 cases in the subset of MS–DRG 673, there were 34 cases describing insertion of a TIVAD or tunneled vascular access device with a principal diagnosis of I12.9, I13.10, N18.1, N18.2, N18.3, N18.4, or N18.9 with an average length of stay of 14.2 days and average costs of $27,844. For MS–DRG 674, we identified a total of 3,055 cases assigned to the special logic within this MS–DRG with an average length of stay of 7.8 days and average costs of $17,107. Of these 3,055 cases in the subset of MS–DRG 674, there were 30 cases describing insertion of a TIVAD or tunneled vascular access device with a principal diagnosis of I12.9, I13.10, N18.1, N18.2, N18.3, N18.4, or N18.9 with an average length of stay of 7.2 days and average costs of $11,227. For MS–DRG 675, we identified a total of 58 cases assigned to the special logic within this MS–DRG with an average length of stay of 6.1 days and average costs of $12,582. Of these 58 cases in the subset of MS–DRG 675, there was one case describing insertion of a TIVAD or tunneled vascular access device with a principal diagnosis of I12.9, I13.10, N18.1, N18.2, N18.3, N18.4, or N18.9 with a length of stay of 4 days and costs of $6,549. Overall, for MS–DRGs 673, 674 and 675, there were a relatively small number of cases reporting a principal diagnosis of I12.9, I13.10, N18.1, N18.2, N18.3, N18.4, or N18.9 and a procedure code describing the insertion of a TIVAD or tunneled vascular access device demonstrating that these conditions are not typically addressed by insertion of these devices.
As stated previously, TIVADs and tunneled vascular access devices may be inserted for a variety of principal diagnoses. We stated in the proposed rule that our clinical advisors believe that continuing to include these seven diagnoses that are not specific to renal failure or that do not otherwise describe indications requiring the insertion of totally implantable vascular access devices or tunneled vascular access devices for hemodialysis would not maintain clinical coherence with other cases in this subset of cases in MS–DRGs 673, 674, and 675. Therefore, for the reasons stated, we proposed to remove ICD–10–CM codes I12.9, I13.10, N18.1, N18.2, N18.3, N18.4, and N18.9 from the subset of GROUPER logic in MS–DRGs 673, 674, and 675 that recognizes the insertion of totally implantable vascular access devices or tunneled vascular access devices as an inpatient procedure for the purposes of hemodialysis.
As discussed in the proposed rule, ICD–10–CM diagnosis codes N17.0,
After consideration of the public comments received, we are finalizing our proposal to remove ICD–10–CM codes I12.9, I13.10, N18.1, N18.2, N18.3, N18.4, and N18.9 from the subset of GROUPER logic in MS–DRGs 673, 674, and 675 that recognizes the insertion of totally implantable vascular access devices or tunneled vascular access devices as an inpatient procedure for the purposes of hemodialysis under the ICD–10 MS–DRGs Version 38, effective October 1, 2020.
As discussed in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32524), we received a request to review the GROUPER logic in MDC 17. The requester stated that cases reporting the introduction of a high dose chemotherapy agent, or reporting a chemotherapy principal diagnosis with a secondary diagnosis describing acute leukemia, are assigned to medical MS–DRGs 837 (Chemotherapy with Acute Leukemia as Secondary Diagnosis or with High Dose Chemotherapy Agent with MCC), MS–DRG 838 (Chemotherapy with Acute Leukemia as Secondary Diagnosis with CC or High Dose Chemotherapy Agent), and MS–DRG 839 (Chemotherapy with Acute Leukemia as Secondary Diagnosis without CC/MCC). However, when procedure codes describing the placement of an inferior vena cava (IVC) filter, namely 06H03DZ (Insertion of intraluminal device into inferior vena cava, percutaneous approach), are also reported with the same codes describing the introduction of a high dose chemotherapy agent or report a chemotherapy principal diagnosis with a secondary diagnosis describing acute leukemia, the cases are assigned to surgical MS–DRGs 829 and 830 (Myeloproliferative Disorders or Poorly Differentiated Neoplasms with Other Procedure with and without CC/MCC, respectively). According to the requestor, the additional resources used by the hospital to place an IVC filter should not result in assignment to lower-weighted MS–DRGs.
As stated in the proposed rule, the ICD–10–PCS codes that describe the insertion of an infusion device or the insertion of an intraluminal device into the inferior vena cava are listed in the following table.
We stated our analysis of this grouping issue confirmed that, when procedure code 06H03DZ (Insertion of intraluminal device into inferior vena cava, percutaneous approach) is reported with a procedure code describing the introduction of a high dose chemotherapy agent, or when it is reported with a chemotherapy principal diagnosis code with a secondary diagnosis code describing acute leukemia, these cases group to surgical MS–DRGs 829 and 830. ICD–10–PCS procedure code 06H03DZ identifies the placement of an IVC filter and is designated as an extensive O.R. procedure for purposes of MS–DRG assignment. We then examined the GROUPER logic for medical MS–DRGs 837, 838 and 839. The GROUPER logic for MS–DRGs 837, 838, and 839 is defined by a principal diagnosis of chemotherapy identified with ICD–10–CM diagnosis codes Z08 (Encounter for follow-up examination after completed treatment for malignant neoplasm), Z51.11 (Encounter for antineoplastic chemotherapy) or Z51.112 (Encounter for antineoplastic immunotherapy) along with a secondary diagnosis of acute leukemia or a procedure code for the introduction of a high dose
We refer the reader to the ICD–10 MS-DRG Version 37 Definitions Manual (which is available via the internet on the CMS website at:
We examined claims data from the September 2019 update of the FY 2019 MedPAR file for all cases in MS–DRGs 829 and 830 and for cases reporting the insertion of an IVC filter (procedure codes 06H00DZ, 06H03DZ, and 06H04DZ) with a procedure code describing the introduction of a high dose chemotherapy agent, or with a chemotherapy principal diagnosis code with a secondary diagnosis code describing acute leukemia. Our findings are shown in the following table.
As shown in the table, there were a total of 1,697 cases with an average length of stay of 9.2 days and average costs of $24,188 in MS–DRG 829. Of those 1,697 cases, there were 18 cases reporting procedure code 06H03DZ with a procedure code describing the introduction of a high dose chemotherapy agent, or with a chemotherapy principal diagnosis code with a secondary diagnosis code describing acute leukemia with an average length of stay of 25.6 days and average costs of $83,861. We noted that there were no cases reporting procedure codes 06H00DZ or 06H04DZ. For MS–DRG 830, there were a total of 311 cases with an average length of stay of 2.9 days and average costs of $10,885. We found zero cases in MS–DRG 830 reporting a procedure code for the insertion of an IVC filter with a procedure code describing the introduction of a high dose chemotherapy agent, or with a chemotherapy principal diagnosis code with a secondary diagnosis code describing acute leukemia. Based on the claims data, the cases reporting procedure code 06H03DZ with a
We also reviewed the claims data for MS–DRGs 837, 838, and 839. Our findings are shown in the following table.
As shown in the table, there were a total of 1,776 cases with an average length of stay of 17 days and average costs of $40,667 in MS–DRG 837. There were a total of 1,172 cases with an average length of stay of 7.3 days and average costs of $16,594 in MS–DRG 838. There were a total of 810 cases with an average length of stay of 5 days and average costs of $10,994 in MS–DRG 839. Based on the claims data, the cases reporting procedure code 06H03DZ with a procedure code describing the introduction of a high dose chemotherapy agent, or with a chemotherapy principal diagnosis code with a secondary diagnosis code describing acute leukemia again have higher average costs ($83,861 versus $40,667, $16,594, and $10,994 respectively) and a longer average length of stay (25.6 days versus 17 days, 7.3 days and 5 days, respectively) than all the cases in MS–DRG 837, 838, and 839. We stated our clinical advisors reviewed the claims data and noted there were only a small number of cases reporting procedure code 06H03DZ with a procedure code describing the introduction of a high dose chemotherapy agent, or with a chemotherapy principal diagnosis code with a secondary diagnosis code describing acute leukemia, and believe there may have been other factors contributing to the higher costs for these cases. Our clinical advisors stated the procedure to insert an IVC filter is not surgical in nature and recommended further analysis.
We performed further analysis on the other ICD–10–PCS codes describing the insertion of a device into the inferior vena cava to identify if they have a similar extensive O.R. designations and noted inconsistencies among the O.R. and non-O.R. designations. In Version 37 of the ICD–10 MS–DRGs, ICD–10–PCS procedure codes 06H003T, 06H003Z, 06H033T, 06H033Z, and 06H043Z identify the insertion of an infusion device into the inferior vena cava with various approaches and are classified as Non-O.R. procedures. ICD–10–PCS procedure codes 06H00DZ, 06H03DZ, and 06H04DZ identify the insertion of an intraluminal device into the inferior vena cava (IVC filter procedure) with various approaches and are classified as extensive O.R. procedures. We stated that our clinical advisors indicated that codes 06H00DZ, 06H03DZ, and 06H04DZ describing the insertion of an intraluminal device into the inferior vena cava do not require the resources of an operating room, that the procedure to insert an IVC filter is not surgical in nature and that these procedures are comparable to the related ICD–10–PCS procedure codes that describe the insertion of infusion devices into the inferior vena cava that are currently designated as Non-O.R. procedures. We stated our clinical advisors believe that, given the similarity in factors such as complexity, resource utilization, and lack of a requirement for anesthesia administration between all procedures describing insertion of a device into the inferior vena cava, it would be more appropriate to designate these three ICD–10–PCS codes describing the insertion of an intraluminal device into the inferior vena cava as Non-O.R. procedures. Therefore, we proposed to remove ICD–10–PCS procedure codes 06H00DZ, 06H03DZ, and 06H04DZ from the FY 2021 ICD–10 MS–DRG Version 38 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS–DRG Index as O.R. procedures. Under this proposal, these procedures would no longer impact MS–DRG assignment.
The GROUPER logic assignment for each diagnosis code as a principal diagnosis is for grouping purposes only. As discussed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41227), because the diagnoses are codes listed under the heading of “Principal Diagnosis” in the ICD–10 MS–DRG Definitions Manual, it may appear to indicate that these codes are to be reported as a principal diagnosis for assignment to these MS–DRGs. However, the Definitions Manual display of the GROUPER logic assignment for each diagnosis code does not correspond to coding guidelines for reporting the principal diagnosis. The MS–DRG logic must specifically require a condition to group based on whether it is reported as a principal diagnosis or a secondary diagnosis, and consider any procedures that are reported, in addition to consideration of the patient's age, sex and discharge status in order to affect the MS–DRG assignment. In other words, cases will group according to the GROUPER logic, regardless of any coding guidelines or coverage policies. It is the Medicare Code Editor (MCE)
With regard to the comments about the implications for reimbursement, we note that the goals of changing the designation of procedures from non-O.R. to O.R., or vice versa, are to better clinically represent the resources involved in caring for these patients and to enhance the overall accuracy of the system. Therefore, decisions to change an O.R. designation are based on whether such a change would accomplish those goals and not whether the change in designation would impact the payment in a particular direction.
Our clinical advisors reviewed the commenters' concerns and continue to support changing the O.R. designation of procedures describing insertion of an intraluminal device into the inferior vena cava performed via a percutaneous approach for consistency with the other procedure codes describing the insertion of a device into the inferior vena cava that are currently designated as non-O.R procedures because, as commenters noted in their own comments, inferior vena cava filters are most often placed in Interventional Radiology suites. The resources involved in furnishing these procedures are consistent with non-O.R. procedures and our clinical advisors noted it is not uncommon for anesthesia to be used in the radiology suite. Our clinical advisors also disagree with the assertion that these procedures are dissimilar to procedures describing the insertion of infusion devices into the inferior vena cava and believe that these procedures involve similar technical complexity.
Our clinical advisors do, however, concur with the commenters that while the procedure to insert an IVC filter is not surgical in nature, procedures describing the insertion of an intraluminal device into the inferior vena cava performed via an open or a percutaneous endoscopic approach could require greater resources than a procedure describing insertion of an intraluminal device into the inferior vena cava performed via a percutaneous approach. As such, we believe that at this time it would be appropriate to take additional time to further examine the relevant clinical factors and similarities in resource consumption between procedures describing the insertion of an intraluminal device into the inferior vena cava performed via an open or a percutaneous endoscopic approach. As discussed in section II.E.11. of the preamble of this final rule, we are exploring alternatives on how we may restructure the current O.R. and non-O.R. designations for procedures by leveraging the detail that is now available in the ICD–10 claims data. We continue to develop our process and methodology, and will provide more detail in future rulemaking.
Therefore, after consideration of the public comments we received, and for the reasons stated above, under the ICD–10 MS–DRGs Version 38, effective October 1, 2020, we are (1) finalizing our proposal to change the designation of ICD–10–PCS procedure code 06H03DZ from O.R. procedure to non-O.R. procedure and (2) maintaining the O.R. designation of procedure codes 06H00DZ and 06H04DZ. Accordingly, procedure codes 06H00DZ and 06H04DZ will continue to impact MS–DRG assignment.
We annually conduct a review of procedures producing assignment to MS–DRGs 981 through 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) or MS–DRGs 987 through 989 (Non-Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) on the basis of volume, by procedure, to see if it would be appropriate to move cases reporting these procedure codes out of these MS–DRGs into one of the surgical MS–DRGs for the MDC into which the principal diagnosis falls. The data are arrayed in two ways for comparison purposes. We look at a frequency count of each major operative procedure code. We also compare procedures across MDCs by volume of procedure codes within each MDC. We use this information to determine which procedure codes and diagnosis codes to examine. We identify those procedures occurring in conjunction with certain principal diagnoses with sufficient frequency to justify adding them to one of the surgical MS–DRGs for the MDC in which the diagnosis falls. We also consider whether it would be more appropriate to move the principal diagnosis codes into the MDC to which the procedure is currently assigned.
In addition to this internal review, we also consider requests that we receive to examine cases found to group to MS–DRGs 981 through 983 or MS–DRGs 987 through 989 to determine if it would be appropriate to add procedure codes to one of the surgical MS DRGs for the MDC into which the principal diagnosis falls or to move the principal diagnosis to the surgical MS DRGs to which the procedure codes are assigned.
Based on the results of our review of the claims data from the September 2019 update of the FY 2019 MedPAR file, as well as our review of the requests that we received to examine cases found to group to MS–DRGs 981 through 983 or MS–DRGs 987 through 989, we proposed to move the cases reporting the procedures and/or principal diagnosis codes described in this section of this rule from MS–DRGs 981 through 983 or MS–DRGs 987 through 989 into one of the surgical MS–DRGs for the MDC into which the principal diagnosis or procedure is assigned.
As discussed in the proposed rule, we received a request to reassign cases reporting a principal diagnosis of a horseshoe abscess with a procedure involving open drainage of perineum subcutaneous tissue and fascia from MS–DRGs 987, 988, and 989 (Non-Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) to MS–DRGs 356, 357, and 358 (Other Digestive System O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 06. ICD–10–CM diagnosis code K61.31 (Horseshoe abscess) is used to report a horseshoe abscess and is currently assigned to MDC 06 (Diseases and Disorders of the Digestive System). A horseshoe abscess is a specific type of ischiorectal abscess caused by an abscessed anal gland located in the posterior midline of the anal canal with suppuration found in the ischiorectal fossae. ICD–10–PCS procedure code 0J9B0ZZ (Drainage of perineum subcutaneous tissue and fascia, open approach) may be reported to describe drainage of an abscess in the ischiorectal space and is currently assigned to MDC 08 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue), MDC 09 (Diseases and Disorders of the Skin, Subcutaneous Tissue and Breast), MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs) and MDC 24 (Multiple Significant Trauma).
We stated in the proposed rule that our analysis of this grouping issue confirmed when a horseshoe abscess is reported as a principal diagnosis with ICD–10–PCS procedure code 0J9B0ZZ, these cases group to MS–DRGs 987, 988, and 989. As previously noted, whenever there is a surgical procedure reported on the claim that is unrelated to the MDC to which the case was assigned based on the principal diagnosis, it results in an MS–DRG assignment to a surgical class referred to as “unrelated operating room procedures”.
We first examined the claims data to identify cases reporting procedure code 0J9B0ZZ with a principal diagnosis of K61.31 that are currently grouping to MS–DRGs 987, 988, and 989. Our findings are shown in this table:
As previously noted, the requester asked that we reassign these cases to MS–DRGs 356, 357, and 358. We therefore examined the data for all cases in MS–DRGs 356, 357, and 358. Our findings are shown in this table:
We stated while our clinical advisors noted that the average length of stay and average costs of cases in MS–DRGs 356, 357, and 358 are higher than the average length of stay and average costs for the small subset of cases reporting procedure code 0J9B0ZZ and a principal diagnosis code of K61.31 in MS–DRGs 987, 988, and 989, they believe that the procedure is clearly clinically related to the principal diagnosis and is a logical accompaniment of the diagnosis. Therefore, they believe it is clinically appropriate for the procedure to group to the same MS–DRGs as the principal diagnosis.
Therefore, we proposed to add ICD–10–PCS procedure code 0J9B0ZZ to MDC 06 in MS–DRGs 356, 357, and 358. Under this proposal, cases reporting procedure code 0J9B0ZZ in conjunction with a principal diagnosis from MDC 06, such as diagnosis code K61.31, would group to MS–DRGs 356, 357, and 358.
After consideration of the public comments received, we are finalizing our proposal to add ICD–10–PCS procedure code 0J9B0ZZ to MDC 06 in MS–DRGs 356, 357, and 358.
We received a request to reassign cases reporting a principal diagnosis of acquired deformity of chest and rib with a procedure involving the placement of a biological or synthetic material that supports or strengthens the body part from MS–DRGs 981, 982, and 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) to MS–DRGs 515, 516, and 517 (Other Musculoskeletal System and Connective Tissue O.R. Procedures, with MCC, with CC, and without CC/MCC, respectively) in MDC 08.
As discussed in the proposed rule, ICD–10–CM diagnosis code M95.4 (Acquired deformity of chest and rib) is used to report this condition and is currently assigned to MDC 08 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue). ICD–10–PCS procedure codes 0WU807Z (Supplement chest wall with autologous tissue substitute, open approach), 0WU80JZ (Supplement chest wall with synthetic substitute, open approach) and 0WU80KZ (Supplement chest wall with nonautologous tissue substitute, open approach) may be reported to describe procedures to supplement or reinforce the chest wall with biologic or synthetic material. ICD–10–PCS procedure codes 0WU807Z and 0WU80KZ are currently assigned to MDC 04 (Diseases and Disorders of the Respiratory System). We noted that ICD–10–PCS procedure code 0WU80JZ is already assigned to MDC 08 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue) as well as MDC 04 (Diseases and Disorders of the Respiratory System), so these cases already group to MS–DRGs 515, 516, and 517 when reported with a principal diagnosis of ICD–10–CM diagnosis code M95.4.
We stated in the proposed rule that our analysis of this grouping issue confirmed that when diagnosis code M95.4 is reported as a principal diagnosis with ICD–10–PCS procedure codes 0WU807Z or 0WU80KZ, these cases group to MS–DRGs 981, 982, and 983. As noted in the previous discussion, whenever there is a surgical procedure reported on the claim that is unrelated to the MDC to which the case was assigned based on the principal diagnosis, it results in an MS–DRG assignment to a surgical class referred to as “unrelated operating room procedures”.
We examined the claims data to identify cases reporting procedure codes 0WU807Z or 0WU80KZ with principal diagnosis code M95.4 that are currently grouping to MS–DRGs 981, 982, and 983. Our analysis showed one case reporting a principal diagnosis of code M95.4 with procedure code 0WU807Z, with a length of stay of 2.0 days and average costs of $11,594 in MS–DRG 983. We found zero cases in MS–DRGs 981 and 982 reporting procedure codes 0WU807Z or 0WU80KZ and a principal diagnosis of M95.4.
We also examined the data for cases in MS–DRGs 515, 516, and 517, and our findings are shown in this table.
While there was only one case reporting procedure codes 0WU807Z or 0WU80KZ with principal diagnosis M95.4 in MS–DRGs 981, 982, and 983, we stated our clinical advisors reviewed this request and believe that the cases involving procedures of chest wall supplementation with a principal diagnosis of acquired deformity of chest and rib represent a distinct, recognizable clinical group similar to those cases in MS–DRGs 515, 516, and 517, and that procedures reporting 0WU80JZ and 0WU80KZ are clearly related to the principal diagnosis code. They believe that it is clinically appropriate for the three ICD–10–PCS codes describing procedures to supplement or reinforce the chest wall with biologic or synthetic material to group to the same MS–DRGs as the principal diagnoses.
Therefore, we proposed to add ICD–10–PCS procedure codes 0WU807Z and 0WU80KZ to MDC 08 in MS–DRGs 515, 516, and 517. Under this proposal, cases reporting procedure codes 0WU807Z or 0WU80KZ in conjunction with a principal diagnosis code from MDC 08 would group to MS–DRGs 515, 516, and 517.
After consideration of the public comments we received, we are finalizing our proposal to add ICD–10–PCS procedure codes 0WU807Z and 0WU80KZ to MDC 08 in MS–DRGs 515, 516, and 517.
As discussed in the proposed rule, we received a request to reassign cases for hepatic malignancy when reported with procedures involving the embolization of a hepatic artery from MS–DRGs 987, 988, and 989 (Non-Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) to MS–DRGs 423, 424, and 425 (Other Hepatobiliary or Pancreas Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 08.
We stated in the proposed rule that ICD–10–PCS procedure code 04V33DZ (Restriction of hepatic artery with intraluminal device, percutaneous approach) may be reported to describe embolization procedures to narrow or partially occlude a hepatic artery with an intraluminal device and is currently assigned to MDC 05 (Diseases and Disorders of the Circulatory System). ICD–10–PCS procedure code 04L33DZ (Occlusion of hepatic artery with intraluminal device, percutaneous approach) may be reported to describe embolization procedures to completely close off a hepatic artery with an intraluminal device and is currently assigned to MDC 05 (Diseases and Disorders of the Circulatory System) and MDC 06 (Diseases and Disorders of the Digestive System).
The requestor did not provide an ICD–10–CM diagnosis code in its request so we reviewed ICD–10–CM diagnosis codes in the C00 through D49 code range to identify conditions that describe hepatic malignancies. We
Our analysis of this grouping issue confirmed that, when one of the fourteen hepatic malignancy ICD–10–CM diagnosis codes previously listed is reported as a principal diagnosis with ICD–10–PCS procedure code 04L33DZ, these cases group to MS–DRGs 987, 988, and 989. However, we noted that when one of these fourteen hepatic malignancy ICD–10–CM diagnosis codes is reported as a principal diagnosis with ICD–10–PCS procedure code 04V33DZ, these cases currently group to MS DRGs 981, 982, and 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively). As noted in the previous discussion, whenever there is a surgical procedure reported on the claim that is unrelated to the MDC to which the case was assigned based on the principal diagnosis, it results in an MS–DRG assignment to a surgical class referred to as “unrelated operating room procedures”.
To understand the resource use for the subset of cases reporting procedure code 04V33DZ with a principal diagnosis of hepatic malignancy that are currently grouping to MS–DRGs 981, 982, and 983, we examined claims data for the average length of stay and average costs for these cases. Our findings are shown in the following table:
We then examined the claims data to identify cases reporting procedure code 04L33DZ reported with a principal diagnosis of hepatic malignancy that are currently grouping to MS–DRGs 987, 987, and 989. Our findings are shown in the following table:
We also examined the data for cases in MS–DRGs 423, 424, and 425, and our findings are shown in the following table:
While the average lengths of stay of cases in MS–DRGs 423, 424, and 425 are longer than the average lengths of stay for the subset of cases reporting procedure codes 04V33DZ or 04L33DZ and a principal diagnosis of hepatic malignancy, the average costs of these same cases are generally similar. We stated our clinical advisors also believe that these procedures are clearly related to the principal diagnoses, as they are an appropriate treatment for a number of hepatobiliary diagnoses, including cancer and it is clinically appropriate for the procedures to group to the same MDC as the principal diagnoses.
Therefore, we proposed to add ICD–10–PCS procedure codes 04V33DZ and 04L33DZ to MDC 07 in MS–DRGs 423, 424 and 425. Under this proposal, cases reporting procedure codes 04V33DZ or 04L33DZ in conjunction with a principal diagnosis code for a hepatic malignancy from MDC 07 would group to MS–DRGs 423, 424 and 425.
After consideration of the public comments received, we are finalizing our proposal to add ICD–10–PCS procedure codes 04V33DZ and 04L33DZ to MDC 07 in MS–DRGs 423, 424 and 425.
We received a request to reassign cases for hemoptysis when reported with a procedure describing percutaneous embolization of an upper artery with an intraluminal device from MS–DRGs 981, 982, and 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) to MS–DRGs 163, 164, and 165 (Major Chest Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 04. As discussed in the proposed rule, hemoptysis is the expectoration of blood from some part of the respiratory tract. ICD–10–CM diagnosis code R04.2 (Hemoptysis) is used to report this condition and is currently assigned to MDC 04 (Diseases and Disorders of the Respiratory System). ICD–10–PCS procedure code 03LY3DZ (Occlusion of upper artery with intraluminal device, percutaneous approach) may be reported to describe percutaneous embolization of an upper artery with an intraluminal device and is currently assigned to MDC 05 (Diseases and Disorders of the Circulatory System), MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs) and MDC 24 (Multiple Significant Trauma).
Our analysis of this grouping issue confirmed that when a procedure describing percutaneous embolization of an upper artery with an intraluminal device (such as ICD–10–PCS procedure code 03LY3DZ) is reported with a principal diagnosis from MDC 04, such as R04.2, these cases group to MS–DRGs 981, 982, and 983. We stated during our review of this issue, we also examined claims data for similar procedures 03LY0DZ (Occlusion of upper artery with intraluminal device, open approach) and 03LY4DZ (Occlusion of upper artery with intraluminal device, percutaneous endoscopic approach) and noted the same pattern. As noted in the previous discussion, whenever there is a surgical procedure reported on the claim that is unrelated to the MDC to which the case was assigned based on the principal diagnosis, it results in an MS–DRG assignment to a surgical class referred to as “unrelated operating room procedures”.
We examined the claims data to identify cases reporting procedure codes 03LY0DZ, 03LY3DZ or 03LY4DZ with a principal diagnosis from MDC 04 that are currently grouping to MS–DRGs 981, 982, and 983. Our findings are shown in this table:
As indicated earlier, the requestor suggested that we move ICD–10–PCS procedure code 03LY3DZ to MS–DRGs 163, 164, and 165. We stated, however, our clinical advisors believe that, within MDC 04, procedure codes describing percutaneous embolization of an upper artery with an intraluminal device are more clinically aligned with the procedure codes assigned to MS–DRGs 166, 167, and 168 (Other Respiratory System O.R. Procedures with MCC, with CC and without CC/MCC, respectively), as these procedures would not be considered major chest procedures. Therefore, we examined claims data to identify the average length of stay and average costs for cases assigned to MS–DRGs 166, 167 and 168. Our findings are shown in the following table.
While our clinical advisors noted that the average costs of cases in MS–DRGs 166, 167, and 168 are lower than the average costs for the subset of cases reporting procedure codes 03LY0DZ, 03LY3DZ or 03LY4DZ and a principal diagnosis code from MDC 04, they believe that these procedures are clearly related to the principal diagnoses as these procedures are appropriate for certain respiratory tract diagnoses. We stated that therefore, it is clinically appropriate for the procedures to group to the same MDC as the principal diagnoses.
Therefore, we proposed to add ICD–10–PCS procedure codes 03LY0DZ, 03LY3DZ and 03LY4DZ to MDC 04 in MS–DRGs 166, 167, and 168. Under this proposal, cases reporting procedure codes 03LY0DZ, 03LY3DZ or 03LY4DZ in conjunction with a principal diagnosis code from MDC 04 such as hemoptysis (R04.2) would group to MS–DRGs 166, 167, and 168.
While we agree that the ICD–10–PCS Official Guidelines for Coding and Reporting define the root operation “control” as “stopping or attempting to stop, postprocedural or other acute bleeding”, the guidelines also state that if a more definitive root operation is required to stop the bleeding then the more definitive root operation is coded instead of “control”. That is, when embolization is performed to stop acute postprocedural or other acute bleeding of a tubular body part, the more definitive root operations that should be coded in those instances are restriction (if the intent is to partially close) or occlusion (if the intent is to completely occlude) the tubular body part, and not the root operation “control”. We encourage this commenter to review the posted ICD–10–PCS Guidelines on the CMS website at:
As stated in the proposed rule, ICD–10–CM diagnosis code R04. 2 (Hemoptysis) is currently assigned to MDC 04 (Diseases & Disorders of the Respiratory System), not MDC 05 (Diseases & Disorders of the Circulatory System). We proposed to add these procedures to MDC 04, to address the matter of these procedures producing assignment to MS–DRGs 981 through 983 when coded with this diagnosis.
We note that under this proposal ICD–10–PCS procedure codes 03LY0DZ, 03LY3DZ and 03LY4DZ will continue to also be assigned to several MS–DRGs in three other MDCs (including MDC 05 (Diseases & Disorders of the Circulatory System)) as discussed in the proposed rule. With the exception of the pre-
Our clinical advisors continue to believe that these procedures are also clearly related to ICD–10–CM diagnosis code R04.2 (Hemoptysis) assigned to MDC 04 and believe that it is appropriate to add these procedures to MDC 04. Therefore, after consideration of the public comments received, we are finalizing our proposal to add ICD–10–PCS procedure codes 03LY0DZ, 03LY3DZ and 03LY4DZ to MDC 04 in MS–DRGs 166, 167, and 168.
As discussed in the proposed rule, we received a request to reassign cases for acquired coagulation factor deficiency when reported with a procedure describing the complete occlusion of an artery with an intraluminal device from MS–DRGs 981, 982, and 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) to MS–DRGs 252, 253 and 254 (Other Vascular Procedures with MCC, with CC, and without CC/MCC, respectively) or 270, 271, and 272 (Other Major Cardiovascular Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 05 (Diseases and Disorders of the Circulatory System). The requestor asked that we reassign ICD–10–CM diagnosis code D68.4 (Acquired coagulation factor deficiency) from MDC 16 (Diseases and Disorders of Blood, Blood Forming Organs, Immunologic Disorders) in MS–DRG 813 (Coagulation Disorders), to MDC 05. The requestor provided the following list of 59 ICD–10–PCS procedure codes describing the complete occlusion of an artery with an intraluminal device in its request for consideration to reassign the ICD–10–CM diagnosis code for acquired coagulation factor deficiency to MDC 05. The requester noted that the diagnosis of Hemorrhage, not elsewhere classified
We stated our analysis of this grouping issue confirmed that, when diagnosis code D68.4 is reported as a principal diagnosis with one of the 59 ICD–10–PCS procedure codes provided by the requestor, these cases group to MS–DRGs 981, 982, and 983. As noted in the previous discussion, whenever there is a surgical procedure reported on the claim that is unrelated to the MDC to which the case was assigned based on the principal diagnosis, it results in an MS–DRG assignment to a surgical class referred to as “unrelated operating room procedures”. We examined the claims data to identify cases involving the 59 procedure codes in MDC 05 reported with a principal diagnosis of code D68.4 that are currently grouping to MS–DRGs 981, 982, and 983. Our analysis showed one case reported a principal diagnosis of D68.4 with a procedure code in MDC 05, with a length of stay of 2.0 days and costs of $21,890 in MS–DRG 981. We found zero cases in MS–DRGs 982 and 983 reporting a procedure code from MDC 05 and a principal diagnosis of code D68.4.
Overall, for MS–DRGs 981, 982 and 983, there was a total of one case reporting a principal diagnosis of acquired coagulation factor deficiency with any of the procedures from MDC 05 provided by the requestor, demonstrating that acquired coagulation factor deficiency is not typically corrected surgically by occlusion of an artery with an intraluminal device.
As discussed in the proposed rule, we also examined the data for cases in MS–DRG 813, and our findings are shown in this table:
As shown in this table, there were a total of 16,680 cases in MS–DRG 813, with an average length of stay of 4.7 days and average costs of $11,286. In MS–DRG 813, we found 142 cases reporting a principal diagnosis of an acquired coagulation factor deficiency with an average length of stay of 6.41 days and average costs of $17,822. We note that the average costs for the subset of cases in MS–DRG 813 reporting a principal diagnosis of an acquired coagulation factor deficiency are higher than the average costs of all cases that currently group to MS–DRG 813.
We are clarifying in this final rule that cases reporting a principal diagnosis of acquired coagulation factor deficiency group to MS–DRGs 813, which is the medical MS–DRG that contains coagulation disorders, in the absence of a surgical procedure. We note that every diagnosis code is assigned to a medical MS–DRG to define the logic of the MS–DRG either as a principal or secondary diagnosis. As discussed in section II.E.12.a., certain procedure codes may affect the MS–DRG and result in a surgical MS–DRG assignment. Cases reporting a principal diagnosis of acquired coagulation factor deficiency group to MS–DRGs 799, 800 and 801 (Splenectomy with MCC, with CC, and without CC/MCC, respectively) or MS–DRGs 802, 803, and 804 (Other O.R. Procedures of the Blood and Blood Forming Organs with MCC, with CC, and without CC/MCC, respectively) in the presence of a surgical procedure such as the procedures listed by the requestor. We refer the reader to the ICD–10 MS–DRG Version 37 Definitions Manual for complete documentation of the logic for case assignment to surgical MS–DRGs 799, 800, 801, 802, 803, and 804 and to medical MS–DRG 813 (which is available via the internet on the CMS website at:
However, as stated in the proposed rule, our clinical advisors believe that diagnosis code D68.4 describes acquired bleeding disorders in which the affected person lacks the necessary coagulation factors for proper clot formation and wound healing, and therefore, is most clinically aligned with the diagnosis codes assigned to MDC 16 (where it is currently assigned). Our clinical advisors further note that a diagnosis of an acquired bleeding disorder is not comparable to conditions described by the ICD–10–CM code R58 (Hemorrhage, not elsewhere classified) as suggested by the requestor. Diagnoses described by codes from Chapter 18 (Symptoms, Signs and Abnormal Clinical and Laboratory Findings) of ICD–10–CM, such as R58, can be the result of a variety of underlying conditions, or describe conditions of an unexplained etiology. We stated that as an ill-defined condition, our clinical advisors do not believe it is appropriate to equate this diagnosis code with a bleeding disorder. Therefore, we did not propose to reassign ICD–10–CM diagnosis code D68.4 from MDC 16 to MDC 05.
After consideration of the public comments we received, we are finalizing our proposal to maintain the assignment of ICD–10–CM diagnosis code D68.4 in MDC 16.
We received a request to consider adding cases for a hemorrhage of the nose when reported with a procedure describing percutaneous arterial embolization to MDC 03 (Disease and Disorders of the Ear, Nose, Mouth and Throat) in MS–DRGs 133 and 134 (Other Ear, Nose, Mouth and Throat O.R. Procedures with CC/MCC and without CC/MCC, respectively). ICD–10–CM diagnosis code R04.0 (Epistaxis) is used to describe a hemorrhage of the nose or “nosebleed” and is currently assigned to MDC 03. ICD–10–PCS procedure codes describing percutaneous arterial embolization may be reported with procedure codes 03LM3DZ (Occlusion of right external carotid artery with intraluminal device, percutaneous approach), 03LN3DZ (Occlusion of left external carotid artery with intraluminal device, percutaneous approach), or 03LR3DZ (Occlusion of face artery with intraluminal device, percutaneous approach) and are currently assigned to several MS–DRGs in five MDCs as illustrated in the table.
According to the requestor, when diagnosis code R04.0 is reported as a principal diagnosis with any one of the procedure codes describing a percutaneous arterial embolization (03LM3DZ, 03LN3DZ, or 03LR3DZ), these cases are grouping to MS–DRGs 981, 982, and 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively).
As stated in the proposed rule, our analysis of this grouping issue confirmed that, when epistaxis (ICD–10–CM diagnosis code R04.0) is reported as a principal diagnosis with ICD–10–PCS procedure codes 03LM3DZ, 03LN3DZ, or 03LR3DZ, these cases group to MS–DRGs 981, 982, and 983. The reason for this grouping is because whenever there is a surgical procedure reported on a claim that is unrelated to the MDC to which the case was assigned based on the principal diagnosis, it results in an MS–DRG assignment to a surgical class referred to as “unrelated operating room procedures.”
For our review of this grouping issue and the request to have cases reporting procedure codes 03LM3DZ, 03LN3DZ, or 03LR3DZ added to MDC 03 in MS–DRGs 133 through 134, we first examined claims data from September 2019 update of the FY 2019 MedPAR file for cases reporting ICD–10–PCS procedure codes 03LM3DZ, 03LN3DZ, or 03LR3DZ with a principal diagnosis of R04.0 from MDC 03 that currently group to MS–DRGs 981 through 983. Our findings are shown in the following table.
We then examined the claims data to identify the average length of stay and average costs for all cases in MS–DRGs 133 and 134. Our findings are shown in the table.
As shown in the table, for MS–DRG 133, there were a total of 1,757 cases with an average length of stay of 5.6 days and average costs of $15,337. For MS–DRG 134, there were a total of 849 cases with an average length of stay of 2.5 days and average costs of $9,512. Our clinical advisors believe that procedure codes 03LM3DZ, 03LN3DZ, and 03LR3DZ are appropriate procedures to treat commonly occurring ear, nose, and throat bleeding diagnoses and expressed support for these procedure codes to group to MDC 03.
We noted that, as discussed in section II.D.4 of the preamble of the proposed rule and section II.E.4. of this final rule, we proposed to delete MS–DRGs 133 and 134 and create new MS–DRGs 143, 144, and 145 (Other Ear, Nose, Mouth and Throat O.R. Procedures with MCC, with CC, and without CC/MCC, respectively). Therefore, we proposed to add ICD–10–PCS procedure codes 03LM3DZ, 03LN3DZ, and 03LR3DZ to MDC 03 in new MS–DRGs 143, 144, and 145, if finalized. Under this proposal, cases reporting ICD–10–PCS procedure codes 03LM3DZ, 03LN3DZ, or 03LR3DZ with a principal diagnosis from MDC 03 would group to new MS–DRGs 143, 144, and 145.
The following table reflects our simulation for ICD–10–PCS procedure codes 03LM3DZ, 03LN3DZ, and 03LR3DZ in new MS–DRGs 143, 144, and 145.
As explained in the proposed rule, when conducting the review of procedures producing assignment to MS–DRGs 981 through 983 or MS–DRGs 987 through 989, the objective is to identify those procedures occurring in conjunction with certain principal diagnoses with sufficient frequency to justify adding them to one of the surgical MS–DRGs for the MDC in which the diagnosis falls, or to move the principal diagnosis codes to the MDC in which the procedure falls.
As stated in the proposed rule, ICD–10–CM diagnosis code R04.0 (Epistaxis) is used to describe a hemorrhage of the nose or “nosebleed” and is currently assigned to MDC 03 (Diseases & Disorders of the Ear, Nose, Mouth & Throat), not MDC 05 (Diseases & Disorders of the Circulatory System). We proposed to add these procedures to MDC 03, to address the matter of these procedures producing assignment to MS–DRGs 981 through 983 when performed for a diagnosis of epistaxis.
We note that under this proposal ICD–10–PCS procedure codes 03LM3DZ, 03LN3DZ, and 03LR3DZ will continue to also be assigned to several MS–DRGs in five other MDCs (including MDC 05 (Diseases & Disorders of the Circulatory System)) as discussed in the proposed rule. With the exception of the pre-MDC, assignment to MDCs is driven by the principal diagnosis and not by the procedure. We also note that according
Therefore, after consideration of the public comments we received, we are finalizing our proposal to add ICD–10–PCS procedure codes 03LM3DZ, 03LN3DZ, and 03LR3DZ to MDC 03 in new MS–DRGs 143, 144, and 145. We refer the reader to section II.E.4. of this final rule for the comments regarding our proposal to create new MS–DRGs 143, 144, and 145, as well as our finalization of that proposal.
As discussed in the proposed rule, during our review of the cases that group to MS–DRGs 981 through 983, we noted that when several ICD–10–PCS procedure codes describing revision or removal of synthetic substitute in the peritoneal cavity are reported in conjunction with ICD–10–CM diagnosis codes in MDC 01 (Diseases and Disorders of the Nervous System), such as complications of intracranial shunts, the cases group to MS–DRGs 981 through 983. ICD–10–PCS procedure codes 0WWG0JZ (Revision of synthetic substitute in peritoneal cavity, open approach), 0WWG4JZ (Revision of synthetic substitute in peritoneal cavity, percutaneous endoscopic approach), and 0WPG0JZ (Removal of synthetic substitute from peritoneal cavity, open approach) are currently assigned to MDC 06 (Diseases and Disorders of the Digestive System) in MS–DRGs 356, 357, and 358 (Other Digestive System O.R. Procedures with MCC, with CC, and without CC/MCC, respectively).
As stated in the proposed rule, we examined cases that reported a principal diagnosis in MDC 01 and procedure code 0WWG0JZ, 0WWG4JZ, or 0WPG0JZ that currently group to MS–DRGs 981 through 983. Our findings are shown in the following table.
Within MDC 01, our clinical advisors believe that these procedures, which describe revision or removal of synthetic substitute in peritoneal cavity, are most clinically similar to those in MS–DRGs 031, 032, and 033 (Ventricular Shunt Procedures with MCC, with CC, and without CC/MCC, respectively). We therefore examined the data for all cases in MS–DRGS 031, 032, and 033.
The average costs for the subset of cases in MS–DRGs 981, 982, and 983 that report procedures describing revision or removal of synthetic substitute in the peritoneal cavity with a principal diagnosis from MDC 01 are lower than the average costs of cases in MS–DRGs 031, 032, and 033 as a whole, and the average length of stay for this subset of cases is also lower in two of the MS–DRGs and higher in one. Our clinical advisors believe the procedure codes describing revision or removal of synthetic substitute in the peritoneal cavity are clearly related to the principal diagnosis codes describing complications of intracranial shunts and, therefore, it is clinically appropriate for the procedures to group to the same MS–DRGs (031, 032, and 033) as the principal diagnoses describing complications of intracranial shunts. We proposed to add ICD–10–PCS procedure codes 0WWG0JZ, 0WWG4JZ, and 0WPG0JZ to MDC 01 (Diseases and Disorders of the Nervous System) in MS–DRGs 031, 032, and 033.
After consideration of the public comments received, we are finalizing our proposal to add ICD–10–PCS procedure codes 0WWG0JZ, 0WWG4JZ, and 0WPG0JZ to MDC 01 (Diseases and Disorders of the Nervous System) in MS–DRGs 031, 032, and 033.
As discussed in the proposed rule, during our review of the cases currently grouping to MS–DRGs 981 through 983, we noted that when procedure codes describing Totally Implantable Vascular Access Devices (TIVADs) are reported with ICD–10–CM diagnosis codes assigned to MDC 04 (Diseases and Disorders of the Respiratory System), MDC 06 (Diseases and Disorders of the Digestive System), MDC 07 (Diseases and Disorders of the Hepatobiliary System and Pancreas), MDC 08 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue), MDC 13 (Diseases and Disorders of the Female Reproductive System), or MDC 16 (Diseases and Disorders of Blood, Blood Forming Organs, Immunologic Disorders), the cases group to MS–DRGs 981 through 983.
TIVADs are port catheter devices inserted for chemotherapy treatment. The nine ICD–10–PCS procedure codes describing TIVADs are listed in this table.
We examined claims data to identify the average length of stay and average costs for cases in MS–DRGs 981 through 983 reporting ICD–10–PCS procedure codes describing TIVADs in conjunction with a principal diagnosis from MDCs 04, 06, 07, 08, 13, or 16. Our findings are shown in the following table.
We stated our clinical advisors believe that cases reporting TIVADs with a principal diagnosis in MDCs 04, 06, 07, 08, 13, or 16 would most suitably group to the MS–DRGs describing “Other” procedures for each of these MDCs. These TIVAD procedures cannot be assigned to the specific surgical MS–DRGs within these MDCs since they are not performed on the particular anatomical areas described by each of the specific surgical MS–DRGs. For example, in MDC 04, TIVADs could not be assigned to MS–DRGs 163, 164, and 165 (Major Chest Procedures with MCC, with CC, and without CC/MCC, respectively) because they are not major chest procedures.
We therefore examined the claims data for each of these MS–DRGs. Our findings are shown in the following table.
In the proposed rule, we noted that while the average costs and length of stay are similar in some cases and in some cases vary between the subset of cases currently grouping to MS–DRGs 981 through 983 and the cases currently grouping to the MS–DRGs describing “Other” procedures as set forth in the table, our clinical advisors noted that TIVADs are frequently inserted in order to administer chemotherapy for a variety of malignancies. MDCs 04, 06, 07, 08, 13, or 16 each contain ICD–10–CM diagnosis codes that describe a variety of malignancies. Therefore, our clinical advisors believe that the TIVAD procedures are clearly related to the principal diagnoses within MDCs 04, 06, 07, 08, 13, and 16. For the reasons previously indicated, our clinical advisors believe that cases reporting TIVADs with a principal diagnosis in MDCs 04, 06, 07, 08, 13, or 16 would mostly suitably group to the MS–DRGs describing “Other” procedures for each of these MDCs.
Therefore, we proposed to add the nine ICD–10–PCS procedure codes describing TIVADs as set forth in the table to the MS–DRGs describing “Other” procedures within each of MDCs 04, 06, 07, 08, 13, and 16, specifically: MDC 04 in MS–DRGs 166, 167, and 168, MDC 06 in MS–DRGs 356, 357, and 358, MDC 07 in MS–DRGs 423, 424, and 425, MDC 08 in MS–DRGs 515, 516, and 517, MDC 13 in MS–DRGs 749 and 750, and MDC 16 in MS–DRGs 802, 803, and 804. Under this proposal, cases reporting a principal diagnosis in MDCs 04, 06, 07, 08, 13, or 16 with a TIVAD procedure would group to the respective MS–DRGs within the MDC.
After consideration of the public comments received, we are finalizing our proposal to add the nine ICD–10–PCS procedure codes describing TIVADs as set forth in the table to the MS–DRGs describing “Other” procedures within each of MDCs 04, 06, 07, 08, 13, and 16, specifically: MDC 04 in MS–DRGs 166, 167, and 168, MDC 06 in MS–DRGs 356, 357, and 358, MDC 07 in MS–DRGs 423, 424, and 425, MDC 08 in MS–DRGs 515, 516, and 517, MDC 13 in MS–DRGs 749 and 750, and MDC 16 in MS–DRGs 802, 803, and 804.
As discussed in the proposed rule, for FY 2020, we received a request to reassign cases involving diagnoses that identify multiple significant trauma combined with internal fixation of joint procedures from MS–DRGs 981, 982, and 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) to MS–DRGs 957, 958, and 959 (Other O.R. Procedures for Multiple Significant Trauma with MCC, with CC, and without CC/MCC, respectively) in MDC 24 (Multiple Significant Trauma). The requestor provided an example of several ICD–10–CM diagnosis codes that together described multiple significant trauma in conjunction with ICD–10–PCS procedure codes beginning with the prefix “0RH” and “0SH” that describe internal fixation of upper and lower joints. The requestor provided several suggestions to address this reassignment, including: Adding all ICD–10–PCS procedure codes from MDC 08 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue) with the exception of codes that group to MS–DRG 956 (Limb Reattachment, Hip and Femur Procedures for Multiple Significant
For FY 2021, as the first step of the comprehensive analysis needed to assess the reassignment of cases involving diagnoses that identify multiple significant trauma combined with internal fixation of joint procedures, we stated in the proposed rule, our clinical advisors reviewed the list of procedure codes in the “0RH” and “0SH” code ranges, as suggested by the requestor. Our clinical advisors identified 161 ICD–10–PCS codes, which are listed in table 6P.1f., that they believe are clinically related to diagnoses assigned to MDC 24. We examined the claims data for cases that would be assigned to MDC 24 based on their diagnoses, but currently group to MS–DRGs 981 through 983 based on the presence of procedure codes in the “0RH” and “0SH” code ranges. Our findings are shown in this table.
In the proposed rule, we noted that we found only 8 claims, with varying lengths of stay and average costs. We also examined the claims data for all cases in MS–DRGs 957, 958, and 959. Our findings are shown in this table.
The very small number of claims we identified for cases that would be assigned to MDC 24 based on their diagnoses, but grouped to MS–DRGs 981 through 983 based on the presence of procedure codes in the “0RH” and “0SH” code ranges, have varying resource use relative to MS–DRGs 957, 958, and 959 as a whole. The average costs of the cases found in MS–DRGs 981–983 range from $7,015 to $72,331 with average lengths of stay ranging from 3 days to 14 days. The average costs of the cases found in MS–DRGs 957–959 range from $20,563 to $54,771 with average lengths of stay ranging from 5 days to 13.2 days. We stated given the nature of trauma cases, the resource use would be expected to vary based on the nature of the patient's injuries. In addition, as noted, our clinical advisors believe that these procedure codes are clinically related to the diagnoses in MDC 24. Therefore, we proposed to add the 161 ICD–10–PCS codes shown in Table 6P.1f associated with the proposed rule to MDC 24 in MS–DRGs 957, 958, and 959. Under this proposal, cases that would be assigned to MDC 24 based on their diagnoses, that also report one of the 161 ICD–10–PCS codes included in table 6P.1f, will group to MDC 24 in MS–DRGs 957, 958, and 959, rather than to MS–DRGs 981 through 983.
In the proposed rule, we noted that while we made this proposal to address the grouping issue for internal fixation of upper and lower joint procedures identified by the requestor, our clinical advisors believe that a more comprehensive analysis is required within MDC 24 to address the differences in severity level of diagnoses as well as the assignment of procedure codes to the MS–DRGs within MDC 24. We plan to continue this comprehensive analysis in future rulemaking.
After consideration of the public comments received, we are finalizing our proposal to add the 161 ICD–10–PCS codes shown in Table 6P.1f associated with this final rule to MDC 24 in MS–DRGs 957, 958, and 959. Accordingly, cases that would be assigned to MDC 24 based on their diagnoses, that also report one of the 161 ICD–10–PCS codes included in table 6P.1f, will group to MDC 24 in MS–DRGs 957, 958, and 959 under the ICD–10 MS–DRGs Version 38, effective October 1, 2020. As noted in the proposed rule, we plan to continue this comprehensive analysis in future rulemaking.
We also review the list of ICD–10–PCS procedures that, when in combination with their principal diagnosis code, result in assignment to MS–DRGs 981 through 983, or 987 through 989, to ascertain whether any of those procedures should be reassigned from one of those two groups of MS–DRGs to the other group of MS–DRGs based on average costs and the length of stay. We look at the data for trends such as shifts in treatment practice or reporting practice that would make the resulting MS–DRG assignment illogical. If we find these shifts, we would propose to move cases to keep the MS–DRGs clinically similar or to provide payment for the cases in a similar manner. Generally, we move only those procedures for which we have an adequate number of discharges to analyze the data.
Based on the results of our review of claims data in the September 2019 update of the FY 2019 MedPAR file, we proposed to reassign three procedure codes from MS–DRGs 981, 982, and 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, without CC/MCC, respectively) to MS–DRGs 987, 988, and 989 (Non-Extensive Procedure Unrelated to Principal Diagnosis with MCC, with CC, without CC/MCC, respectively). We also proposed to reassign three procedure codes from MS–DRGs 987, 988, and 989 (Non-Extensive Procedure Unrelated to Principal Diagnosis with MCC, with CC, without CC/MCC, respectively) to MS–DRGs 981, 982, and 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, without CC/MCC, respectively).
In conducting our review of the request to designate ICD–10–PCS procedure code 0W3G0ZZ (Control bleeding in peritoneal cavity, open approach) as an O.R. procedure (as described in section II.E.11.c.5. of this final rule), our clinical advisors noted that ICD–10–PCS codes 0W3G3ZZ (Control bleeding in peritoneal cavity, percutaneous approach) and 0W3G4ZZ (Control bleeding in peritoneal cavity, percutaneous endoscopic approach) are currently assigned to MS–DRGs 981 through 983 when reported with a principal diagnosis that is not assigned to one of the MDCs to which these procedure codes are assigned. We stated that our clinical advisors believe that these procedures would be more appropriately assigned to MS–DRGs 987 through 989 because they are on average less complex and difficult than the same procedure performed by an open approach, and therefore should be assigned to the “less extensive” DRG. Therefore, we proposed to reassign ICD–10–PCS codes 0W3G3ZZ and 0W3G4ZZ from MS–DRGs 981 through 983 to 987 through 989.
After consideration of the public comments we received, we are finalizing our proposal to reassign ICD–10–PCS codes 0W3G3ZZ and 0W3G4ZZ from MS–DRGs 981 through 983 to 987 through 989, effective October 1, 2020.
In conducting our review of the request to designate ICD–10–PCS procedure codes 0WBC4ZX (Excision of mediastinum, percutaneous endoscopic approach, diagnostic) and 0WBC3ZX (Excision of mediastinum, percutaneous approach, diagnostic) as O.R. procedures (as described in section II.E.11.c.1. of this final rule), our clinical advisors noted that ICD–10–PCS code 0WBC0ZX (Excision of mediastinum, open approach, diagnostic) is currently assigned to MS–DRGs 981 through 983 when reported with a principal diagnosis that is not assigned to one of the MDCs to which the procedure code is assigned. We stated that our clinical advisors believe that this procedure would be more appropriately assigned to MS–DRGs 987 through 989 because this assignment is consistent with the assignment of other procedures that describe excision of the mediastinum performed by an open, percutaneous, or percutaneous endoscopic approach, and is consistent with the proposal for procedure codes 0WBC4ZX and 0WBC3ZX (with diagnostic qualifier) as discussed in section II.E.11.c.1. of this final rule. Therefore, we proposed to reassign ICD–10–PCS code 0WBC0ZX from MS–DRGs 981 through 983 to 987 through 989.
After consideration of the public comments we received, we are finalizing our proposal to reassign ICD–10–PCS code 0WBC0ZX from MS–DRGs
As discussed in the proposed rule, we received a request to examine cases reporting a procedure describing the open excision of gastrointestinal body parts in the gastrointestinal body system. The requester stated that when procedures describing the open excision of a specific gastrointestinal body part in the gastrointestinal body system are reported with a principal diagnosis such as C49.A3 (Gastrointestinal stromal tumor of small intestine (GIST)), the cases are assigned to MS–DRGs 987, 988, and 989 (Non-Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively). However, when procedures describing the excision of a general gastrointestinal body part in the gastrointestinal body system are reported with the same principal diagnosis of GIST, the cases are assigned to MS–DRGs 981, 982, and 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively). The requestor stated that procedures describing a specific body part value should be assigned to the same MS–DRG as procedures describing a general body part value.
The requestor provided four ICD–10–PCS procedure codes in its request. These four ICD–10–PCS procedure codes, as well as their MDC assignments, are listed in the table:
In the proposed rule, we noted that in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42120 through 42122), we finalized our proposal to move seven ICD–10–CM diagnosis codes describing gastrointestinal stromal tumors (GIST), including C49.A3, from MDC 08 to MDC 06, under the ICD–10 MS–DRGs Version 37, effective October 1, 2019. As a result, cases reporting a principal diagnosis of GIST and a procedure code that is assigned to MDC 06 (such as ICD–10–PCS codes 0DBA0ZZ, 0DBB0ZZ, 0DB80ZZ, and 0DB90ZZ) group to MS–DRGs in MDC 06.
We stated in the proposed rule that our analysis of this grouping issue found that these four ICD–10–PCS codes describing related procedures have dissimilar designations that determine whether and in what way the presence of the procedure impacts the MS–DRG assignment. We noted ICD–10–PCS code 0DB80ZZ is classified as an extensive O.R. procedure and ICD–10–PCS codes 0DB90ZZ, 0DBA0ZZ, and 0DBB0ZZ are classified as non-extensive O.R. procedures. As a result, whenever ICD–10–PCS code 0DB80ZZ is reported with a principal diagnosis that is assigned to a different MDC than the procedure code, the case would be assigned to MS–DRGs 981 through 983. When ICD–10–PCS codes 0DB90ZZ, 0DBA0ZZ, or 0DBB0ZZ are reported with a principal diagnosis that is assigned to a different MDC than the procedure code, the case would be assigned to MS–DRGs 987 through 989.
We examined the claims data to identify cases reporting procedure code 0DB80ZZ that are currently grouping to MS–DRGs 981, 982 and 983. Our findings are shown in this table:
We also examined the claims data to identify cases reporting procedure codes 0DB90ZZ, 0DBA0ZZ, and 0DBB0ZZ that are currently grouping to MS–DRGs 987, 988 and 989. Our findings are shown in this table:
We stated the results of our data analysis indicated that cases reporting procedure codes 0DB90ZZ, 0DBA0ZZ, and 0DBB0ZZ describing the open excision of a specific gastrointestinal body part in MS–DRGs 987, 988, and 989 generally have a longer length of stay and higher average costs when compared to all the cases in their assigned MS–DRG. The subset of cases reporting 0DB90ZZ, 0DBA0ZZ, and 0DBB0ZZ and the subset of cases in MS–DRGs 981, 982 and 983 reporting 0DB80ZZ are more closely aligned in terms of the lengths of stay and average costs. Further we stated, our clinical advisors believed that, given the similarity in resource use required for procedures describing an open excision of a gastrointestinal body part in terms of the use of an operating room, anesthesia and skills required, for clinical coherence and consistency in assignment with ICD–10–PCS code 0DB80ZZ, it would be appropriate to also designate ICD–10–PCS codes 0DB90ZZ, 0DBA0ZZ, and 0DBB0ZZ as extensive O.R. procedures.
Therefore, we proposed to change the designation of ICD–10–PCS codes 0DB90ZZ, 0DBA0ZZ and 0DBB0ZZ from non-extensive O.R. procedures to extensive O.R. procedures for FY 2021. Under this proposal, cases reporting procedure codes 0DB90ZZ, 0DBA0ZZ and 0DBB0ZZ, which are unrelated to the MDC to which the case would otherwise be assigned based on the principal diagnosis, will group to MS–DRGs 981, 982 and 983.
After consideration of the public comments we received, we are finalizing our proposal to change the designation of ICD–10–PCS codes 0DB90ZZ, 0DBA0ZZ and 0DBB0ZZ from non-extensive O.R. procedures to extensive O.R. procedures, effective October 1, 2020.
Under the IPPS MS–DRGs (and former CMS MS–DRGs), we have a list of procedure codes that are considered operating room (O.R.) procedures. Historically, we developed this list using physician panels that classified each procedure code based on the procedure and its effect on consumption of hospital resources. For example, generally the presence of a surgical procedure which required the use of the operating room would be expected to have a significant effect on the type of hospital resources (for example, operating room, recovery room, and anesthesia) used by a patient, and therefore, these patients were considered surgical. Because the claims data generally available do not precisely indicate whether a patient was taken to the operating room, surgical patients were identified based on the procedures that were performed. Generally, if the procedure was not expected to require the use of the operating room, the patient would be considered medical (non-O.R.).
Currently, each ICD–10–PCS procedure code has designations that determine whether and in what way the presence of that procedure on a claim impacts the MS–DRG assignment. First, each ICD–10–PCS procedure code is either designated as an O.R. procedure for purposes of MS–DRG assignment (“O.R. procedures”) or is not designated as an O.R. procedure for purposes of MS–DRG assignment (“non-O.R. procedures”). Second, for each procedure that is designated as an O.R. procedure, that O.R. procedure is further classified as either extensive or non-extensive. Third, for each procedure that is designated as a non-O.R. procedure, that non-O.R. procedure is further classified as either affecting the MS–DRG assignment or not affecting the MS–DRG assignment. We refer to these designations that do affect MS–DRG assignment as “non-O.R. affecting the MS–DRG.” For new procedure codes that have been finalized through the ICD–10 Coordination and Maintenance Committee meeting process and are proposed to be classified as O.R.
We discussed in the FY 2020 IPPS/LTCH PPS proposed rule that as a result of this planned review and potential restructuring, procedures that are currently designated as O.R. procedures may no longer warrant that designation, and conversely, procedures that are currently designated as non-O.R. procedures may warrant an O.R. type of designation. We intend to consider the resources used and how a procedure should affect the MS–DRG assignment. We may also consider the effect of specific surgical approaches to evaluate whether to subdivide specific MS–DRGs based on a specific surgical approach. We plan to utilize our available MedPAR claims data as a basis for this review and the input of our clinical advisors. As part of this comprehensive review of the procedure codes, we also intend to evaluate the MS–DRG assignment of the procedures and the current surgical hierarchy because both of these factor into the process of refining the ICD–10 MS–DRGs to better recognize complexity of service and resource utilization.
We will provide more detail on this analysis and the methodology for conducting this review in future rulemaking. As we noted in the FY 2020 IPPS/LTCH PPS rulemaking, as we continue to develop our process and methodology, as previously noted, we are soliciting recommendations on other factors to consider in our refinement efforts to recognize and differentiate consumption of resources for the ICD–10 MS–DRGs. Therefore, in the FY 2021 proposed rule, we again solicited feedback on what factors or criteria to consider in determining whether a procedure is designated as an O.R. procedure in the ICD–10–PCS classification system for future consideration. We stated commenters should submit their recommendations to the following email address:
In this FY 2021 IPPS/LTCH PPS final rule, we present a summation of the comments we received in response to this discussion in the proposed rule.
In the FY 2021 IPPS/LTCH PPS proposed rule and this final rule, we are addressing requests that we received regarding changing the designation of specific ICD–10–PCS procedure codes from non-O.R. to O.R. procedures, or changing the designation from O.R. procedure to non-O.R. procedure. In this section of the rule we discuss the process that was utilized for evaluating the requests that were received for FY 2021 consideration. For each procedure, our clinical advisors considered—
• Whether the procedure would typically require the resources of an operating room;
• Whether it is an extensive or a nonextensive procedure; and
• To which MS–DRGs the procedure should be assigned.
We note that many MS–DRGs require the presence of any O.R. procedure. As a result, cases with a principal diagnosis associated with a particular MS–DRG would, by default, be grouped to that MS–DRG. Therefore, we do not list these MS–DRGs in our discussion in this section of this rule. Instead, we only discuss MS–DRGs that require explicitly adding the relevant procedure codes to the GROUPER logic in order for those procedure codes to affect the MS–DRG assignment as intended. In cases where we proposed to change the designation of procedure codes from non-O.R. procedures to O.R. procedures, we also proposed one or more MS–DRGs with which these procedures are clinically aligned and to which the procedure code would be assigned.
In addition, cases that contain O.R. procedures will map to MS–DRG 981, 982, or 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) or MS–DRG 987, 988, or 989 (Non-Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) when they do not contain a principal diagnosis that corresponds to one of the MDCs to which that procedure is assigned. These procedures need not be assigned to MS–DRGs 981 through 989 in order for this to occur. Therefore, if requestors included some or all of MS–DRGs 981 through 989 in their request or included MS–DRGs that require the presence of any O.R. procedure, we did not specifically address that aspect in summarizing their request or our response to the request in this section of this rule.
For procedures that would not typically require the resources of an operating room, our clinical advisors determined if the procedure should affect the MS–DRG assignment.
As indicated in the proposed rule, we received several requests to change the designation of specific ICD–10–PCS procedure codes from non-O.R. procedures to O.R. procedures, or to change the designation from O.R. procedures to non-O.R. procedures. In this section of this rule, as we did in the proposed rule, we detail and respond to some of those requests and, further, summarize and respond to the public comments we received in response to our proposals, if applicable. With regard to the remaining requests, as stated in the proposed rule, our clinical advisors believe it is appropriate to consider these requests as part of our comprehensive review of the procedure codes as previously discussed.
One requestor identified three ICD–10–PCS procedure codes that describe endoscopic revision of feeding devices, shown in the following table.
In the ICD–10 MS–DRG Version 37 Definitions Manual, these three ICD–10–PCS procedure codes are currently recognized as O.R. procedures for purposes of MS–DRG assignment. The requestor noted that these procedures would not require the resources of an operating room and that they consume resources comparable to related ICD–10–PCS procedure codes describing the endoscopic insertion of feeding tubes that currently are designated as Non-O.R. procedures.
In the proposed rule, we stated that we agreed with the requestors that these procedures do not typically require the resources of an operating room, and are not surgical in nature. Therefore, we proposed to remove 0DW08UZ, 0DW68UZ, and 0DWD8UZ from the FY 2021 ICD–10 MS–DRGs Version 38 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS–DRG Index as O.R. procedures. We stated in the proposed rule that, under this proposal, these procedures would no longer impact MS–DRG assignment.
After consideration of the public comments we received, we are finalizing our proposal to change the designation of procedure codes 0DW08UZ, 0DW68UZ, and 0DWD8UZ from O.R. procedures to non-O.R. procedures, effective October 1, 2020.
One requestor identified ICD–10–PCS procedure code 0WBC4ZX (Excision of mediastinum, percutaneous endoscopic approach, diagnostic) that describes a percutaneous endoscopic biopsy of the mediastinum that the requestor stated is performed in the operating room under general anesthesia, requires an incision through the chest wall, insertion of a mediastinoscope in the space between the lungs and involves removal of a tissue sample. The requestor recommended that all procedures performed within the mediastinum by an open or percutaneous endoscopic approach, regardless of whether it is a diagnostic or therapeutic procedure, should be designated as O.R. procedures because the procedures require great skill and pose risks to patients due to the structures contained within the mediastinum. The requestor noted that the mediastinum contains loose connective tissue, the heart and great vessels, esophagus, trachea, nerves, and lymph nodes. The requestor further noted that redesignating these procedures from non-O.R. to O.R. would provide compensation for operating room resources and general anesthesia.
We note that under the ICD–10–PCS procedure classification, biopsy procedures are identified by the 7th digit qualifier value “diagnostic” in the code description. In response to the requestor's suggestion that all procedures performed within the mediastinum by an open or percutaneous endoscopic approach, regardless of whether it is a diagnostic or therapeutic procedure should be designated as an O.R. procedure, we examined the following procedure codes:
In the ICD–10 MS–DRGs Definitions Manual Version 37, procedure codes 0WBC0ZX, 0WBC0ZZ, 0WBC3ZZ, and 0WBC4ZZ are currently designated as O.R. procedures, however, procedure codes 0WBC3ZX and 0WBC4ZX are not recognized as O.R. procedures for purposes of MS–DRG assignment. We stated in the proposed rule that we agree with the requestor that procedure code 0WBC4ZX would typically require the resources of an operating room. We further stated that our clinical advisors also agree that procedure code 0WBC3ZX would typically require the resources of an operating room. Therefore, we proposed to add these 2 procedure codes to the FY 2021 ICD–10 MS–DRGs Version 38 Definitions Manual in Appendix E- Operating Room Procedures and Procedure Code/MS–DRG Index as O.R. procedures, assigned to MS–DRGs 166, 167 and 168 (Other Respiratory System O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 04 (Diseases and Disorders of the Respiratory
As previously noted, procedure codes 0WBC0ZX, 0WBC0ZZ, 0WBC3ZZ, and 0WBC4ZZ are currently designated as O.R. procedures. As displayed in the FY 2020 ICD–10 MS–DRGs Version 37 Definitions Manual in Appendix E- Operating Room Procedures and Procedure Code/MS–DRG Index, these procedure codes are assigned to several MS–DRGs across many MDCs. During our process of reviewing potential MDC and MS–DRG assignments for procedure codes 0WBC3ZX and 0WBC4ZX, our clinical advisors recommended that we reassign procedure codes 0WBC0ZZ, 0WBC3ZZ, and 0WBC4ZZ from their current MS–DRG assignments in MDC 04 (Diseases and Disorders of the Respiratory System). Procedure codes 0WBC0ZZ, 0WBC3ZZ, and 0WBC4ZZ are currently assigned to MS–DRGs 163, 164, and 165 (Major Chest Procedures with MCC, with CC, and without CC/MCC, respectively) and procedure code 0WBC0ZX is assigned to MS–DRGs 166, 167 and 168 (Other Respiratory System O.R. Procedures with MCC, with CC, and without CC/MCC, respectively). We stated in the proposed rule that according to our clinical advisors, procedure codes 0WBC0ZZ, 0WBC3ZZ, and 0WBC4ZZ would be more appropriately and clinically aligned with the same MS–DRG assignment as procedure code 0WBC0ZX, which is also consistent with the assignment for other procedures performed on the mediastinum. Therefore, we proposed to reassign procedure codes 0WBC0ZZ, 0WBC3ZZ, and 0WBC4ZZ to MS–DRGs 166, 167 and 168 (Other Respiratory System O.R. Procedures with MCC, with CC, and without CC/MCC, respectively).
Commenters also supported the proposal to reassign procedure codes 0WBC0ZZ, 0WBC3ZZ, and 0WBC4ZZ from MS–DRGs 163, 164, and 165 to MS–DRGs 166, 167, and 168. However, a couple commenters did not agree with the proposal and stated that the open, percutaneous, and endoscopic therapeutic mediastinal excisions should remain distinct from the diagnostic mediastinal procedures. The commenters noted that while the approaches of the procedures are the same, the time, risk and resource utilization is different for the therapeutic and diagnostic procedures. The commenters stated that diagnostic procedures require only a small mediastinal resection, more specifically an incisional biopsy, for diagnostic purposes while the therapeutic mediastinal resection involves the complete resection of large tumors, cysts or masses that may be malignant or benign juxtaposed to critical mediastinal structures. In addition, the commenters reported that therapeutic mediastinal resections will often require more time in the O.R., slightly longer lengths of stay, and more post-operative care due to the invasive nature of the procedures.
While the commenters' asserted that therapeutic mediastinal procedures will often require more time in the O.R., slightly longer lengths of stay, and more post-operative care due to the invasive nature of the procedures, our analysis of claims data found that the average length of stay and the average costs for the diagnostic procedures were greater than those of the therapeutic procedures. We examined data from the September 2019 update of the FY 2019 MedPAR data for both diagnostic and therapeutic mediastinal excision procedures across all MS–DRGs. Our findings are shown in the table below.
As shown in the table, there were a total of 1,141 cases reporting a diagnostic excision of mediastinum procedure with an average length of stay of 8.2 days and average costs of $21,279 and a total of 291 cases reporting a therapeutic excision of mediastinum procedure with an average length of stay of 4.3 days and average costs of $17,267. Our clinical advisors maintain that therapeutic and diagnostic procedures involving excision of the mediastinum are clinically aligned and should be grouped together. However, as noted in prior rule making (84 FR 42148), our clinical advisors recognize that MS–DRGs 163, 164, 165, 166, 167, and 168 may warrant further review and therefore, we plan to begin this more detailed review beginning with our FY 2022 MS–DRG classification analysis of claims data and determine what modifications may need to be considered for future rulemaking.
After consideration of the public comments we received, we are finalizing our proposal to add procedure codes 0WBC4ZX and 0WBC3ZX as O.R. procedures to the FY 2021 ICD–10 MS–DRGs Version 38 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS– DRG Index as O.R. procedures, assigned to MS–DRGs 166, 167, and 168 (Other Respiratory System O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 04 (Diseases and Disorders of the Respiratory System); MS–DRGs 628, 629, and 630 (Other Endocrine, Nutritional and Metabolic O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 10 (Endocrine, Nutritional and Metabolic Diseases and Disorders); MS–DRGs 820, 821, and 822 (Lymphoma and Leukemia with Major O.R. Procedure with MCC, with CC, and without CC/MCC, respectively) and MS–DRGs 826, 827, and 828 (Myeloproliferative Disorders or Poorly Differentiated Neoplasms with Major O.R. Procedure with MCC, with CC, and without CC/MCC, respectively) in MDC 17 (Myeloproliferative Diseases and Disorders, Poorly Differentiated Neoplasms); and to MS–DRGs 987, 988, and 989 (Non-Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC and without MCC/CC, respectively). We are also finalizing our proposal to reassign procedure codes 0WBC0ZZ, 0WBC3ZZ, and 0WBC4ZZ from MS–DRGs 163, 164, and 165 to MS–DRGs 166, 167, and 168, effective FY 2021.
One requestor identified ICD–10–PCS procedure code 3E0L4GC (Introduction of other therapeutic substance into pleural cavity, percutaneous endoscopic approach) that the requestor stated is currently not recognized as an O.R. procedure for purposes of MS–DRG assignment. The requestor noted that talc pleurodesis via video-assisted thoracoscopic surgery (VATS), involves placing a thoracoscope through the chest wall for visualization, then placing a port and injecting talc, doxycycline, or other chemical into the pleural cavity under general anesthesia and should therefore be recognized as an O.R. procedure for purposes of MS–DRG assignment.
We stated in the proposed rule that we agreed with the requestor that ICD–10–PCS procedure code 3E0L4GC typically requires the resources of an operating room. We also note that the AHA published Coding Clinic advice in 2015 that instructed to code both ICD–10–PCS procedure codes 0BJQ4ZZ (Inspection of pleura, percutaneous endoscopic approach) and 3E0L3GC (Introduction of other therapeutic substance into pleural cavity, percutaneous approach) for thoracoscopic chemical pleurodesis. In the publication, code 0BJQ4ZZ, recognized as an O.R. procedure for purposes of MS–DRG assignment, was instructed to be reported for the video-assisted thoracoscopic portion of the procedure since the endoscopic component of the procedure could not be captured by the approach values available at the time. In FY 2018, the approach value “4” Percutaneous Endoscopic was added to the root operation Introduction table 3E0, to capture percutaneous endoscopic administration of a therapeutic substance, meaning that code 0BJQ4ZZ was no longer needed along with code 3E0L3GC to report thoracoscopic chemical pleurodesis. Only code 3E0L4GC is needed to report all components of the procedure. Designating code 3E0L4GC as an O.R. procedure for purposes of MS–DRG assignment classifies the procedure as intended when two codes were needed to fully code the procedure. Therefore, we proposed to add procedure code 3E0L4GC to the FY 2021 ICD–10 MS–DRG Version 38 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS–DRG Index as an O.R. procedure assigned to MS–DRGs 166, 167, and 168 (Other Respiratory System O.R. procedures with MCC, CC, without CC/MCC, respectively) in MDC 04 (Diseases and Disorders of the Respiratory System); and MS–DRG 264 (Other Circulatory System O.R. Procedures) in MDC 05 (Diseases and Disorders of the Circulatory System).
After consideration of the public comments we received, we are finalizing our proposal to change the designation of procedure code 3E0L4GC from non-O.R. procedure to O.R. procedure, effective October 1, 2020.
One requestor identified ICD–10–PCS procedure code 0DB64ZZ (Excision of stomach, percutaneous endoscopic approach) that the requestor stated is currently not recognized as an O.R. procedure for purposes of MS–DRG assignment. The requestor noted that percutaneous endoscopic excisions of gastric lesions and percutaneous endoscopic partial gastrectomies are performed in the operating room under general anesthesia, use comparable resources, and are designated as O.R. procedures. Therefore, the requestor stated that this procedure should also be recognized as O.R. procedure for purposes of MS–DRG assignment.
We stated in the proposed rule that we agreed with the requestor that ICD–10–PCS procedure code 0DB64ZZ typically requires the resources of an operating room. During our review, we also noted that ICD–10–PCS code 0DB64ZX (Excision of stomach, percutaneous endoscopic approach, diagnostic) was not currently recognized as an O.R. procedure. We proposed to add these codes to the FY 2021 ICD–10 MS–DRG Version 38 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS–DRG Index as O.R. procedures assigned to MS–DRGs 326, 327, and 328 (Stomach, Esophageal and Duodenal Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 06 (Diseases and Disorders of the Digestive System); MS–DRGs 619, 620, and 621 (Procedures for Obesity with MCC, with CC, and without CC/MCC, respectively) in MDC 10 (Endocrine, Nutritional and Metabolic Diseases and Disorders); and MS–DRGs 820, 821, and 822 (Lymphoma and Leukemia with Major Procedure with MCC, with CC, and without CC/MCC, respectively), MS–DRGs 826, 827, and 828 (Myeloproliferative Disorders or Poorly Differentiated Neoplasms with Major Procedure with MCC, with CC, and without CC/MCC, respectively), and MS–DRGs 829 and 830 (Myeloproliferative Disorders or Poorly Differentiated Neoplasms with Other Procedure with CC/MCC and without CC/MCC, respectively) in MDC 17 (Myeloproliferative Diseases and Disorders, Poorly Differentiated Neoplasms).
After consideration of the public comments we received, we are finalizing our proposal to change the designation of procedure codes 0DB64ZZ and 0DB64ZX from non-O.R. procedures to O.R. procedures, effective October 1, 2020.
As discussed in the proposed rule, during our review, we also noted that ICD–10–PCS procedure code 0DB64Z3 (Excision of stomach, percutaneous endoscopic approach, vertical (sleeve)), which is clinically similar to ICD–10–PCS codes 0DB64ZZ and 0DB64ZX, is designated as an O.R. procedure assigned to the same MS–DRGs as we proposed for ICD–10–PCS codes 0DB64ZZ and 0DB64ZX, as well as to MS–DRG 264 (Other Circulatory System O.R. Procedures) in MDC 05 (Diseases and Disorders of the Circulatory System); MS–DRGs 907, 908, and 909 (Other O.R. Procedures for Injuries, with MCC, with CC, and without CC/MCC, respectively) in MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs); and MS–DRGs 957, 958, and 959 (Other O.R. procedures for multiple significant trauma, with MCC, with CC, and without CC/MCC, respectively) in MDC 24 (Multiple Significant Trauma). We stated our clinical advisors believe that principal diagnoses in MDCs 05 and 21 are typically not indications for procedures describing percutaneous endoscopic excision of stomach and that ICD–10–PCS procedure code 0DB64Z3 should be assigned to the same MS–DRGs as ICD–10–PCS codes 0DB64ZZ and 0DB64ZX.
We examined claims data from the September 2019 update of the FY 2019 MedPAR file to determine if there were any cases that reported 0DB64Z3 and were assigned to MDC 05, MDC 21, or MDC 24. The following table shows our findings:
We found zero cases in MS–DRGs 957, 958, and 959 reporting 0DB64Z3 and a principal diagnosis in MDC 24 (Multiple Significant Trauma). We stated our analysis demonstrated that diagnoses assigned to MDC 05, MDC 21, and MDC 24 are not typically corrected surgically by percutaneous endoscopic vertical (sleeve) gastrectomy given the small number of cases reporting this procedure in these MDCs. We also stated our clinical advisors believe procedure codes describing the percutaneous endoscopic excision of stomach should have the same MDC assignments in the ICD–10 MS–DRGs Version 38 for coherence. Therefore, we proposed to remove the assignments of code 0DB64Z3 from MS–DRG 264 (Other Circulatory System O.R. Procedures) in MDC 05 (Diseases and Disorders of the Circulatory System); MS–DRGs 907, 908, and 909 (Other O.R. Procedures for Injuries, with MCC, with CC, and without CC/MCC, respectively) in MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs); and MS–DRGs 957, 958, and 959 (Other O.R. procedures for multiple significant trauma, with MCC, with CC, and without CC/MCC, respectively) in MDC 24 (Multiple Significant Trauma).
After consideration of the public comments we received, we are finalizing our proposal to remove the assignments of code 0DB64Z3 from MS–DRG 264 (Other Circulatory System O.R. Procedures) in MDC 05 (Diseases and Disorders of the Circulatory System); MS–DRGs 907, 908, and 909 (Other O.R. Procedures for Injuries, with MCC, with CC, and without CC/MCC, respectively) in MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs); and MS–DRGs 957, 958, and 959 (Other O.R. procedures for multiple significant trauma, with MCC, with CC, and without CC/MCC, respectively) in MDC 24 (Multiple Significant Trauma), effective October 1, 2020.
Lastly, we stated while we were reviewing this request, we noted inconsistencies in how procedures involving the excision of stomach are designated. Excision of stomach codes differ by approach and qualifier. ICD–10–PCS procedure codes describing excision of stomach with similar approaches have been assigned different attributes in terms of designation as an O.R. or Non-O.R. procedure. We identified the following five related codes:
As discussed in the proposed rule, in the ICD–10 MS–DRGs Version 37, these ICD–10–PCS codes are currently recognized as O.R. procedures for purposes of MS–DRG assignment, while similar excision of stomach procedure codes with the same approach but different qualifiers are recognized as Non-O.R. procedures. We stated our clinical advisors indicated that these procedures are not surgical in nature and do not require an incision. Therefore, we proposed to remove ICD–10–PCS procedure codes 0DB63Z3, 0DB63ZZ, 0DB67Z3, 0DB67ZZ, and 0DB68Z3 from the FY 2021 ICD–10 MS–DRG Version 38 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS–DRG Index as O.R. procedures. Under this proposal, these procedures would no longer impact MS–DRG assignment.
Our clinical advisors continue to indicate that these procedures are not surgical in nature and do not require an incision however, after acknowledging the concerns raised by commenters, believe it would be appropriate to take additional time to review the inconsistencies in how procedures involving the excision of stomach are designated. Therefore, after consideration of public comments, we are not finalizing our proposal to remove ICD–10–PCS procedure codes 0DB63Z3, 0DB63ZZ, 0DB67Z3, 0DB67ZZ, and 0DB68Z3 from the FY 2021 ICD–10 MS–DRG Version 38 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS–DRG Index as O.R. procedures. Accordingly, these procedures will continue to impact MS–DRG assignment under the ICD–10 MS–DRGs Version 38, effective October 1, 2020.
One requestor identified six ICD–10–PCS procedure codes that describe procedures involving laparoscopic drainage of peritoneum, peritoneal cavity, and gallbladder that the requestor stated are currently not recognized as O.R. procedures for purposes of MS–DRG assignment. The six procedure codes are listed in the following table:
The requestor stated these procedures would commonly be performed under general anesthesia and require the resources of an operating room. The requestor also noted that similar procedures such as percutaneous endoscopic inspection of gallbladder, percutaneous endoscopic excision of peritoneum and percutaneous endoscopic extirpation of matter from peritoneal cavity are currently classified as O.R. procedures in Version 37 of the ICD–10 MS–DRGs and that the six listed procedure codes should be designated as O.R. procedures due to comparable costs and resource use.
We stated in the proposed rule that we agreed with the requestor that the six ICD–10–PCS procedure codes listed in the table typically require the resources of an operating room. Therefore, to the FY 2021 ICD–10 MS–DRG Version 38 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS–DRG Index, we proposed to add codes 0D9W4ZZ and 0D9W40Z as O.R. procedures assigned to MS–DRGs 356, 357, and 358 (Other Digestive System O.R. Procedures, with MCC, with CC, and without CC/MCC, respectively) in MDC 06 (Diseases and Disorders of the Digestive System); and MS–DRGs 907, 908, and 909 (Other O.R. Procedures for Injuries with MCC, with CC, and without CC/MCC, respectively) in MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs). We also proposed to add codes 0W9G4ZZ and 0W9G40Z as O.R. procedures assigned to MS–DRGs 356, 357, and 358 (Other Digestive System O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 06 (Diseases and Disorders of the Digestive System); MS–DRGs 420, 421, and 422 (Hepatobiliary Diagnostic Procedures, with MCC, with CC, and without CC/MCC, respectively) in MDC 07 (Diseases and Disorders of the Hepatobiliary System and Pancreas); MS–DRGs 673, 674, and 675 (Other Kidney and Urinary Tract Procedures, with MCC, with CC, and without CC/MCC, respectively) in MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract); MS–DRGs 749 and 750 (Other Female Reproductive System Procedures with and without CC/MCC, respectively) in MDC 13 (Diseases and Disorders of the Female Reproductive System); MS–DRGs 802, 803, and 804 (Other O.R. Procedures of the Blood and Blood Forming Organs, with MCC, with CC, and without CC/MCC, respectively) in MDC 16 (Diseases and Disorders of Blood, Blood Forming Organs, Immunologic Disorders); MS–DRGs 820, 821, and 822 (Lymphoma and Leukemia with Major Procedure with MCC, with CC, and without CC/MCC, respectively) and MS–DRGs 826, 827, and 828 (Myeloproliferative Disorders or Poorly Differentiated Neoplasms with Major Procedure with MCC, with CC, and without CC/MCC, respectively) in MDC 17 (Myeloproliferative Diseases and Disorders, Poorly Differentiated Neoplasms); and MS–DRGs 907, 908, and 909 (Other O.R. Procedures for Injuries with MCC, with CC, and without CC/MCC, respectively) in MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs). Lastly, we proposed to add codes 0F944ZZ and 0F9440Z as O.R. procedures assigned to MS–DRGs 408, 409, and 410 (Biliary Tract Procedures Except Only Cholecystectomy with or without C.D.E., with MCC, with CC, and without CC/MCC, respectively) in MDC 07 (Diseases and Disorders of the Hepatobiliary System and Pancreas).
After consideration of the public comments we received, we are finalizing our proposal to change the designation of ICD–10–PCS procedure codes 0D9W4ZZ, 0D9W40Z, 0W9G4ZZ 0W9G40Z, 0F944ZZ and 0F9440Z from non-O.R. procedures to O.R. procedures, effective October 1, 2020.
As discussed in the proposed rule, during our review of this request, we identified related ICD–10–PCS procedure code 0F944ZX (Drainage of gallbladder, percutaneous endoscopic approach, diagnostic) that is also currently not recognized as an O.R. procedure for purposes of MS–DRG assignment. We stated that our clinical advisors believe that similar to the six procedure codes submitted by the requester, this procedure typically requires the resources of an operating room and should have the same attributes in Version 38 for coherence. Therefore, we proposed to add code 0F944ZX as an O.R. procedure assigned to MS–DRGs 420, 421 and 422 (Hepatobiliary Diagnostic Procedures, with MCC, with CC, and without CC/MCC, respectively) in MDC 07 (Diseases and Disorders of the Hepatobiliary System and Pancreas) to the FY 2021 ICD–10 MS–DRG Version 38 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS–DRG Index.
After consideration of the public comments we received, we are finalizing our proposal to change the designation of 0F944ZX from non-O.R. procedure to O.R. procedure, effective October 1, 2020.
In the proposed rule, we stated during our review, we also identified the related ICD–10–PCS procedure codes 0F940ZZ (Drainage of gallbladder, open approach), 0F940ZX (Drainage of gallbladder, open approach, diagnostic) and 0F9400Z (Drainage of gallbladder with drainage device, open approach). Our analysis found that the ICD–10–PCS codes describing drainage of gallbladder have dissimilar MDC assignments. Procedure codes 0F940ZZ and 0F940ZX are currently assigned to MS–DRGs 356, 357, and 358 (Other Digestive System O.R. Procedures, with MCC, with CC, and without CC/MCC, respectively) in MDC 06 (Diseases and Disorders of the Digestive System) and MS–DRGs 408, 409, and 410 (Biliary Tract Procedures Except Only Cholecystectomy with or without C.D.E, with MCC, with CC, and without CC/MCC, respectively) in MDC 07 (Diseases and Disorders of the Hepatobiliary System and Pancreas). However, ICD–10–PCS procedure code 0F9400Z is currently assigned to MS–DRGs 408, 409, and 410 (Biliary Tract Procedures Except Only Cholecystectomy with or without C.D.E, with MCC, with CC, and without CC/MCC, respectively) in MDC 07 (Diseases and Disorders of the Hepatobiliary System and Pancreas) alone. We stated our clinical advisors believe that principal diagnoses in MDC 06 are typically not indications for procedures describing the drainage of gallbladder. We examined claims data from the September 2019 update of the FY 2019 MedPAR file to determine if there were any cases that reported procedure codes 0F940ZZ or 0F940ZX and were assigned to MDC 06. We found zero cases in MS–DRGs 356, 357, and 358 reporting code 0F944ZZ or 0F940ZX and a principal diagnosis in MDC 06 (Diseases and Disorders of the Digestive System), demonstrating that diagnoses in MDC 06 are not typically corrected surgically by drainage of the gallbladder. Our clinical advisors believe procedure codes describing the drainage of gallbladder should have the same MDC assignments in Version 38 for coherence. Therefore, we proposed to remove procedure codes 0F940ZZ and 0F940ZX from MS–DRGs 356, 357, and 358 in MDC 06 (Diseases and Disorders of the Digestive System).
After consideration of the public comments we received, we are finalizing our proposal to remove procedure codes 0F940ZZ and 0F940ZX from MS–DRGs 356, 357, and 358 in MDC 06 (Diseases and Disorders of the Digestive System), effective October 1, 2020.
As stated in the proposed rule, our further analysis of this request identified the nine ICD–10–PCS codes in the following table describing drainage of the peritoneum, peritoneal cavity, or gallbladder:
We noted that these procedures are currently classified as extensive O.R. procedures. Our clinical advisors have noted that treatment practices have shifted since the initial O.R. procedure designations. We stated our clinical advisors believe that, given the similarity in factors such as complexity, resource utilization, and requirement for anesthesia administration between procedures describing the drainage of the peritoneum, peritoneal cavity, and gallbladder, it would be more appropriate to designate these nine ICD–10–PCS codes as non-extensive O.R. procedures. Therefore, we also proposed to change the designation of ICD–10–PCS codes 0D9W00Z, 0D9W0ZX, 0D9W0ZZ, 0D9W4ZX, 0W9G00Z, 0W9G0ZZ, 0F9400Z, 0F940ZZ and 0F940ZX from extensive O.R. procedures to non-extensive O.R. procedures for FY 2021.
Also, we are not clear what the commenter means when they state that “the designation of procedure codes describing the open drainage of the peritoneum should depend on how deep the open drainage incision site is”. The peritoneum is defined as the smooth transparent serous membrane that lines the cavity of the abdomen. Procedure codes for the open drainage of the peritoneum are used to describe any procedure where the skin or mucous membrane and any other body layers necessary to expose the peritoneum are cut through to take or let out fluid and/or gases. Any anatomical differences from patient to patient that might factor into the technical complexity of the procedure, such as habitus, would be captured in the ICD–10–CM diagnosis coding.
In the absence of a compelling clinical rationale for maintaining the designation of these procedures as extensive O.R. procedures, our clinical advisors continue to believe that, given the similarity in factors such as complexity, resource utilization, and requirement for anesthesia administration between procedures describing the drainage of the peritoneum, peritoneal cavity, and gallbladder, it would be more appropriate to designate these nine ICD–10–PCS codes as non-extensive O.R. procedures. Therefore, after consideration of the public comments we received, we are finalizing our proposal to change the designation of ICD–10–PCS codes 0D9W00Z, 0D9W0ZX, 0D9W0ZZ, 0D9W4ZX, 0W9G00Z, 0W9G0ZZ, 0F9400Z, 0F940ZZ and 0F940ZX from extensive O.R. procedures to non-extensive O.R. procedures, effective October 1, 2020.
One requestor identified ICD–10–PCS procedure code 0W3G0ZZ (Control bleeding in peritoneal cavity, open approach) that describes a procedure in which the bleeding source within the peritoneal cavity is controlled by cautery, clips, and/or suture through an open abdominal incision with direct visualization of the surgical site, that the requestor stated requires the resources of an operating room and general anesthesia but is currently not recognized as an O.R. procedure for purposes of MS–DRG assignment. The requestor also noted that ICD–10–PCS procedure codes 0W3F0ZZ (Control bleeding in abdominal wall, open approach), 0W3H0ZZ (Control bleeding in retroperitoneum, open approach), and 0W3J0ZZ (Control bleeding in pelvic cavity, open approach) describe procedures to control bleeding in various anatomic sites and are currently classified as O.R. procedures.
We stated in the proposed rule that we agree with the requestor that it would be clinically appropriate to redesignate procedure code 0W3G0ZZ as an O.R. procedure consistent with procedure codes 0W3F0ZZ, 0W3H0ZZ and 0W3J0ZZ, that also describe procedures performed to control bleeding and are designated as O.R. procedures. Therefore, we proposed to add procedure code 0W3G0ZZ to the FY 2021 ICD–10 MS–DRG Version 38 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS–DRG Index as an O.R. procedure assigned to MS–DRG 264 (Other Circulatory O.R. Procedures) in MDC 05 (Diseases and Disorders of the Circulatory System); MS–DRGs 356, 357, and 358 (Other Digestive System O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 06 (Diseases and Disorders of the Digestive System); MS–DRGs 423, 424, and 425 (Other Hepatobiliary or Pancreas O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 07 (Diseases and Disorders of the Hepatobiliary System and Pancreas); MS–DRGs 673, 674, and 675 (Other Kidney and Urinary Tract Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract); MS–DRGs 820, 821, and 822 (Lymphoma and Leukemia with Major O.R. Procedure with MCC, with CC, and without CC/MCC, respectively), MS–DRGs 826, 827, and 828 (Myeloproliferative Disorders or Poorly Differentiated Neoplasms with Major O.R. Procedure with MCC, with CC, and without CC/MCC, respectively), and MS–DRGs 829 and 830 (Myeloproliferative Disorders or Poorly Differentiated Neoplasms with Other Procedure with and without CC/MCC, respectively) in MDC 17 (Myeloproliferative Diseases and Disorders, Poorly Differentiated Neoplasms); MS–DRGs 907, 908, and 909 (Other O.R. Procedures for Injuries with and without CC/MCC, respectively) in MDC 21 ((Injuries, Poisonings and Toxic Effects of Drugs); MS–DRGs 957, 958, and 959 (Other O.R. Procedures for Multiple Significant Trauma, with MCC, with CC, and without CC/MCC, respectively) in MDC 24 (Multiple Significant Trauma) and to MS–DRGs 981, 982 and 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively).
After consideration of the public comments received, we are finalizing our proposal to add ICD–10–PCS procedure code 0W3G0ZZ to the ICD–10 MS–DRG Version 38 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS–DRG Index as an O.R. procedure assigned to the MDCs and MS–DRGs noted earlier in this section, effective October 1, 2020.
As discussed in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32549), one requestor stated that ICD–10–PCS procedure code 0VJS0ZZ (Inspection of penis, open approach) is currently not recognized as an O.R. procedure for purposes of MS–DRG assignment. The requestor noted that there are circumstances that warrant inpatient admission for open exploration of the penis, such as to rule out penile fracture and extravasation due to trauma. The requestor stated their belief that because this procedure involves an open incision for exploration of penile structures and utilizes general anesthesia in the operating room, it would be appropriately classified as an O.R. procedure. In the proposed rule, we stated that we agreed with the requestor that ICD–10–PCS procedure code 0VJS0ZZ typically requires the resources of an operating room. Therefore, we proposed to add ICD–10–PCS procedure code 0VJS0ZZ to the FY 2021 ICD–10 MS–DRG Version 38 Definitions Manual in Appendix E- Operating Room procedures and procedure code/MS–DRG Index as an O.R. procedure assigned to MS–DRGs 709 (Penis Procedures with CC/MCC) and 710 (Penis Procedures without CC/
After consideration of the public comments received, we are finalizing our proposal to add ICD–10–PCS procedure code 0VJS0ZZ (Inspection of penis, open approach) to the FY2021 ICD–10 MS–DRG Version 38 Definitions Manual in Appendix E Operating Room Procedures and Procedure Code/MS–DRG Index as an O.R. procedure to MS–DRGs 709 (Penis Procedures with CC/MCC) and 710 (Penis Procedures without CC/MCC) in MDC 12 (Diseases and Disorders of the Male Reproductive System) for FY2021 effective October 1, 2020.
Under the IPPS MS–DRG classification system, we have developed a standard list of diagnoses that are considered CCs. Historically, we developed this list using physician panels that classified each diagnosis code based on whether the diagnosis, when present as a secondary condition, would be considered a substantial complication or comorbidity. A substantial complication or comorbidity was defined as a condition that, because of its presence with a specific principal diagnosis, would cause an increase in the length-of-stay by at least 1 day in at least 75 percent of the patients. However, depending on the principal diagnosis of the patient, some diagnoses on the basic list of complications and comorbidities may be excluded if they are closely related to the principal diagnosis. In FY 2008, we evaluated each diagnosis code to determine its impact on resource use and to determine the most appropriate CC subclassification (non-CC, CC, or MCC) assignment. We refer readers to sections II.D.2. and 3. of the preamble of the FY 2008 IPPS final rule with comment period for a discussion of the refinement of CCs in relation to the MS–DRGs we adopted for FY 2008 (72 FR 47152 through 47171).
In the FY 2008 IPPS/LTCH PPS final rule (72 FR 47159), we described our process for establishing three different levels of CC severity into which we would subdivide the diagnosis codes. The categorization of diagnoses as a MCC, a CC, or a non-CC was accomplished using an iterative approach in which each diagnosis was evaluated to determine the extent to which its presence as a secondary diagnosis resulted in increased hospital resource use. We refer readers to the FY 2008 IPPS/LTCH PPS final rule (72 FR 47159) for a complete discussion of our approach. Since the comprehensive analysis was completed for FY 2008, we have evaluated diagnosis codes individually when receiving requests to change the severity level of specific diagnosis codes.
We noted in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19235) that with the transition to ICD–10–CM and the significant changes that have occurred to diagnosis codes since the FY 2008 review, we believed it was necessary to conduct a comprehensive analysis once again. Based on this analysis, we proposed changes to the severity level designations for 1,492 ICD–10–CM diagnosis codes and invited public comments on those proposals. As summarized in the FY 2020 IPPS/LTCH PPS final rule, many commenters expressed concern with the severity level designation changes overall and recommended that CMS conduct further analysis prior to finalizing any proposals. After careful consideration of the public comments we received, as discussed further in the FY 2020 final rule, we generally did not finalize our changes to the severity designations for the ICD–10–CM diagnosis codes, other than the changes to the severity level designations for the diagnosis codes in category Z16- (Resistance to antimicrobial drugs) from a non-CC to a CC. We stated that postponing adoption of the comprehensive changes in the severity level designations would allow further opportunity to provide additional background to the public on the methodology utilized and clinical rationale applied across diagnostic categories to assist the public in its review. We refer readers to the FY 2020 IPPS/LTCH PPS final rule (84 FR 42150 through 42152) for a complete discussion of our response to public comments regarding the severity level designation changes for FY 2020.
As discussed in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32550), to provide the public with more information on the CC/MCC comprehensive analysis discussed in the FY 2020 IPPS/LTCH PPS proposed and final rules, CMS hosted a listening session on October 8, 2019. The listening session included a review of the methodology to measure the impact on resource use. It also provided an opportunity for CMS to receive public input on this analysis and to address any questions in order to assist the public in formulating written comments on the current severity level designations for consideration in the FY 2021 rulemaking. We refer readers to
Following the listening session, we further considered the public comments received and reconvened an internal workgroup comprised of clinicians, consultants, coding specialists and other policy analysts to identify guiding principles to apply in evaluating whether changes to the severity level designations of diagnoses are needed and to ensure the severity designations appropriately reflect resource use based on review of the claims data, as well as consideration of relevant clinical factors (for example, the clinical nature of each of the secondary diagnoses and the severity level of clinically similar diagnoses) and improve the overall accuracy of the IPPS payments. In the proposed rule, we stated our goal was to develop a set of guiding principles that, when applied, could assist in determining whether the presence of the specified secondary diagnosis would lead to increased hospital resource use in most instances. The workgroup identified the following nine guiding principles as meaningful indicators of expected resource use by a secondary diagnosis.
• Represents end of life/near death or has reached an advanced stage associated with systemic physiologic decompensation and debility.
• Denotes organ system instability or failure.
• Involves a chronic illness with susceptibility to exacerbations or abrupt decline.
• Serves as a marker for advanced disease states across multiple different comorbid conditions.
• Reflects systemic impact.
• Post-operative condition/complication impacting recovery.
• Typically requires higher level of care (that is, intensive monitoring, greater number of caregivers, additional testing, intensive care unit care, extended length of stay).
• Impedes patient cooperation and/or management of care.
• Recent (last 10 years) change in best practice, or in practice guidelines and review of the extent to which these changes have led to concomitant changes in expected resource use.
We stated in the FY 2021 IPPS/LTCH PPS proposed rule that we plan to continue a comprehensive CC/MCC analysis, using a combination of mathematical analysis of claims data as discussed in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19235) and the application of these guiding principles, and present the findings and proposals in future rulemaking. We invited public comments regarding these guiding principles, as well as other possible ways we could incorporate meaningful indicators of clinical severity. When providing additional feedback or comments, we encouraged the public to provide a detailed explanation of how applying a suggested concept or principle would ensure that the severity designation appropriately reflects resource use for any diagnosis code.
The nine guiding principles are not criteria, intended to turn the analysis into a quantitative exercise, but instead to provide a framework for assessing relevant clinical factors. As patients present with a variety of diagnoses, in examining the secondary diagnoses, we would consider what additional resources are required, above and beyond those that are already being utilized to address the principal diagnosis and/or other secondary diagnoses that might also be present on the claim. The goal of our comprehensive analysis is to create stratification for reimbursing inpatient hospitalization in the fewest amount of categories with the most explanatory power in a clinically cohesive way.
Our intended approach is first, CMS will use these guiding principles in making an initial clinical assessment of the appropriate severity level designation for each ICD–10–CM code as a secondary diagnosis. CMS will then use a mathematical analysis of claims data as discussed in the FY 2020 IPPS/LTCH PPS proposed rule to determine if the presence of the ICD–10–CM code as a secondary diagnosis appears to, or does not appear to, increase hospital resource consumption. There may be instances in which we would decide that the clinical analysis weighs in favor of proposing to maintain or proposing to change the severity designation of an ICD–10–CM code after application of the nine guiding principles.
We do not believe the nine guiding principles would be mostly applicable, or only applicable, to MCC conditions. In applying the nine guiding principles in our review of the appropriate severity level designation, the intention is not to require that a diagnosis code satisfy each principle, or a specific number of principles in assessing whether to designate a secondary diagnosis code as a non-CC versus a CC versus a MCC. Rather, the severity level determinations would be based on the consideration of the clinical factors captured by these principles as well as the empirical analysis of the additional resources associated with the secondary diagnosis.
We wish to clarify that the definition of a “substantial complication or comorbidity” from the MS–DRG Definition Manual that the commenter referenced, is the definition of a CC that was used in Version 8 of the DRGs. In FY 2008, for Version 25 of the MS–DRGs, the diagnoses comprising the CC list were completely redefined and instead each CC was categorized as a major CC or a CC (that is, non-major CC) based on relative resource use. As stated previously, we refer readers to the FY 2008 IPPS/LTCH PPS final rule (72 FR 47159) for a complete discussion of our approach. We also wish to clarify that there is a difference between the non-CC, CC, or MCC designation of an individual diagnosis code and the requirements for GROUPER assignment into a severity split MS–DRG. MS–DRG assignment is a different issue and is based on GROUPER logic and the other codes reported on a claim.
The Medicare GROUPER is for the Medicare population and is not designed to account for all populations like the APR–DRG GROUPER, so we generally do not believe it would be appropriate to use the APR–DRG GROUPER severity of illness and risk of mortality scores to analyze severity levels as they relate to Medicare inpatient prospective payment. In regards to obstetric conditions, given the limited number of cases reporting ICD–10–CM obstetrical codes in the Medicare claims data, we are considering use of datasets other than MedPAR cost data, as we indicated in the FY 2020 IPPS/LTCH PPS final rule
In this FY 2021 IPPS/LTCH PPS final rule, we present a summation of the comments we received for each of the nine guiding principles and our responses to those comments. We thank commenters for sharing their views and their willingness to support CMS in our efforts to continue a comprehensive CC/MCC analysis.
• Represents end of life/near death or has reached an advanced stage associated with systemic physiologic decompensation and debility.
• Denotes organ system instability or failure.
• Involves a chronic illness with susceptibility to exacerbations or abrupt decline.
• Serves as a marker for advanced disease states across multiple different comorbid conditions.
• Reflects systemic impact.
• Post-operative condition/complication impacting recovery.
• Typically requires higher level of care (that is, intensive monitoring, greater number of caregivers, additional testing, intensive care unit care, extended length of stay).
• Impedes patient cooperation and/or management of care.
• Recent (last 10 years) change in best practice, or in practice guidelines and review of the extent to which these changes have led to concomitant changes in expected resource use.
We agree with the commenter that most medical conditions have potentially had some changes in best practices in the last 10 years. Significant strides have been made in the past 10 years to ensure that Medicare beneficiaries have access to critical and life-saving new cures and technologies that improve beneficiary health outcomes. Consequently, we believe this comprehensive analysis should take into account the way changes in medical practice have, or have not, affected the impact on relative resource use for each ICD–10–CM code as a secondary diagnosis since our last comprehensive analysis in FY 2008.
Therefore, after consideration of the public comments we received, we are updating the nine guiding principles as follows:
• Represents end of life/near death or has reached an advanced stage associated with systemic physiologic decompensation and debility.
• Denotes organ system instability or failure.
• Involves a chronic illness with susceptibility to exacerbations or abrupt decline.
• Serves as a marker for advanced disease states across multiple different comorbid conditions.
• Reflects systemic impact.
• Post-operative/
• Typically requires higher level of care (that is, intensive monitoring, greater number of caregivers, additional testing, intensive care unit care, extended length of stay).
• Impedes patient cooperation and/or management of care.
• Recent (last 10 years) change in best practice, or in practice guidelines and review of the extent to which these changes have led to concomitant changes in expected resource use.
We continue to solicit feedback regarding these guiding principles, as well as other possible ways we can incorporate meaningful indicators of clinical severity. When providing additional feedback or comments, we encourage the public to provide a detailed explanation of how applying a suggested concept or principle would
Commenters should submit their recommendations to the following email address:
In the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32550) we noted the following tables identify the proposed additions and deletions to the diagnosis code MCC severity levels list and the proposed additions and deletions to the diagnosis code CC severity levels list for FY 2021 and are available via the internet on the CMS website at:
Table 6I.1—Proposed Additions to the MCC List—FY 2021;
Table 6I.2—Proposed Deletions to the MCC List—FY 2021;
Table 6J.1—Proposed Additions to the CC List—FY 2021; and
Table 6J.2—Proposed Deletions to the CC List—FY 2021.
As discussed in section II.E.13. of the preamble of this final rule, after consideration of the public comments received, we are finalizing changes to the severity levels for new diagnosis codes D89.833, D89.834, and D89.835 describing cytokine release syndrome (CRS) from NonCC to CC for FY 2021. Therefore, these diagnosis codes are now reflected in Table 6J.1—Additions to the CC List—FY 2021.
The following tables associated with this final rule reflect the finalized severity levels under Version 38 of the ICD–10 MS–DRGs for FY 2021 and are available via the internet on the CMS website at:
Table 6I.—Complete MCC List—FY 2021;
Table 6I.1—Additions to the MCC List—FY 2021;
Table 6I.2—Deletions to the MCC List—FY 2021;
Table 6J.—Complete CC List—FY 2021;
Table 6J.1—Additions to the CC List—FY 2021; and
Table 6J.2—Deletions to the CC List—FY 2021.
In the September 1, 1987 final notice (52 FR 33143) concerning changes to the DRG classification system, we modified the GROUPER logic so that certain diagnoses included on the standard list of CCs would not be considered valid CCs in combination with a particular principal diagnosis. We created the CC Exclusions List for the following reasons: (1) To preclude coding of CCs for closely related conditions; (2) to preclude duplicative or inconsistent coding from being treated as CCs; and (3) to ensure that cases are appropriately classified between the complicated and uncomplicated DRGs in a pair.
In the May 19, 1987 proposed notice (52 FR 18877) and the September 1, 1987 final notice (52 FR 33154), we explained that the excluded secondary diagnoses were established using the following five principles:
• Chronic and acute manifestations of the same condition should not be considered CCs for one another;
• Specific and nonspecific (that is, not otherwise specified (NOS)) diagnosis codes for the same condition should not be considered CCs for one another;
• Codes for the same condition that cannot coexist, such as partial/total, unilateral/bilateral, obstructed/unobstructed, and benign/malignant, should not be considered CCs for one another;
• Codes for the same condition in anatomically proximal sites should not be considered CCs for one another; and
• Closely related conditions should not be considered CCs for one another.
The creation of the CC Exclusions List was a major project involving hundreds of codes. We have continued to review the remaining CCs to identify additional exclusions and to remove diagnoses from the master list that have been shown not to meet the definition of a CC. We refer readers to the FY 2014 IPPS/LTCH PPS final rule (78 FR 50541 through 50544) for detailed information regarding revisions that were made to the CC and CC Exclusion Lists under the ICD–9–CM MS–DRGs.
The ICD–10 MS–DRGs Version 37 CC Exclusion List is included as Appendix C in the ICD–10 MS–DRG Definitions Manual, which is available via the internet on the CMS website at:
In the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32550 through 32551), we discussed a request we received to consider removing diagnosis codes describing any type of stroke that is designated as a MCC in the code range I60.00 through I63.9 from the CC Exclusion list when a principal diagnosis of diabetes in the code range E08.00 through E13 is reported. According to the requestor, acute strokes and chronic diabetes are two distinct conditions, therefore a stroke that occurs during an admission for an underlying diabetic condition should not be excluded from acting as a MCC. The requestor provided an example of a patient with type 2 diabetes who was admitted for treatment of infected foot ulcers and then experienced a stroke prior to discharge, resulting in assignment to MS–DRG 639 (Diabetes without CC/MCC). The requestor asserted the more appropriate assignment is MS–DRG 637 (Diabetes with MCC), which they stated more appropriately reflects severity of illness and resources involved in the treatment of an acute stroke. In another example provided by the requestor, a patient with type 2 diabetes and osteomyelitis underwent a left below the knee amputation and experienced a stroke before discharge, resulting in assignment to MS–DRG 617 (Amputation of Lower Limb for Endocrine, Nutritional, and Metabolic Diseases with CC). The requestor asserted the more appropriate assignment is MS–DRG 616 (Amputation of Lower Limb for Endocrine, Nutritional, and Metabolic Diseases with MCC), which they stated more appropriately reflects severity of illness and resources involved in the treatment of an acute stroke.
We stated in the proposed rule that our clinical advisors agreed that acute strokes and chronic diabetes are two distinct conditions and a case reporting a secondary diagnosis of a stroke in the code range I60.00 through I63.9 should not be excluded from acting as a MCC when reported with a principal diagnosis of diabetes in the code range E08.00 through E13.9.
As noted in the proposed rule, we analyzed claims data from the September 2019 update of the FY 2019 MedPAR file for cases reporting a principal diagnosis of diabetes in the code range E08.00 through E13.9 with a secondary diagnosis of a stroke in the code range I60.00 through I63.9. We refer the reader to table 6P.3a for a detailed list of the diagnosis codes describing diabetes that were analyzed and table 6P.3b associated with the proposed rule for a detailed list of the diagnosis codes describing a stroke that were analyzed and that are also designated as a MCC in this code range. We found a total of 1,109 cases across 40 MS–DRGs with an average length of stay of 10.1 days and average costs of $24,672 reporting a principal diagnosis of diabetes with a secondary diagnosis of a stroke that was excluded from acting as a MCC. Of those 1,109 cases, we identified 161 cases that would result in assignment to the higher severity level “with MCC” MS–DRG if the diagnosis of stroke was no longer excluded from acting as a MCC. The remaining 948 cases would maintain their existing MS–DRG assignment since they were either already grouped to the highest MCC severity level based on another diagnosis code that is designated as a MCC or they were assigned to one of the Pre-MDC MS–DRGs. We refer the reader to table 6P.4a associated with the proposed rule for the detailed analysis.
Based on the advice of our clinical advisors, for FY 2021, we proposed to remove the diagnosis codes describing stroke in the code range I60.00 through I63.9 that are designated as a MCC from the list of CC Exclusions when reported with a principal diagnosis of diabetes in the code range E08.00 through E13.9 from the ICD–10 MS–DRGs Version 38 CC Exclusion List as reflected in Table 6H.1.—Proposed Secondary Diagnosis Order Deletions to the CC Exclusions List—FY 2021 and Table 6H.2.—Proposed Principal Diagnosis Order Deletions to the CC Exclusions List—FY 2021 associated with the proposed rule and available via the internet on the CMS website at:
We proposed additional changes to the ICD–10 MS–DRGs Version 38 CC Exclusion List based on the diagnosis and procedure code updates as discussed in section II.D.13. of the FY 2021 IPPS/LTCH PPS proposed rule and set forth in Tables 6G.1, 6G.2, 6H.1, and 6H.2 associated with the proposed rule and available via the internet on the CMS website at
After consideration of the public comments we received, we are finalizing our proposal to remove diagnosis codes describing stroke in the code range I60.00 through I63.9 that are designated as a MCC from the list of CC Exclusions when reported with a principal diagnosis of diabetes in the code range E08.00 through E13.9.
The proposed CC Exclusions for a subset of the diagnosis codes as set forth in Tables 6G.1, 6G.2, 6H.1, and 6H.2 associated with the FY 2021 IPPS/LTCH PPS proposed rule reflect the proposed severity level designations as discussed in section II.D.13. of the preamble of the proposed rule. As discussed in section II.E.13. of the preamble of this final rule, we are finalizing changes to the severity level designations for three diagnosis codes after consideration of the public comments received. Therefore, the finalized CC Exclusions List as displayed in Tables 6G.1, 6G.2, 6H.1 6H.2, and 6K, associated with this final rule reflect the severity levels under Version 38 of the ICD–10 MS–DRGs.
We have developed Table 6G.1.—Secondary Diagnosis Order Additions to the CC Exclusions List—FY 2021; Table 6G.2.—Principal Diagnosis Order Additions to the CC Exclusions List—FY 2021; Table 6H.1.—Secondary Diagnosis Order Deletions to the CC Exclusions List—FY 2021; Table 6H.2.—Principal Diagnosis Order Deletions to the CC Exclusions List—FY 2021; and Table 6K.—Complete List of CC Exclusions—FY 2021. For Table 6G.1, each secondary diagnosis code for addition to the CC Exclusion List is shown with an asterisk and the principal diagnoses to exclude the secondary diagnosis code are provided in the indented column immediately following it. For Table 6G.2, each of the principal diagnosis codes for which there is a CC exclusion is shown with an asterisk and the conditions for addition to the CC Exclusion List that will not count as a CC are provided in an indented column immediately following the affected principal diagnosis. For Table 6H.1, each secondary diagnosis code for deletion from the CC Exclusion List is shown with an asterisk followed by the principal diagnosis codes that currently exclude it. For Table 6H.2, each of the principal diagnosis codes is shown with an asterisk and the proposed deletions to the CC Exclusions List are provided in an indented column immediately following the affected principal diagnosis. Table 6K is a list of all of the codes that are defined as either CC or a MCC when used as a secondary diagnosis. Within the table each code is specifically indicated as CC or MCC. A table number is given to a collection of diagnosis codes which, when used as the principal diagnosis, will cause the CC or MCC to be considered as only a non-CC. Tables 6G.1., 6G.2., 6H.1., 6H.2., and 6K. associated with this final rule are available via the internet on the CMS website at:
The ICD–10 MS–DRGs Version 38 CC Exclusion List is included as Appendix C of the Definitions Manual (available in two formats; text and HTML). The manuals are available via the internet on the CMS website at:
To identify new, revised and deleted diagnosis and procedure codes, for FY 2021, we have developed Table 6A.—New Diagnosis Codes, Table 6B.—New Procedure Codes, Table 6C.—Invalid Diagnosis Codes, and Table 6E.—Revised Diagnosis Code Titles for this final rule.
These tables are not published in the Addendum to the proposed rule or final rule, but are available via the internet on the CMS website at:
In the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32551 through 32552), we proposed the MDC and MS–DRG assignments for the new diagnosis codes and procedure codes as set forth in Table 6A.—New Diagnosis Codes and Table 6B.—New Procedure Codes. We also stated that the proposed severity level designations for the new diagnosis codes are set forth in Table 6A. and the proposed O.R. status for the new procedure codes are set forth in Table 6B.
Some commenters suggested that the American Society for Transplantation and Cellular Therapy (ASTCT) CRS Grading system be examined in review of potential CC and MCC designations for the CRS diagnosis codes. Other commenters stated that based on the ASTCT CRS Grading system, the CRS diagnosis codes describing grades 3, 4, and 5 appear to satisfy many of the CMS guiding principles discussed in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32550). A commenter recommended that severity level assignments for the various grades of CRS could be used as a test case for these new guiding principles. According to the commenter, the guiding principles as described in the proposed rule do not indicate that a required threshold for the number of cases for Medicare patients be attained before an analysis of the severity level assignment occurs. The commenter stated that based on the ASTCT CRS Grading system, grades 3, 4 and 5 meet the criteria for 7 of the 9 proposed guiding principles. The commenter provided the following information for CMS' consideration.
This same commenter also suggested that CMS consider expanding the logic for the CRS diagnosis codes to include patients diagnosed with COVID–19. The commenter reported that based on current academic literature, CRS is a common occurrence and a focus of treatment in patients presenting with advanced COVID–19. According to the commenter, the presence of CRS in the COVID–19 population also indicates that the new CRS diagnosis codes meet the 4th guiding principle of “marker for advanced disease states across multiple different comorbid conditions.”
Another commenter urged CMS to assign the CRS diagnosis codes identified as Grades 3, 4, and 5 (D89.833, D89.834, and D89.835, respectively) as a MCC and to assign the CRS diagnosis code identified as Grade 2, D89.832 (Cytokine release syndrome, grade 2) as a CC based on clinical significance. The commenter agreed with the proposed NonCC designation for the CRS diagnosis code identified as Grade 1, D89.831 (Cytokine release syndrome, grade 1) until additional data is available for analysis and consideration.
A commenter noted that for Table 6A—New Diagnosis Codes, associated with the proposed rule, that the proposed MDC for the new CRS diagnosis codes is MDC 16 (Diseases and Disorders of Blood, Blood Forming Organs, Immunologic Disorders) and the proposed MS–DRGs are 814, 815, and 816 (Reticuloendothelial and Immunity Disorders with MCC, with CC, and without CC/MCC, respectively). The commenter stated that since the CRS diagnosis codes were proposed as NonCC it understood this to equate to the CRS diagnosis codes being assigned to MS–DRG 816. The commenter disagreed with the proposed severity levels for the CRS diagnosis codes and recommended CMS consider revising. According to the commenter, CRS is the most common complication of Immune Effector Cell (IEC) therapy as described in the ASTCT's Consensus Grading
Similar to comments discussed earlier in this section, this commenter also stated that when applying CMS' guiding principles as described in the proposed rule for severity level assignments, many of them are applicable to the new CRS diagnosis codes. The commenter provided the following table for CMS' consideration and review which also included recommended MS–DRG assignments.
The commenter also noted that coding guidelines instruct the CRS diagnosis codes to be sequenced as a secondary diagnosis with a complication code (T code) sequenced first when CRS is a complication due to a procedure. The commenter expressed concern regarding how CRS cases will group into MS–DRGs 814, 815, and 816 as proposed by CMS since sequencing a T code as the principal diagnosis results in a different MS–DRG assignment. The commenter suggested CMS consider revising the Grouper logic, proposing different MS–DRGs for CRS and allow for public comment, or urging NCHS to change the coding instruction at subcategory D89.83 to allow only for diagnosis code T80.90XA (Unspecified complication following infusion and therapeutic injection) to be reported first since it would group to MS–DRGs 814, 815, and 816. The commenter also urged CMS to request that the NCHS and the AHA publish clear coding guidance to eliminate any confusion about the appropriate T code to report for CRS due to CAR T-cell therapy.
Another commenter also recommended that CMS assign the new CRS diagnosis codes to CC and MCC MS–DRGs within the MS–DRG 814, 815, and 816 series. The commenter stated their belief that several of the CMS guiding principles described in the proposed rule provide sufficient rationale for such assignments. The commenter also stated that once information regarding the CRS codes becomes available in the claims data, CMS can re-evaluate MS–DRG assignments.
Upon further review and consideration, our clinical advisors believe a CC severity level for CRS codes identified as grade 3, 4, or 5 would be warranted since these patients may require additional resources and treatment including intensive monitoring, blood pressure support, oxygen or mechanical ventilation, that are above and beyond the resources required for patients with CRS identified as a grade 1, 2, or an unspecified grade. Our clinical advisors continue to believe that CRS codes with a grade 1, 2, or an unspecified grade do not warrant the CC severity level.
Our clinical advisors also acknowledged the commenters' recommendations to review the American Society for Transplantation and Cellular Therapy (ASTCT) CRS Grading system to reassess potential CC and MCC designations for the CRS codes and consider how the CMS guiding principles discussed in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32550) could be applied as a test case for the various grades of the CRS codes. As noted previously, we applied our established process in proposing severity level assignments for these codes and the other new diagnosis codes for FY 2021. We also note that the guiding principles continue to be under development as we consider the public comments received, as discussed in section II.E.12.c. of the preamble of this final rule. We further note that with respect to proposing severity level assignments for new diagnosis codes in the future, we anticipate continuing our current process of first reviewing the predecessor code assignment, followed by review and consideration of the guiding principles that may be applied, in future rulemaking.
We note that while our clinical advisors do not dispute the commenters' assessments that the CRS codes would appear to meet most of the guiding principles, they also noted, as discussed previously, that a distinction between
In response to the commenter who expressed concern regarding how CRS cases will group into MS–DRGs 814, 815, and 816 as proposed by CMS (since sequencing certain T codes as the principal diagnosis results in a different MS–DRG assignment), we note that after notification and consideration of the concerns involving the proposed Tabular List instructions for the CRS codes were brought to its attention, the CDC/NCHS updated and finalized the Tabular instruction for the CRS codes. As noted in section II.E.16. of the preamble of this final rule, the CDC/NCHS has lead responsibility for the diagnosis codes and CMS has lead responsibility for the ICD–10–PCS procedure codes. The finalized changes effective FY 2021 include updates to the diagnosis codes instructed to be sequenced first, followed by the applicable CRS code as follows:
Code first underlying cause, such as:
As a result, CMS considered modifications to the GROUPER logic to allow cases reporting diagnosis code T80.89XA (Other complications following infusion, transfusion and therapeutic injection) as the principal diagnosis with any one of the CRS codes as a secondary diagnosis to group to MS–DRGs 814, 815, and 816. We note that diagnosis code T80.90XA (Unspecified complication following infusion and therapeutic injection) as the commenter suggested would not be appropriate to report as the principal diagnosis for these cases since the code descriptor refers to an “unspecified complication” and the complication is specified as CRS. In response to the commenter's suggestion that CMS request the NCHS and the AHA publish clear coding guidance to eliminate any confusion about the appropriate T code to report for CRS due to CAR T-cell therapy, we note that it is standard practice for the AHA to publish coding guidance for the annual diagnosis and procedure code updates in the AHA's
With respect to the commenter who recommended that CMS assign the new CRS diagnosis codes to CC and MCC MS–DRGs within the MS–DRG 814, 815, and 816 series, we note that whenever there are new diagnosis codes finalized, the first step for incorporating the new diagnosis code into the logic of the ICD–10 MS–DRGs is to assign the diagnosis code to the appropriate MDC. The next step is to determine if and how the diagnosis code may define the logic for a specific MS–DRG assignment. For example, the diagnosis may be listed as principal or as any one of the secondary diagnoses, as a secondary diagnosis, or only as a secondary diagnosis as noted in more detail below.
• Principal or secondary diagnoses. Indicates that a specific set of diagnoses are used in the definition of the MS–DRG. The diagnoses may be listed as principal or as any one of the secondary diagnoses. A special case of this condition is MS–DRG 008 in which two diagnoses (for example, renal and diabetic) must both be present somewhere in the list of diagnoses in order to be assigned to MS–DRG 008.
• Secondary diagnoses. Indicates that a specific set of secondary diagnoses are used in the definition of the MS–DRG. For example, a secondary diagnosis of acute leukemia with chemotherapy is used to define MS–DRG 839.
• Only secondary diagnoses. Indicates that in order to be assigned to the specified MS–DRG no secondary diagnoses other than those in the specified list may appear on the patient's record. For example, in order to be assigned to MS–DRG 795, only secondary diagnoses from the specified list may appear on the patient's record.
As discussed earlier in this section, modifications to the GROUPER logic were made to allow cases reporting diagnosis code T80.89XA (Other complications following infusion, transfusion and therapeutic injection) as the principal diagnosis with any one of the CRS codes as a secondary diagnosis to group to MS–DRGs 814, 815, and 816. We note that whenever there is a secondary diagnosis component to the MS–DRG logic, the diagnosis code can either be used in the logic for assignment to the MS–DRG or to act as a CC/MCC. For this specific scenario, the CRS codes, as secondary diagnoses, are being used in the definition of the logic for assignment to MS–DRGs 814, 815, and 816, similar to the example described above, where a secondary diagnosis of acute leukemia with chemotherapy is used to define MS–DRG 839.
In response to the commenter that suggested CMS consider expanding the logic for the CRS diagnosis codes to include patients diagnosed with COVID–19, we note that for cases where CRS is present in a patient diagnosed with COVID–19, depending on the circumstances of the admission, the COVID–19 would be reported as the principal diagnosis and the appropriate CRS code would be reported as a secondary diagnosis. In this scenario, the case would group to a MS–DRG under MDC 04 (Diseases and Disorders of the Respiratory System) because that is where diagnosis code U07.1, (COVID–19) is assigned. Therefore, we do not agree that it is necessary to create specific logic for these patients.
After consideration of the public comments received, and for the reasons previously discussed, for FY 2021, we are modifying our proposed severity level designations for a subset of the CRS codes as shown in Table 6A—New Diagnosis Codes, associated with this
We are also finalizing modifications to the ICD–10 MS–DRG GROUPER logic V38 for MS–DRGs 814, 815, and 816. Effective with discharges on and after October 1, 2020 (FY 2021), the logic for case assignment to MS–DRGs 814, 815, and 816 will include a principal diagnosis of T89.89XA with a secondary diagnosis of any CRS code as noted below.
A commenter stated its belief that:
A. Percutaneous ultrasonic fragmentation and extirpation are both catheter-based procedures that address solid matter in a body part;
B. Percutaneous ultrasonic fragmentation is similar to other procedures in the requested MS–DRGs;
C. Both fragmentation and extirpation procedures were evaluated using similar PE pivotal trial designs and have similar efficacy results;
D. Both types of procedures have similar overall hospital resource utilization;
E. Medicare cost data do not reflect EKOS
F. Medicare precedent exists for assignment of new codes to higher paying groups.
Below we provide the commenters' summaries for each of the statements listed above which also reflect similar statements or sentiments submitted by several of the other commenters.
According to the commenter, clot reduction using percutaneous ultrasonic fragmentation is similar to extirpation in many respects. The commenter stated these technologies all use percutaneous approaches, all treat serious PE, all reduce thrombus burden and all treat patients in the inpatient hospital setting with intensive care unit (ICU) care. The commenter provided the following table for comparison of the different technologies.
The commenter stated that similarly, procedures using percutaneous clot reduction devices for peripheral vascular (PV) procedures exhibit many key similarities. All use percutaneous approaches, all manage PV thromboemboli, all reduce thrombus burden, and all involve inpatient hospital admission with ICU care. The commenter provided the following table for comparison.
According to the commenter, for PE, percutaneous ultrasonic fragmentation procedures are clinically similar to procedures that are assigned to MS–DRGs 163, 164, and 165. The commenter stated that both extirpation codes and percutaneous ultrasonic fragmentation codes are reporting services that are intended to reduce clot burden, addressing matter in the body. The commenter provided the following list of procedure codes describing extirpation of matter from pulmonary structures that are currently assigned to MS–DRGs 163, 164, and 165 that it stated are clinically similar to percutaneous ultrasonic fragmentation procedures for PE.
Alternatively, the commenter stated that PE percutaneous ultrasonic fragmentation procedures are not clinically similar to other procedures assigned to MS–DRGs 166, 167, and 168. According to the commenter, percutaneous ultrasonic fragmentation is unlike the other percutaneous procedure codes assigned to these MS–DRGs and even opposite to some. The commenter noted an example of how occlusion procedures stop flow, while percutaneous ultrasonic fragmentation restore flow. The commenter provided the following list of procedure codes describing occlusion and repair of pulmonary structures that are currently assigned to MS–DRGs 166, 167, and 168 that it stated are not clinically similar to percutaneous ultrasonic fragmentation procedures for a PE.
In addition, the commenter stated that for PV procedures, percutaneous ultrasonic fragmentation procedures are clinically similar to procedures in MS–DRGs 270, 271, and 272. The commenter reiterated that both extirpation codes and fragmentation codes identify services that are intended to reduce clot burden, addressing matter in the body. The commenter provided the following list of procedure codes describing extirpation of matter from PV structures that are currently assigned to MS–DRGs 270, 271, and 272 it stated are clinically similar to percutaneous ultrasonic fragmentation procedures for PE.
According to the commenter, as it noted with PE, percutaneous ultrasonic fragmentation PV procedures are generally unlike the codes and even opposite to some of the other ICD–10–PCS procedures in MS–DRGs 252, 253, and 254. For example, the commenter stated that percutaneous ultrasonic fragmentation is not comparable to dilation, which is the root operation for balloon angioplasty or vascular stenting and is primarily used to address peripheral artery disease, a condition which is very different than thrombotic events. The commenter reported that percutaneous ultrasonic fragmentation procedures using the EKOS
The commenter stated that pivotal clinical studies for the treatment of PE with percutaneous ultrasonic fragmentation using EKOS
The commenter stated that the FLARE and EXTRACT–PE trials have nearly identical primary outcome measures and comparable results to that of the EKOS
The commenter stated that the SEATTLE II pivotal trial demonstrated an average length of stay of 8.8 ± 5 days for percutaneous ultrasonic fragmentation procedures with the EKOS
The commenter also reported that the cost of the percutaneous ultrasonic fragmentation procedure performed with the EKOS
According to the commenter, overall, hospital resource utilization is comparable: the length of stay of percutaneous ultrasonic fragmentation procedures with the EKOS
The commenter stated that the EKOS
The commenter stated there is precedent for CMS to use its discretion to assign new codes to higher paying groups, such as the APCs and MS–DRGs. The commenter provided an example of the 2020 Outpatient Prospective Payment System (OPPS) Proposed Rule and noted that CMS proposed assigning two new procedure codes for describing percutaneous creation of AV fistula to a lower level endovascular APC and after reviewing comments, CMS decided to reconsider this recommendation and ultimately assigned the codes to a higher level endovascular APC, as noted in the 2020 OPPS final rule.
Finally, the commenter provided the following table that identifies the procedure codes describing fragmentation of pulmonary and peripheral vascular structures and the proposed O.R., MDC, and MS–DRG assignments for the codes as shown in
Another commenter indicated it was made aware of comments being submitted in response to the FY 2021 IPPS/LTCH PPS proposed rule regarding fragmentation codes (04FC3ZZ through 04FY3ZZ). This commenter noted that
As noted in prior rulemaking (85 FR 32543), for new procedure codes that have been finalized through the ICD–10 Coordination and Maintenance Committee meeting process and are proposed to be classified as O.R. procedures or non-O.R. procedures affecting the MS–DRG, our clinical advisors recommend the MS–DRG assignment which is then made available in association with the proposed rule (Table 6B—New Procedure Codes) and subject to public comment. These proposed assignments are generally based on the assignment of predecessor codes or the assignment of similar codes. Consistent with our established process, we examined the MS–DRG assignment for the predecessor codes to determine the most appropriate MS–DRG assignment. The predecessor codes for the new procedure codes describing fragmentation of pulmonary and peripheral vascular structures with ultrasound as shown in the September 10, 2019 ICD–10 Coordination and Maintenance Committee meeting materials are 6A750Z7 (Ultrasound therapy of other vessels, single) and 3E06317 (Introduction of other thrombolytic into central artery, percutaneous approach) or 3E05317 (Introduction of other thrombolytic into peripheral artery, percutaneous approach). Because these procedure codes are designated as non-O.R. they do not impact the MS–DRG assignment. Therefore, when any combination of these procedure codes is currently reported, case assignment is dependent upon the principal diagnosis, any secondary diagnoses, and whether or not any other procedures may have been performed and reported on the claim. The MS–DRG assignment for cases with a principal diagnosis of PE is generally medical MS–DRG 175 (Pulmonary Embolism with MCC or Acute Cor Pulmonale) or medical MS–DRG 176 (Pulmonary Embolism without MCC). The MS–DRG assignment for cases with a principal diagnosis of DVT is generally medical MS–DRG 299, 300, or 301 (Peripheral Vascular Disorders with MCC, with CC, and without CC/MCC, respectively). Therefore, cases currently reporting the use of ultrasound accelerated thrombolysis for PE or DVT would generally be assigned to one of those medical MS–DRGs.
The commenters are correct that there are different types of devices available in the treatment of pulmonary embolism (PE) and deep venous thrombosis (DVT). The commenters are also correct that some devices remove matter (clot, thrombus, etc.) while others fragment (break up) matter, with or without the use of thrombolytics. Under the ICD–10–PCS procedure classification system there are two root operations, extirpation and fragmentation, specifically defined as:
With respect to the commenter's statement that PE percutaneous ultrasonic fragmentation procedures are not clinically similar to other procedures assigned to MS–DRGs 166, 167, and 168, and PV percutaneous ultrasonic fragmentation procedures are not clinically similar to other procedures assigned to MS–DRGs 252, 253, and 254, we note that, as stated in the ICD–10 MS–DRG Definitions Manual, “In each MDC there is usually a medical and a surgical class referred to as “other medical diseases” and “other surgical procedures,” respectively. The “other” medical and surgical classes are not as precisely defined from a clinical perspective. The
We appreciate the commenter's feedback and information pertaining to the pivotal trials that have been conducted, however, as stated previously, fragmentation and extirpation procedures are clinically distinct and separate procedures, uniquely defined within the classification, and our clinical advisors do not believe it is appropriate to specifically compare the devices being utilized in the performance of these distinct procedures with respect to resource utilization and in consideration of MS–DRG assignment. As discussed earlier in this section, we followed our established process for determining the most appropriate MS–DRG assignment for new procedure codes.
We acknowledge the claims analysis conducted by the commenter and because the current procedure codes do not uniquely identify and describe ultrasound accelerated thrombolysis we concur it is difficult to accurately assess the data.
The ICD–10–CM diagnosis codes that identify pulmonary embolism and acute cor pulmonale that are included in the logic for MS–DRGs 175 and 176 are:
We analyzed claims data from the September 2019 update of the FY 2019 MedPAR file for cases reporting fragmentation procedures in MS–DRGs 175 and 176 with a principal diagnosis of PE and procedure codes 6A750Z7 with 3E06317 to identify the use of fragmentation via ultrasound and thrombolytics. Our findings are shown in the following table.
The data demonstrates that the 297 cases reporting a principal diagnosis of PE with the use of ultrasound and thrombolytics in MS–DRGs 175 and 176 (235+62=297) have higher average costs compared to all the cases in MS–DRGs 175 and 176 ($21,191 versus $10,515 and $19,035 versus $6,268, respectively) and a comparable average length of stay (5.0 days versus 5.0 days and 3.8 days versus 3.1 days, respectively).
The ICD–10–CM diagnosis codes that identify DVT that are included in the logic for MS–DRGs 299, 300 and 301 are:
We also examined claims for cases reporting fragmentation procedures in MS–DRGs 299, 300 and 301 with a principal diagnosis of DVT and procedure codes 6A750Z7 with 3E06317 to identify the use of fragmentation via ultrasound and thrombolytics. Our findings are shown in the following table.
The data demonstrates that the 4 cases reporting a principal diagnosis of DVT with the use of ultrasound and thrombolytics in MS–DRGs 299 and 300 (3+1=4) have higher average costs compared to all the cases in MS–DRGs 299 and 300 ($15,942 versus $10,611 and $12,930 versus $7,378, respectively) and a comparable average length of stay (3.3 days versus 5.2 days and 4.0 days versus 3.9 days, respectively). We note that there were no cases found reporting a principal diagnosis of DVT with the use of ultrasound and thrombolytics in MS–DRG 301.
We then analyzed claims data from the September 2019 update of the FY 2019 MedPAR data for MS–DRGs 163, 164, and 165 and MS–DRGs 270, 271, and 272. Our findings are shown in the following table.
Overall, the data demonstrates that cases reporting a principal diagnosis of PE with ultrasound and thrombolytic (fragmentation) in MS–DRG 175 have average costs and an average length of stay that are less than the average costs and average length of stay of all the cases in MS–DRG 163 ($21,191 versus $34,718) and (5.0 days versus 11.6 days). The data also demonstrates that cases reporting a principal diagnosis of PE with ultrasound and thrombolytic (fragmentation) in MS–DRG 176 have average costs and an average length of stay that are less than the average costs and average length of stay of all the cases in MS–DRG 164 ($19,035 versus $19,120) and (3.8 days versus 5.4 days). We note that because MS–DRG 175 is the “with MCC” MS–DRG and MS–DRG 176 is the “without MCC” (CC+NonCC) MS–DRG that it's possible a subset of the 62 cases found reporting a principal diagnosis of PE with ultrasound and thrombolytic in MS–DRG 176 did not report a CC and those cases would then be compared to MS–DRG 165, however, we were unable to analyze the detailed data for the 62 cases.
The data demonstrates that cases reporting a principal diagnosis of DVT with ultrasound and thrombolytic (fragmentation) in MS–DRG 299 have average costs and an average length of stay that are less than the average costs and average length of stay of all the cases in MS–DRG 270 ($15,942 versus $37,100) and (3.3 days versus 9.4 days). The data also demonstrates that cases reporting a principal diagnosis of DVT with ultrasound and thrombolytic (fragmentation) in MS–DRG 300 have average costs and an average length of stay that are less than the average costs and average length of stay of all the cases in MS–DRG 271 ($12,930 versus $28,219) and (4.0 days versus 5.8 days). For these reasons, based on the claims analysis, our clinical advisors do not support assignment of the new procedure codes describing fragmentation via ultrasound accelerated thrombolysis for the treatment of PE to MS–DRGs 163, 164, and 165 or to MS–DRGs 270, 271, and 272 for the treatment of DVT.
We then analyzed claims data from the September 2019 update of the FY 2019 MedPAR data for MS–DRGs 166, 167, and 168 and MS–DRGs 252, 253, and 254. Our findings are shown in the following table.
Overall, the data demonstrates that cases reporting a principal diagnosis of PE with ultrasound and thrombolytic (fragmentation) in MS–DRG 175 have average costs and an average length of stay that are more consistent with the average costs and average length of stay of all the cases in MS–DRG 166 ($21,191 versus $26,702) and (5.0 days versus 10.3 days). The data also demonstrates that cases reporting a principal diagnosis of PE with ultrasound and thrombolytic (fragmentation) in MS–DRG 176 have average costs and an average length of stay that are more consistent with the average costs and average length of stay of all the cases in MS–DRG 167 ($19,035 versus $13,566) and (3.8 days versus 4.9 days). We note that it's possible that a subset of the 62 cases found reporting a principal diagnosis of PE with ultrasound and thrombolytic in MS–DRG 176 did not report a CC and those cases would then be compared to MS–DRG 168, however, we were unable to analyze the detailed data for the 62 cases.
The data also demonstrates that cases reporting a principal diagnosis of DVT with ultrasound and thrombolytic (fragmentation) in MS–DRG 299 have average costs and an average length of stay that are more consistent with the average costs and average length of stay of all the cases in MS–DRG 252 ($15,942 versus $24,369) and (3.3 days versus 7.5 days). The data also demonstrates that cases reporting a principal diagnosis of DVT with ultrasound and thrombolytic (fragmentation) in MS–DRG 300 have average costs and an average length of stay that are more consistent with the average costs and average length of stay of all the cases in MS–DRG 253 ($12,930 versus $19,316) and (4.0 days versus 5.4 days). As previously noted, there were no cases found reporting a principal diagnosis of DVT with ultrasound and thrombolytic (fragmentation) in MS–DRG 301. For these reasons, our clinical advisors stated the claims analysis supports assignment of the new procedure codes describing fragmentation via ultrasound accelerated thrombolysis for the treatment of PE to MS–DRGs 166, 167, and 168 and to MS–DRGs 252, 253, and 254 for the treatment of DVT.
With respect to the commenter who stated it disagreed with the comparison provided in the other comments, specifically for IVL fragmentation, we appreciate the commenter's feedback, however, we believe that the commenter expressed concerns regarding a different subset of procedure codes that are also reported with the root operation fragmentation. The procedure codes describing fragmentation that are reported to identify an IVL procedure was performed do not include the term “ultrasonic” that is reported with the 7th digit character qualifier value of “0” for the ultrasound accelerated thrombolysis procedures. Alternatively, the procedure codes describing fragmentation that are reported to identify an IVL procedure was performed are reported with the 7th digit character qualifier value of “Z”.
After consideration of the public comments we received, and for reasons previously discussed, we are finalizing our proposal to assign the ultrasound accelerated thrombolysis procedures described by the root operation fragmentation and performed for the treatment of PE to MS–DRGs 166, 167, and 168 and for the treatment of DVT to MS–DRGs 252, 253, and 254 as proposed in Table 6B—New Procedure Codes associated with the proposed rule, and shown in Table 6B—New Procedure Codes associated with this final rule.
We note that, as stated in prior rule making (84 FR 42148), our clinical advisors recognize that MS–DRGs 163, 164, 165, 166, 167, and 168 may warrant further review and therefore, we plan to begin conducting this detailed review beginning with our FY 2022 MS–DRG classification analysis of claims data and determine what modifications may need to be considered for future rulemaking.
After consideration of the comment we received, we are finalizing our proposal to designate procedure code XW0Q316 as non-O.R. for FY 2021. As claims data becomes available for this procedure we can reevaluate for future rule making.
We are making available on the CMS website at
• Table 6A—New Diagnosis Codes–FY 2021;
• Table 6B—New Procedure Codes–FY 2021;
• Table 6C—Invalid Diagnosis Codes–FY 2021;
• Table 6E—Revised Diagnosis Code Titles–FY 2021;
• Table 6G.1—Secondary Diagnosis Order Additions to the CC Exclusions List–FY 2021;
• Table 6G.2—Principal Diagnosis Order Additions to the CC Exclusions List–FY 2021;
• Table 6H.1—Secondary Diagnosis Order Deletions to the CC Exclusions List–FY 2021;
• Table 6H.2—Principal Diagnosis Order Deletions to the CC Exclusions List—FY 2021;
• Table 6I—Complete MCC List–FY 2021;
• Table 6I.1—Additions to the MCC List–FY 2021;
• Table 6I.2–Deletions to the MCC List–FY 2021;
• Table 6J—Complete CC List –FY 2021;
• Table 6J.1—Additions to the CC List–FY 2021;
• Table 6J.2—Deletions to the CC List –FY 2021; and
• Table 6K—Complete List of CC Exclusions –FY 2021.14. Changes to the Medicare Code Editor (MCE)
The Medicare Code Editor (MCE) is a software program that detects and reports errors in the coding of Medicare claims data. Patient diagnoses, procedure(s), and demographic information are entered into the Medicare claims processing systems and are subjected to a series of automated screens. The MCE screens are designed to identify cases that require further review before classification into an MS–DRG.
As discussed in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42156), we made available the FY 2020 ICD–10 MCE Version 37 manual file. The manual contains the definitions of the Medicare code edits, including a description of each coding edit with the corresponding diagnosis and procedure code edit lists. The link to this MCE manual file, along with the link to the mainframe and computer software for the MCE Version 37 (and ICD–10 MS–DRGs) are posted on the CMS website at
In the FY 2021 IPPS/LTCH PPS proposed rule, we addressed the MCE requests we received by the November 1, 2019 deadline. We also discussed the proposals we were making based on internal review and analysis. In this FY 2021 IPPS/LTCH PPS final rule, we present a summation of the comments we received in response to the MCE requests and proposals presented based on internal reviews and analyses in the proposed rule, our responses to those comments, and our finalized policies.
In addition, as a result of new and modified code updates approved after the annual spring ICD–10 Coordination and Maintenance Committee meeting, we routinely make changes to the MCE. In the past, in both the IPPS proposed and final rules, we have only provided the list of changes to the MCE that were brought to our attention after the prior year's final rule. We historically have not listed the changes we have made to the MCE as a result of the new and modified codes approved after the annual spring ICD–10 Coordination and Maintenance Committee meeting. These changes are approved too late in the rulemaking schedule for inclusion in the proposed rule. Furthermore, although our MCE policies have been described in our proposed and final rules, we have not provided the detail of each new or modified diagnosis and procedure code edit in the final rule. However, we make available the finalized Definitions of Medicare Code Edits (MCE) file. Therefore, we are making available the FY 2021 ICD–10 MCE Version 38 Manual file, along with the link to the mainframe and computer software for the MCE Version 38 (and ICD–10 MS–DRGs), on the CMS website at:
In the MCE, the Age conflict edit exists to detect inconsistencies between a patient's age and any diagnosis on the patient's record; for example, a 5-year-old patient with benign prostatic hypertrophy or a 78-year-old patient coded with a delivery. In these cases, the diagnosis is clinically and virtually impossible for a patient of the stated age. Therefore, either the diagnosis or the age is presumed to be incorrect. Currently, in the MCE, the following four age diagnosis categories appear under the Age conflict edit and are listed in the manual and written in the software program:
• Perinatal/Newborn—Age 0 years only; a subset of diagnoses which will only occur during the perinatal or newborn period of age 0 (for example, tetanus neonatorum, health examination for newborn under 8 days old).
• Pediatric—Age is 0–17 years inclusive (for example, Reye's syndrome, routine child health exam).
• Maternity—Age range is 9–64 years inclusive (for example, diabetes in pregnancy, antepartum pulmonary complication).
• Adult—Age range is 15–124 years inclusive (for example, senile delirium, mature cataract).
Under the ICD–10 MCE, the Maternity diagnoses category for the Age conflict edit considers the age range of 9 to 64 years inclusive. For that reason, the diagnosis codes on this Age conflict edit list would be expected to apply to conditions or disorders specific to that age group only.
As discussed in section II.D.13. of the preamble of the proposed rule and section II.E.13. of this final rule, Table 6A.—New Diagnosis Codes, lists the diagnosis codes that have been approved to date which will be effective with discharges on and after October 1, 2020. We proposed to add the following new ICD–10–CM diagnosis codes listed in this section of this rule to the Maternity diagnoses category code list under the Age conflict edit.
In addition, as discussed in section II.D.13. of the preamble of the proposed rule and section II.E.13. of this final rule, Table 6C.—Invalid Diagnosis Codes, lists the diagnosis codes that are no longer effective October 1, 2020. Included in this table is ICD–10–CM diagnosis code O99.89 (Other specified diseases and conditions complicating pregnancy, childbirth and the puerperium) which is currently listed on the Maternity diagnoses category code list under the Age Conflict edit. We proposed to remove this code from the Maternity diagnoses category code list.
After consideration of the public comments we received, we are finalizing our proposal to add the diagnosis codes listed in the previous table to the Maternity diagnoses category edit code list and our proposal to remove ICD–10–CM diagnosis code O99.89 from the Maternity diagnoses category edit code list under the ICD–10 MCE Version 38, effective October 1, 2020.
Under the ICD–10 MCE, the Adult diagnoses category for the Age conflict edit considers the age range of 15 to 124 years inclusive. For that reason, the diagnosis codes on this Age conflict edit list would be expected to apply to conditions or disorders specific to that age group only.
As discussed in section II.D.13. of the preamble of the proposed rule and section II.E.13. of this final rule, Table 6A.—New Diagnosis Codes, lists the diagnosis codes that have been approved to date which will be effective with discharges on and after October 1, 2020. We proposed to add the following new ICD–10–CM diagnosis codes to the Adult diagnoses category code list under the Age conflict edit.
After consideration of the public comments we received, we are finalizing our proposal to add the diagnosis codes listed in the previous table to the Adult diagnoses category edit code list under the ICD–10 MCE Version 38, effective October 1, 2020.
In the MCE, the Sex conflict edit detects inconsistencies between a patient's sex and any diagnosis or procedure on the patient's record; for example, a male patient with cervical cancer (diagnosis) or a female patient with a prostatectomy (procedure). In both instances, the indicated diagnosis or the procedure conflicts with the stated sex of the patient. Therefore, the patient's diagnosis, procedure, or sex is presumed to be incorrect.
As discussed in section II.D.13. of the preamble of the proposed rule and section II.E.13. of this final rule, Table 6A.—New Diagnosis Codes, lists the new diagnosis codes that have been approved to date which will be effective
In addition, as discussed in section II.D.13. of the preamble of the proposed rule and section II.E.13. of this final rule, Table 6C.—Invalid Diagnosis Codes, lists the diagnosis codes that are no longer effective October 1, 2020. Included in this table are ICD–10–CM diagnosis code O99.89 (Other specified diseases and conditions complicating pregnancy, childbirth and the puerperium) and ICD–10–CM diagnosis code Q51.20 (Other doubling of uterus, unspecified) which are currently listed on the Diagnoses for Females Only edit code list. We proposed to delete these codes from the Diagnoses for Females Only edit code list.
After consideration of the public comments that we received, we are finalizing our proposal to add the diagnosis codes displayed in the previous table to the Diagnoses for Females Only edit code list and our proposal to remove ICD–10–CM diagnosis code O99.89 and Q51.20 from the Diagnoses for Females Only edit code list under the ICD–10 MCE Version 38, effective October 1, 2020.
As discussed in section II.D.13. of the preamble of the proposed rule and section II.E.13. of this final rule, Table 6B—New Procedure Codes, lists the new procedure codes that have been approved to date which will be effective with discharges on and after October 1, 2020. We proposed to add the following new ICD–10–PCS procedure codes listed in this section of this rule to the edit code list for the Procedures for Females Only edit.
After consideration of the public comments that we received, we are finalizing our proposal to add the ICD–10–PCS procedure codes listed in the previous table to the edit code list for the Procedures for Females Only edit under the ICD–10 MCE Version 38, effective October 1, 2020.
As discussed in section II.D.13. of the preamble of the proposed rule and in section II.E.13. of this final rule, Table 6B—New Procedure Codes, lists the new procedure codes that have been approved to date which will be effective with discharges on and after October 1, 2020. We proposed to add the following new ICD–10–PCS procedure codes listed in this section of this rule to the edit code list for the Procedures for Males Only edit.
After consideration of the public comments that we received, we are finalizing our proposal to add the ICD–10–PCS procedure codes listed in the previous table to the edit code list for the Procedures for Males Only edit under the ICD–10 MCE Version 38, effective October 1, 2020.
In the ICD–10–CM classification system, manifestation codes describe the manifestation of an underlying disease, not the disease itself, and therefore should not be used as a principal diagnosis.
As discussed in section II.D.13. of the preamble of the proposed rule and section II.E.13. of this final rule, Table 6A—New Diagnosis Codes, lists the new diagnosis codes that have been approved to date which will be effective with discharges on and after October 1, 2020. We proposed to add the following new ICD–10–CM diagnosis codes listed in this section of this rule to the edit code list for the Manifestation Codes Not Allowed as Principal Diagnosis edit code list because these codes are describing the manifestation of an underlying disease and not the disease itself.
After consideration of the public comments that we received, we are finalizing our proposal to add the ICD–10–CM diagnosis codes listed in the previous table to the edit code list for the Manifestation Codes Not Allowed as Principal Diagnosis edit under the ICD–10 MCE Version 38, effective October 1, 2020.
In addition, as discussed in section II.D.13. of the preamble of the proposed rule and in section II.E.13. of this final rule, Table 6C.—Invalid Diagnosis Codes, lists the diagnosis codes that are no longer effective October 1, 2020. Included in this table is ICD–10–CM diagnosis code J84.17 (Other interstitial pulmonary diseases with fibrosis in diseases classified elsewhere) which is currently listed on the Manifestation Codes Not Allowed as Principal Diagnosis edit code list. We proposed to delete this code from the Manifestation Codes Not Allowed as Principal Diagnosis edit code list.
After consideration of the public comments that we received, we are finalizing our proposal to delete ICD–10–CM diagnosis code J84.17 from the Manifestation Codes Not Allowed as Principal Diagnosis edit code list under the ICD–10 MCE Version 38, effective October 1, 2020.
In the MCE, there are select codes that describe a circumstance which influences an individual's health status but does not actually describe a current illness or injury. There also are codes that are not specific manifestations but may be due to an underlying cause. These codes are considered unacceptable as a principal diagnosis. In limited situations, there are a few codes on the MCE Unacceptable Principal Diagnosis edit code list that are considered “acceptable” when a specified secondary diagnosis is also coded and reported on the claim.
As discussed in Section II.D.13. of the preamble of the proposed rule and section II.E.13. of this final rule, Table 6A.—New Diagnosis Codes, lists the new diagnosis codes that have been approved to date which will be effective with discharges on and after October 1, 2020. We proposed to add the following new ICD–10–CM diagnosis codes listed in this section of this rule to the Unacceptable Principal Diagnosis edit code list.
“Code first underlying cause, such as:
They also stated that the intent is for the CRS codes to not be reported as a principal diagnosis. Diagnosis codes K74.00 (Hepatic fibrosis, unspecified), K74.01 (Hepatic fibrosis, early fibrosis), and K74.02 (Hepatic fibrosis, advanced fibrosis) also have a “Code first” note at the new subcategory K74.0 (Hepatic fibrosis), effective October 1, 2020. The commenter is correct that currently, diagnosis code K74.0 is not on the Unacceptable Principal Diagnosis Code list and we note that there is not a “Code first” note currently at that diagnosis code. We point out that diagnosis code K74.0 has been expanded effective October 1 and is therefore classified as a subcategory. The ICD–10–CM Tabular instruction at new subcategory K74.0 has a “Code first” note that reads:
“Code first underlying liver disease, such as:
The “Code first” note at this subcategory applies to all three new diagnosis codes, K74.00, K74.01, and K74.02.
In response to the commenter's disagreement with adding diagnosis codes Z03.821 (Encounter for observation for suspected ingested foreign body ruled out), Z03.822 (Encounter for observation for suspected aspirated (inhaled) foreign body ruled out), and Z03.823 (Encounter for observation for suspected inserted (injected) foreign body ruled out) to the Unacceptable Principal Diagnosis edit code list, we note that these diagnosis codes were created in response to a request from the American Academy of Pediatrics, which indicated that since a child is often not able to communicate what occurred, there needs to be a way to identify and track these kinds of encounters, therefore, we would not expect these codes to be reported in our Medicare claims data for an inpatient stay.
After consideration of the public comments that we received, we are finalizing our proposal to add the diagnosis codes listed in the previous table to the Unacceptable Principal Diagnosis edit code list under the ICD–10 MCE Version 38, effective October 1, 2020.
In addition, as discussed in section II.D.13. of the preamble of the proposed rule and in section II.E.13. of this final rule, Table 6C.—Invalid Diagnosis Codes, lists the diagnosis codes that are no longer effective October 1, 2020. Included in this table are the following ICD–10–CM diagnosis codes that are currently listed on the Unacceptable Principal Diagnosis edit code list. We proposed to delete these codes from the Unacceptable Principal Diagnosis edit code list.
After consideration of the public comments that we received, we are finalizing our proposal to remove the diagnosis codes, as previously listed, from the Unacceptable Principal Diagnosis edit code list under the ICD–10 MCE Version 38, effective October 1, 2020.
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38053 through 38054) we noted the importance of ensuring accuracy of the coded data from the reporting, collection, processing, coverage, payment and analysis aspects. Subsequently, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20235) we stated that we engaged a contractor to assist in the review of the limited coverage and non-covered procedure edits in the MCE that may also be present in other claims processing systems that are utilized by our MACs. The MACs must adhere to criteria specified within the National Coverage Determinations (NCDs) and may implement their own edits in addition to what is already incorporated into the MCE, resulting in duplicate edits. The objective of this review is to identify where duplicate edits may exist and to determine what the impact might be if these edits were to be removed from the MCE. The contractor is continuing to conduct this review.
We have also noted that the purpose of the MCE is to ensure that errors and inconsistencies in the coded data are recognized during Medicare claims processing. As we indicated in the FY
As we continue to evaluate the purpose and function of the MCE with respect to ICD–10, we encourage public input for future discussion. As we have discussed in prior rulemaking, we recognize a need to further examine the current list of edits and the definitions of those edits. We continue to encourage public comments on whether there are additional concerns with the current edits, including specific edits or language that should be removed or revised, edits that should be combined, or new edits that should be added to assist in detecting errors or inaccuracies in the coded data. Comments should be directed to the MS–DRG Classification Change Mailbox located at
Some inpatient stays entail multiple surgical procedures, each one of which, occurring by itself, could result in assignment of the case to a different MS–DRG within the MDC to which the principal diagnosis is assigned. Therefore, it is necessary to have a decision rule within the GROUPER by which these cases are assigned to a single MS–DRG. The surgical hierarchy, an ordering of surgical classes from most resource-intensive to least resource-intensive, performs that function. Application of this hierarchy ensures that cases involving multiple surgical procedures are assigned to the MS–DRG associated with the most resource-intensive surgical class.
A surgical class can be composed of one or more MS–DRGs. For example, in MDC 11, the surgical class “kidney transplant” consists of a single MS–DRG (MS–DRG 652) and the class “major bladder procedures” consists of three MS–DRGs (MS–DRGs 653, 654, and 655). Consequently, in many cases, the surgical hierarchy has an impact on more than one MS–DRG. The methodology for determining the most resource-intensive surgical class involves weighting the average resources for each MS–DRG by frequency to determine the weighted average resources for each surgical class. For example, assume surgical class A includes MS–DRGs 001 and 002 and surgical class B includes MS–DRGs 003, 004, and 005. Assume also that the average costs of MS–DRG 001 are higher than that of MS–DRG 003, but the average costs of MS–DRGs 004 and 005 are higher than the average costs of MS–DRG 002. To determine whether surgical class A should be higher or lower than surgical class B in the surgical hierarchy, we would weigh the average costs of each MS–DRG in the class by frequency (that is, by the number of cases in the MS–DRG) to determine average resource consumption for the surgical class. The surgical classes would then be ordered from the class with the highest average resource utilization to that with the lowest, with the exception of “other O.R. procedures” as discussed in this final rule.
This methodology may occasionally result in assignment of a case involving multiple procedures to the lower-weighted MS–DRG (in the highest, most resource-intensive surgical class) of the available alternatives. However, given that the logic underlying the surgical hierarchy provides that the GROUPER search for the procedure in the most resource-intensive surgical class, in cases involving multiple procedures, this result is sometimes unavoidable. We note that, notwithstanding the foregoing discussion, there are a few instances when a surgical class with a lower average cost is ordered above a surgical class with a higher average cost. For example, the “other O.R. procedures” surgical class is uniformly ordered last in the surgical hierarchy of each MDC in which it occurs, regardless of the fact that the average costs for the MS–DRG or MS–DRGs in that surgical class may be higher than those for other surgical classes in the MDC. The “other O.R. procedures” class is a group of procedures that are only infrequently related to the diagnoses in the MDC, but are still occasionally performed on patients with cases assigned to the MDC with these diagnoses. Therefore, assignment to these surgical classes should only occur if no other surgical class more closely related to the diagnoses in the MDC is appropriate.
A second example occurs when the difference between the average costs for two surgical classes is very small. We have found that small differences generally do not warrant reordering of the hierarchy because, as a result of reassigning cases on the basis of the hierarchy change, the average costs are likely to shift such that the higher-ordered surgical class has lower average costs than the class ordered below it.
Based on the changes that we proposed to make in the FY 2021 IPPS/LTCH PPS proposed rule, as discussed in section II.E.2.b. of the preamble of this final rule, we proposed to revise the surgical hierarchy for the Pre-MDC MS–DRGs as follows: In the Pre-MDC MS–DRGs we proposed to sequence proposed new Pre-MDC MS–DRG 018 (Chimeric Antigen Receptor (CAR) T-cell Immunotherapy) above Pre-MDC MS–DRGs 001 and 002 (Heart Transplant or Implant of Heart Assist System with and without MCC, respectively). We also note that, as discussed in section II.D.2.b. of the preamble of the proposed rule and in section II.E.2.b. of this final rule, we proposed to revise the title for Pre-MDC MS–DRG 016 to “Autologous Bone Marrow Transplant with CC/MCC”. In addition, based on the changes that we proposed to make as discussed in section II.D.8.a. of the preamble of the proposed rule and in section II.E.8.a. of this final rule, we also proposed to sequence proposed new Pre-MDC MS–DRG 019 (Simultaneous Pancreas/Kidney Transplant with Hemodialysis) above Pre-MDC MS–DRG 008 (Simultaneous Pancreas/Kidney Transplant) and below Pre-MDC MS–DRG 007 (Lung Transplant).
As discussed in section II.D.4. of the preamble of the proposed rule and section II.E.4. of this final rule, we proposed to delete MS–DRGs 129 (Major Head and Neck Procedures with CC/MCC or Major Device) and MS–DRG 130 (Major Head and Neck Procedures without CC/MCC), MS–DRGs 131 and 132 (Cranial and Facial Procedures with CC/MCC and without CC/MCC, respectively), and MS–DRGs 133 and 134 (Other Ear, Nose, Mouth and Throat O.R. Procedures with CC/MCC and without CC/MCC, respectively). Based on the changes we proposed to make for those MS–DRGs in MDC 03, we proposed to revise the surgical hierarchy for MDC 03 (Diseases and Disorders of the Ear, Nose, Mouth and Throat) as follows: In MDC 03, we proposed to sequence proposed new MS–DRGs 140, 141, and 142 (Major Head and Neck Procedures with MCC, with CC, and without CC/MCC, respectively) above new MS–DRGs 143, 144, and 145 (Other Ear, Nose, Mouth and Throat O.R. Procedures with MCC, with CC, and without CC/MCC, respectively). We also proposed to sequence proposed new MS–DRGs 143, 144, and 145 above MS–DRGs 135 and 136 (Sinus and Mastoid Procedures with CC/MCC and without CC/MCC, respectively). We also note that, based on the changes that we proposed to make, as discussed in section II.D.7.b. of the preamble of the proposed rule and section II.E.7.b. of this final rule, we proposed to revise the surgical hierarchy for MDC 08 (Diseases and
Our proposal for Appendix D MS–DRG Surgical Hierarchy by MDC and MS–DRG of the ICD–10 MS–DRG Definitions Manual Version 38 is illustrated in the following tables.
After consideration of the public comments we received, we are finalizing the proposed changes as illustrated in the tables above for the surgical hierarchy within Appendix D MS–DRG Surgical Hierarchy by MDC and MS–DRG of the ICD–10 MS–DRG Definitions Manual Version 38 for FY 2021.
16. Maintenance of the ICD–10–CM and ICD–10–PCS Coding Systems
In September 1985, the ICD–9–CM Coordination and Maintenance Committee was formed. This is a Federal interdepartmental committee, co-chaired by the CDC National Center for Health Statistics (NCHS) and CMS, charged with maintaining and updating the ICD–9–CM system. The final update to ICD–9–CM codes was made on October 1, 2013. Thereafter, the name of the Committee was changed to the ICD–10 Coordination and Maintenance Committee, effective with the March 19–20, 2014 meeting. The ICD–10 Coordination and Maintenance Committee addresses updates to the ICD–10–CM and ICD–10–PCS coding systems. The Committee is jointly responsible for approving coding changes, and developing errata, addenda, and other modifications to the coding systems to reflect newly developed procedures and technologies and newly identified diseases. The Committee is also responsible for promoting the use of Federal and non-Federal educational programs and other communication techniques with a view toward standardizing coding applications and upgrading the quality of the classification system.
The official list of ICD–9–CM diagnosis and procedure codes by fiscal year can be found on the CMS website at:
The NCHS has lead responsibility for the ICD–10–CM and ICD–9–CM diagnosis codes included in the Tabular List and Alphabetic Index for Diseases, while CMS has lead responsibility for the ICD–10–PCS and ICD–9–CM procedure codes included in the Tabular List and Alphabetic Index for Procedures.
The Committee encourages participation in the previously mentioned process by health-related organizations. In this regard, the Committee holds public meetings for discussion of educational issues and coding changes. These meetings provide an opportunity for representatives of recognized organizations in the coding field, such as the American Health Information Management Association (AHIMA), the American Hospital Association (AHA), and various physician specialty groups, as well as individual physicians, health information management professionals, and other members of the public, to contribute ideas on coding matters. After considering the opinions expressed at the public meetings and in writing, the Committee formulates recommendations, which then must be approved by the agencies.
The Committee presented proposals for coding changes for implementation in FY 2021 at a public meeting held on September 10–11, 2019, and finalized the coding changes after consideration of comments received at the meetings and in writing by November 08, 2019.
The Committee held its 2020 meeting on March 17–18, 2020. The deadline for submitting comments on these code proposals was April 17, 2020. It was announced at this meeting that any new diagnosis and procedure codes for which there was consensus of public support and for which complete tabular and indexing changes would be made by June 2020 would be included in the October 1, 2020 update to the ICD–10–CM diagnosis and ICD–10–PCS procedure code sets. As discussed in earlier sections of the preamble of this final rule, there are new, revised, and deleted ICD–10–CM diagnosis codes and ICD–10–PCS procedure codes that are captured in Table 6A—New Diagnosis Codes, Table 6B—New Procedure Codes, Table 6C.—Invalid Diagnosis Codes, and Table 6E—Revised Diagnosis Code Titles for this final rule, which are available via the internet on the CMS website at:
Live Webcast recordings of the discussions of the diagnosis and procedure codes at the Committee's September 10–11, 2019 meeting and a recording of the virtual meeting held on March 17–18, 2020 can be obtained from the CMS website at:
We encourage commenters to address suggestions on coding issues involving diagnosis codes via Email to:
Questions and comments concerning the procedure codes should be submitted via Email to:
In response to the commenter's recommendation that clear and timely transcripts or recordings of such meetings should always be made publicly available, as well as any written comments that are provided following public meetings so that stakeholders can understand the different perspectives under consideration, we note that we announce during the meeting that a link to the recording (or webcast) will be made publicly available on both the CDC and CMS web pages following the meeting, along with the slides that were presented. This information is generally posted no later than one week following the meeting and additional details regarding each organization's website where materials are posted is also included in our IPPS rule as discussed earlier in this section. With respect to making written comments that are received after the meeting publicly available so that stakeholders can understand different perspectives, we will take that into consideration for the future. We note that some organizations, such as the AHIMA, routinely display the comments they have submitted in response to code proposals on their website. Therefore, in response to the commenter's concern, we believe that the processes we currently have in place enable the CMS staff to have the background and understanding of the current trajectory of treatment options to be considered in our proposed policies.
In the September 7, 2001 final rule implementing the IPPS new technology add-on payments (66 FR 46906), we indicated we would attempt to include proposals for procedure codes that would describe new technology discussed and approved at the Spring meeting as part of the code revisions effective the following October.
Section 503(a) of Public Law 108–173 included a requirement for updating diagnosis and procedure codes twice a year instead of a single update on October 1 of each year. This requirement was included as part of the amendments to the Act relating to recognition of new technology under the IPPS. Section 503(a) of Public Law 108–173 amended section 1886(d)(5)(K) of the Act by adding a clause (vii) which states that the Secretary shall provide for the addition of new diagnosis and procedure codes on April 1 of each year, but the addition of such codes shall not require the Secretary to adjust the payment (or diagnosis-related group classification) until the fiscal year that begins after such date. This requirement improves the recognition of new technologies under the IPPS by providing information on these new technologies at an earlier date. Data will be available 6 months earlier than would be possible with updates occurring only once a year on October 1.
While section 1886(d)(5)(K)(vii) of the Act states that the addition of new diagnosis and procedure codes on April 1 of each year shall not require the Secretary to adjust the payment, or DRG classification, under section 1886(d) of the Act until the fiscal year that begins after such date, we have to update the DRG software and other systems in order to recognize and accept the new codes. We also publicize the code changes and the need for a mid-year systems update by providers to identify the new codes. Hospitals also have to obtain the new code books and encoder updates, and make other system changes in order to identify and report the new codes.
The commenter acknowledged that CMS may grant implementation exceptions for codes capturing new technology and understands that topics presented during the fall meeting are considered for April 1 implementation if there is a strong and convincing case made by the requester at the Committee's public meeting. However, relying on this rationale, the commenter stated their belief that it is critical to establish a process for expedited assignment of new ICD–10 diagnosis codes for therapeutic areas that have medications under review via an accelerated FDA review. According to the commenter, without timely assignment of ICD–10 diagnosis codes, access to new products may be delayed or denied, and resources appropriated by Congress and used by FDA for its accelerated approval pathways go to waste. The commenter encouraged CMS to revise and update the ICD–10 process to ensure timely access to these innovative products.
The ICD–10 (previously the ICD–9–CM) Coordination and Maintenance Committee holds its meetings in the spring and fall in order to update the codes and the applicable payment and reporting systems by October 1 of each year. Items are placed on the agenda for the Committee meeting if the request is received at least 3 months prior to the meeting. This requirement allows time for staff to review and research the coding issues and prepare material for discussion at the meeting. It also allows time for the topic to be publicized in meeting announcements in the
A discussion of this timeline and the need for changes are included in the December 4–5, 2005 ICD–9–CM Coordination and Maintenance Committee Meeting minutes. The public agreed that there was a need to hold the fall meetings earlier, in September or October, in order to meet the new implementation dates. The public provided comment that additional time would be needed to update hospital systems and obtain new code books and coding software. There was considerable concern expressed about the impact this April update would have on providers.
In the FY 2005 IPPS final rule, we implemented section 1886(d)(5)(K)(vii) of the Act, as added by section 503(a) of Public Law 108–173, by developing a mechanism for approving, in time for the April update, diagnosis and procedure code revisions needed to describe new technologies and medical services for purposes of the new technology add-on payment process. We also established the following process for making these determinations. Topics considered during the Fall ICD–10 (previously ICD–9–CM) Coordination and Maintenance Committee meeting are considered for an April 1 update if a strong and convincing case is made by the requestor at the Committee's public meeting. The request must identify the reason why a new code is needed in April for purposes of the new technology process. The participants at the meeting and those reviewing the Committee meeting materials and live webcast are provided the opportunity to comment on this expedited request. All other topics are considered for the October 1 update. Participants at the Committee meeting are encouraged to comment on all such requests.
There were not any requests submitted for an expedited April 1, 2020 implementation of a new code at the September 10–11, 2019 Committee meeting. However, as announced by the CDC on December 9, 2019, a new ICD–10 emergency code was established by the World Health Organization (WHO) in response to recent occurrences of vaping related disorders. Consistent with this update, the CDC/NCHS implemented a new ICD–10–CM diagnosis code, U07.0 (Vaping-related disorder) for U.S. reporting of vaping-related disorders effective April 1, 2020. In addition, as announced by the CDC, a new emergency code was established by the WHO on January 31, 2020, in response to the 2019 Novel Coronavirus (2019–nCoV) disease outbreak that was declared a public health emergency of international concern. Consistent with this update, the CDC/NCHS implemented a new ICD–10–CM diagnosis code, U07.1 (COVID–19) for U.S. reporting of the 2019 Novel Coronavirus disease effective April 1, 2020. We refer the reader to the CDC web page at
We provided the MS–DRG assignments for these codes effective with discharges on and after April 1, 2020, consistent with our established process for assigning new diagnosis codes. Specifically, we review the predecessor diagnosis code and MS–DRG assignment most closely associated with the new diagnosis code, and consider other factors that may be relevant to the MS–DRG assignment, including the severity of illness, treatment difficulty, and the resources utilized for the specific condition/diagnosis. We note that this process does not automatically result in the new diagnosis code being assigned to the same MS–DRG as the predecessor code. Effective with discharges on and after April 1, 2020, diagnosis code U07.0 is assigned to MDC 04 (Diseases and Disorders of the Respiratory System) in MS–DRGs 205 and 206 (Other Respiratory System Diagnoses with and without MCC, respectively), consistent with the assignment of the predecessor diagnosis code. Effective with discharges on and after April 1, 2020, diagnosis code U07.1 is assigned to MDC 04 in MS–DRGs 177, 178 and 179
These assignments for diagnosis codes U07.0 and U07.1 are reflected in Table 6A- New Diagnosis Codes associated with the proposed rule and this final rule (which is available via the internet on the CMS website at
In response to the COVID–19 pandemic and new treatments that have followed, on July 30, 2020 we announced the implementation of 12 new ICD–10–PCS procedure codes to identify the introduction or infusion of therapeutics for treating hospital inpatients with COVID–19. These procedure codes will afford the healthcare industry the ability to track the use of these drugs and their effectiveness in the inpatient setting, effective with discharges on and after August 1, 2020. The 12 new ICD–10–PCS procedure codes listed in this section of this rule are designated as non-O.R. and do not affect any MDC or MS–DRG assignment as shown in the following table.
We also note that Change Request (CR) 11623, Transmittal 10317, titled “Update to the International Classification of Diseases, Tenth Revision, (ICD–10) Diagnosis Codes for Vaping Related Disorder and Diagnosis and Procedure Codes for the 2019 Novel Coronavirus (COVID–19)”, was issued on August 21, 2020 (available via the internet on the CMS website at:
In response to the implementation of these procedure codes, we subsequently released a new updated version of the ICD–10 MS–DRG Grouper and Medicare Code Editor (MCE) software, Version 37.2, effective with discharges on or after August 1, 2020 reflecting these new codes, which replaced the ICD–10 MS–DRG Grouper and Medicare Code Editor (MCE) software, Version 37.1 R1 that reflected diagnosis codes U07.0 (Vaping-related disorder) and U07.1 (COVID–19). The updated software, along with the updated ICD–10 MS–DRG V37.2 Definitions Manual and the Definitions of Medicare Code Edits V37.2 manual are available at
ICD–9–CM addendum and code title information is published on the CMS website at:
Information on ICD–10–CM diagnosis codes, along with the Official ICD–10–CM Coding Guidelines, can also be found on the CDC website at:
The following chart shows the number of ICD–10–CM and ICD–10–PCS codes and code changes since FY 2016 when ICD–10 was implemented.
As mentioned previously, the public is provided the opportunity to comment on any requests for new diagnosis or procedure codes discussed at the ICD–10 Coordination and Maintenance Committee meeting.
In the FY 2008 IPPS final rule with comment period (72 FR 47246 through 47251), we discussed the topic of Medicare payment for devices that are replaced without cost or where credit for a replaced device is furnished to the hospital. We implemented a policy to reduce a hospital's IPPS payment for certain MS–DRGs where the implantation of a device that subsequently failed or was recalled determined the base MS–DRG assignment. At that time, we specified that we will reduce a hospital's IPPS payment for those MS–DRGs where the hospital received a credit for a replaced device equal to 50 percent or more of the cost of the device.
In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51556 through 51557), we clarified this policy to state that the policy applies if the hospital received a credit equal to 50 percent or more of the cost of the replacement device and issued instructions to hospitals accordingly.
As discussed in the FY 2021 IPPS/LTCH proposed rule (84 FR 32560 through 32564) for FY 2021, we proposed to delete MS–DRGs 129 and 130, add new MS–DRGs 140, 141, and 142 (Major Head and Neck Procedures with MCC, with CC, and without CC/MCC, respectively) and to reassign a subset of the procedures currently assigned to MS–DRGs 129 and 130 to new MS–DRGs 140 through 142. Additionally, we proposed to create new MS–DRGs 521 and 522 (Hip Replacement with Principal Diagnosis of Hip Fracture with and without MCC, respectively) and to assign a subset of the procedures currently assigned to MS–DRGs 469 and 470 to new MS–DRGs 521 and 522. (We note that in the proposed rule, we inadvertently referred to these as MS–DRGs 551 and 552.)
As stated in the FY 2016 IPPS/LTCH PPS proposed rule (80 FR 24409), we generally map new MS–DRGs onto the
As discussed in section II.E.5.a. of the preamble of this final rule, we are finalizing our proposal to delete MS–DRGs 129 and 130, add new MS–DRGs 140, 141, and 142, and to reassign a subset of the procedures currently assigned to MS–DRGs 129 and 130 to new MS–DRGs 140 through 142. Additionally, we are finalizing our proposal to create new MS–DRGs 521 and 522 and to reassign a subset of the procedures currently assigned to MS–DRGs 469 and 470 to new MS–DRGs 521 and 522. We did not receive any public comments opposing our proposal to delete MS–DRGs 129 and 130. Additionally, we did not receive any public comments opposing our proposal to add MS–DRGs 140, 141, 142, 521 and 522 to the policy for replaced devices offered without cost or with credit as reflected in the previous table or to continue to include the existing MS–DRGs currently subject to the policy. Therefore, we are finalizing the list of MS–DRGs in the table included in the proposed rule and in this rule that will be subject to the replaced devices offered without cost or with a credit policy effective October 1, 2020.
The final list of MS–DRGs subject to the IPPS policy for replaced devices offered without cost or with a credit will be issued to providers in the form of a Change Request (CR).
We received public comments on MS–DRG related issues that were outside the scope of the proposals included in the FY 2021 IPPS/LTCH PPS proposed rule.
Because we consider these public comments to be outside the scope of the proposed rule, we are not addressing them in this final rule. As stated in section II.E.1.b. of the preamble of this final rule, we encourage individuals with comments about MS–DRG classifications to submit these comments no later than November 1, 2020 so that they can be considered for possible inclusion in the annual proposed rule. We will consider these public comments for possible proposals in future rulemaking as part of our annual review process.
Consistent with our established policy, in developing the MS–DRG relative weights for FY 2021, we proposed to use two data sources: Claims data and cost report data. The claims data source is the MedPAR file, which includes fully coded diagnostic and procedure data for all Medicare inpatient hospital bills. The FY 2019 MedPAR data used in this final rule include discharges occurring on October 1, 2018, through September 30, 2019, based on bills received by CMS through March 31, 2019, from all hospitals subject to the IPPS and short-term, acute care hospitals in Maryland (which at that time were under a waiver from the IPPS). The FY 2019 MedPAR file used in calculating the relative weights includes data for approximately 9,218,950 Medicare discharges from IPPS providers. Discharges for Medicare beneficiaries enrolled in a Medicare Advantage managed care plan are excluded from this analysis. These discharges are excluded when the MedPAR “GHO Paid” indicator field on the claim record is equal to “1” or when the MedPAR DRG payment field, which represents the total payment for the claim, is equal to the MedPAR “Indirect Medical Education (IME)” payment field, indicating that the claim was an “IME only” claim submitted by a teaching hospital on behalf of a beneficiary enrolled in a Medicare Advantage managed care plan. In addition, the March 31, 2020 update of the FY 2019 MedPAR file complies with version 5010 of the X12 HIPAA Transaction and Code Set Standards, and includes a variable called “claim type.” Claim type “60” indicates that the claim was an inpatient claim paid as fee-for-service. Claim types “61,” “62,” “63,” and “64” relate to encounter claims, Medicare Advantage IME claims, and HMO no-pay claims. Therefore, the calculation of the relative weights for FY 2021 also excludes claims with claim type values not equal to “60.” The data exclude CAHs, including hospitals that subsequently became CAHs after the period from which the data were taken. We note that the FY 2021 relative weights are based on the ICD–10–CM diagnosis codes and ICD–10–PCS procedure codes from the FY 2019 MedPAR claims data, grouped through the ICD–10 version of the FY 2021 GROUPER (Version 38).
The second data source used in the cost-based relative weighting methodology is the Medicare cost report data files from the HCRIS. Normally, we use the HCRIS dataset that is 3 years prior to the IPPS fiscal year. Specifically, we used cost report data from the March 31, 2020 update of the FY 2018 HCRIS for calculating the FY 2021 cost-based relative weights.
In this final rule, as we proposed, we calculated the FY 2021 relative weights based on 19 CCRs, as we did for FY 2020. The methodology we proposed to use to calculate the FY 2021 MS–DRG cost-based relative weights based on claims data in the FY 2019 MedPAR file and data from the FY 2018 Medicare cost reports is as follows:
• To the extent possible, all the claims were regrouped using the FY 2021 MS–DRG classifications discussed in sections II.B. and II.F. of the preamble of this final rule.
• The transplant cases that were used to establish the relative weights for heart and heart-lung, liver and/or intestinal, and lung transplants (MS–DRGs 001, 002, 005, 006, and 007, respectively) were limited to those Medicare-approved transplant centers that have cases in the FY 2019 MedPAR file.
• Organ acquisition costs for kidney, heart, heart-lung, liver, lung, pancreas, and intestinal (or multivisceral organs) transplants continue to be paid on a reasonable cost basis. Because these acquisition costs are paid separately from the prospective payment rate, it is necessary to subtract the acquisition charges from the total charges on each transplant bill that showed acquisition charges before computing the average cost for each MS–DRG and before eliminating statistical outliers.
• Claims with total charges or total lengths of stay less than or equal to zero were deleted. Claims that had an amount in the total charge field that differed by more than $30.00 from the sum of the routine day charges, intensive care charges, pharmacy charges, implantable devices charges, supplies and equipment charges, therapy services charges, operating room charges, cardiology charges, laboratory charges, radiology charges, other service charges, labor and delivery charges, inhalation therapy charges, emergency room charges, blood and blood products charges, anesthesia charges, cardiac catheterization charges, CT scan charges, and MRI charges were also deleted.
• At least 92.8 percent of the providers in the MedPAR file had charges for 14 of the 19 cost centers. All claims of providers that did not have charges greater than zero for at least 14 of the 19 cost centers were deleted. In other words, a provider must have no more than five blank cost centers. If a provider did not have charges greater than zero in more than five cost centers, the claims for the provider were deleted.
• Statistical outliers were eliminated by removing all cases that were beyond 3.0 standard deviations from the geometric mean of the log distribution of both the total charges per case and the total charges per day for each MS–DRG.
• Effective October 1, 2008, because hospital inpatient claims include a POA indicator field for each diagnosis present on the claim, only for purposes of relative weight-setting, the POA indicator field was reset to “Y” for “Yes” for all claims that otherwise have an “N” (No) or a “U” (documentation insufficient to determine if the condition was present at the time of inpatient admission) in the POA field.
Under current payment policy, the presence of specific HAC codes, as indicated by the POA field values, can generate a lower payment for the claim. Specifically, if the particular condition is present on admission (that is, a “Y” indicator is associated with the diagnosis on the claim), it is not a HAC, and the hospital is paid for the higher severity (and, therefore, the higher weighted MS–DRG). If the particular condition is not present on admission (that is, an “N” indicator is associated with the diagnosis on the claim) and there are no other complicating conditions, the DRG GROUPER assigns the claim to a lower severity (and, therefore, the lower weighted MS–DRG) as a penalty for allowing a Medicare inpatient to contract a HAC. While the POA reporting meets policy goals of encouraging quality care and generates program savings, it presents an issue for the relative weight-setting process. Because cases identified as HACs are likely to be more complex than similar cases that are not identified as HACs, the charges associated with HAC cases are likely to be higher as well. Therefore, if the higher charges of these HAC claims are grouped into lower severity MS–DRGs prior to the relative weight-setting process, the relative weights of these particular MS–DRGs would become artificially inflated, potentially skewing the relative weights. In addition, we want to protect the integrity of the budget neutrality process by ensuring that, in estimating payments, no increase to the standardized amount occurs as a result of lower overall payments in a previous year that stem from using weights and case-mix that are based on lower severity MS–DRG assignments. If this would occur, the anticipated cost savings from the HAC policy would be lost.
To avoid these problems, we reset the POA indicator field to “Y” only for relative weight-setting purposes for all claims that otherwise have an “N” or a “U” in the POA field. This resetting “forced” the more costly HAC claims into the higher severity MS–DRGs as appropriate, and the relative weights calculated for each MS–DRG more closely reflect the true costs of those cases.
In addition, in the FY 2013 IPPS/LTCH PPS final rule, for FY 2013 and subsequent fiscal years, we finalized a policy to treat hospitals that participate in the Bundled Payments for Care Improvement (BPCI) initiative the same as prior fiscal years for the IPPS payment modeling and ratesetting process without regard to hospitals' participation within these bundled payment models (77 FR 53341 through 53343). Specifically, because acute care hospitals participating in the BPCI Initiative still receive IPPS payments under section 1886(d) of the Act, we include all applicable data from these subsection (d) hospitals in our IPPS payment modeling and ratesetting calculations as if the hospitals were not participating in those models under the BPCI initiative. We refer readers to the FY 2013 IPPS/LTCH PPS final rule for a complete discussion on our final policy for the treatment of hospitals participating in the BPCI initiative in our ratesetting process. For additional information on the BPCI initiative, we refer readers to the CMS' Center for Medicare and Medicaid Innovation's website at:
The participation of hospitals in the BPCI initiative concluded on September 30, 2018. The participation of hospitals in the BPCI Advanced model started on October 1, 2018. The BPCI Advanced model, tested under the authority of section 1115A of the Act, is comprised of a single payment and risk track, which bundles payments for multiple services beneficiaries receive during a Clinical Episode. Acute care hospitals may participate in BPCI Advanced in one of two capacities: As a model Participant or as a downstream Episode Initiator. Regardless of the capacity in which they participate in the BPCI Advanced model, participating acute care hospitals will continue to receive IPPS payments under section 1886(d) of the Act. Acute care hospitals that are Participants also assume financial and quality performance accountability for Clinical Episodes in the form of a reconciliation payment. For additional information on the BPCI Advanced model, we refer readers to the BPCI Advanced web page on the CMS Center for Medicare and Medicaid Innovation's website at:
The charges for each of the 19 cost groups for each claim were standardized to remove the effects of differences in area wage levels, IME and DSH payments, and for hospitals located in Alaska and Hawaii, the applicable cost-of-living adjustment. Because hospital charges include charges for both operating and capital costs, we standardized total charges to remove the effects of differences in geographic adjustment factors, cost-of-living adjustments, and DSH payments under the capital IPPS as well. Charges were then summed by MS–DRG for each of the 19 cost groups so that each MS–DRG had 19 standardized charge totals. Statistical outliers were then removed. These charges were then adjusted to cost by applying the national average CCRs developed from the FY 2018 cost report data.
The 19 cost centers that we used in the relative weight calculation are shown in a supplemental data file posted via the internet on the CMS website for this final rule and available at
We invited public comments on our proposals related to recalibration of the FY 2021 relative weights and the changes in relative weights from FY 2020.
In the proposed rule, we noted that in the FY 2020 IPPS/LTCH PPS final rule, we adopted a temporary one-time measure for FY 2020 for an MS–DRG where the FY 2018 relative weight declined by 20 percent from the FY 2017 relative weight, and the FY 2020 relative weight would have declined by 20 percent or more from the FY 2019 relative weight, which was maintained at the FY 2018 relative weight. For an MS–DRG meeting this criterion, the FY 2020 relative weight was set equal to the FY 2019 relative weight, which in turn had been set equal to the FY 2018 relative weight (84 FR 42167). For FY 2020, the only MS–DRG meeting this criterion was MS–DRG 215. We invited public comments on the proposed FY 2021 weight for MS–DRG 215 (Other Heart Assist System Implant) as set forth in Table 5 associated with the proposed rule, including comments on whether we should consider a policy under sections 1886(d)(4)(B) and (C) of the Act similar to the measure adopted in the FY 2020 IPPS/LTCH PPS final rule to maintain the FY 2021 relative weight equal to the FY 2020 relative weight for MS–DRG 215, or an alternative approach such as averaging the FY 2020 relative weight and the otherwise applicable FY 2021 weight.
Some commenters requested that CMS consider this approach in any situation when the relative weight for an MS–DRG is drastically reduced in a given year, particularly when it follows a significant decline in prior years. Some commenters pointed to MS–DRGs 796 (Vaginal Delivery with Sterilization/D&C with MCC) and 933 (Extensive Burns or Full Thickness Burns with MV >96 hrs without Skin Graft), which also have significant decreases relative to FY 2020.
With regard to the commenters who raised concerns about other MS–DRGs with significant reductions relative to FY 2020, the other MS–DRGs are low volume in our claims data, and therefore typically experience a greater degree of year-to-year variation. For example, while MS–DRGs 796 and 933 would have significant decreases relative to FY 2020, those MS–DRGs experienced considerable increases between FY 2019 and FY 2020. We acknowledge the longstanding concerns related to low volume MS–DRGs and will take into consideration the unique issues relating to such MS–DRGs and the stability of their weights for future rulemaking.
As discussed in section II.E.2.b. of this final rule, we proposed, and are finalizing, to create new MS–DRG 018 for cases that include procedures describing CAR T-cell therapies, which are currently reported using ICD–10–PCS procedure codes XW033C3 or XW043C3. As discussed in section IV.I. of this final rule, given the high cost of the CAR T-cell product, we proposed, and are finalizing, a differential payment for cases where the CAR T-cell product is provided without cost as part of a clinical trial to ensure that the payment amount for CAR T-cell therapy clinical trial cases appropriately reflects the relative resources required for providing CAR T-cell therapy as part of a clinical trial.
We stated in the proposed rule that we also believe it would be appropriate to modify our existing relative weight methodology to ensure that the relative weight for new MS–DRG 018 appropriately reflects the relative resources required for providing CAR T-cell therapy outside of a clinical trial, while still accounting for the clinical trial cases in the overall average cost for all MS–DRGs. Specifically, we proposed that clinical trial claims that group to new MS–DRG 018 would not be included when calculating the average cost for new MS–DRG 018 that is used to calculate the relative weight for this MS–DRG, so that the relative weight reflects the costs of the CAR T-cell therapy drug. Consistent with our analysis of the FY 2019 MedPAR claims data as discussed in section IV.I. of this final rule, we identified clinical trial claims as claims that contain ICD–10–CM diagnosis code Z00.6 or contain standardized drug charges of less than $373,000, which is the average sales price of KYMRIAH and YESCARTA, which are the two CAR T-cell biological products licensed to treat relapsed/refractory large B-cell lymphoma as of the time of the development of the proposed rule and this final rule. We also proposed to calculate the following adjustment to account for the CAR T-cell therapy cases identified as clinical trial cases in calculating the national average standardized cost per case that is used to calculate the relative weights for all MS–DRGs and for purposes of budget neutrality and outlier simulations:
• Calculate the average cost for cases to be assigned to new MS–DRG 018 that contain ICD–10–CM diagnosis code Z00.6 or contain standardized drug charges of less than $373,000.
• Calculate the average cost for cases to be assigned to new MS–DRG 018 that do not contain ICD–10–CM diagnosis code Z00.6 or standardized drug charges of at least $373,000.
• Calculate an adjustor by dividing the average cost calculated in step 1 by the average cost calculated in step 2.
• Apply the adjustor calculated in step 3 to the cases identified in step 1 as clinical trial cases, then add this adjusted case count to the non-clinical trial case count prior to calculating the average cost across all MS–DRGs.
Each year, when we calculate the relative weights, we use a transfer-adjusted case count for each MS–DRG, which accounts for payment adjustments resulting from our postacute care transfer policy. This process is described in the FY 2006 IPPS/LTCH PPS final rule (70 FR 47697). We proposed to apply this adjustor to the case count for MS–DRG 018 in a similar manner. We proposed to first calculate the transfer-adjusted case count for MS–DRG 018, and then further adjust the transfer-adjusted case count by the adjustor described previously. Then, we proposed to use this adjusted case count for MS–DRG 018 in calculating the national average cost per case, which is used in the calculation of the relative weights. Based on the December 2019 update of the FY 2019 MedPAR file, we estimated that the average costs of CAR T-cell therapy cases identified as clinical trial cases were 15% of the average costs of the CAR T-cell therapy cases identified as non-clinical trial cases, and therefore, in calculating the national average cost per case for purposes of the proposed rule, each case identified as a clinical trial case was adjusted to 0.15. We indicated that we expected to recalculate this proposed adjustor for the CAR T cell therapy clinical trial cases for the final rule based on the updated data available. We also noted that we were applying this proposed adjustor for CAR T-cell therapy clinical trial cases for purposes of budget neutrality and outlier simulations, as discussed further in section II.A. of the Addendum to the proposed rule and this final rule.
We invited public comments on our proposal.
Some commenters also raised issues in the context of the payment adjustment for CAR T-cell clinical trial cases regarding two relatively less frequent scenarios. Commenters stated that when CAR T-cell therapy products are used out of specification (also termed expanded access), hospitals do not incur the cost of the CAR T-cell therapy product, but the claim would not include ICD–10–CM diagnosis code Z00.6 because the case is not part of a clinical trial. Commenters identified an additional scenario, in which the CAR T-cell therapy product is purchased in the usual manner, but the case involves a clinical trial of another drug, in which case ICD–10–CM diagnosis code Z00.6 would be included on the claim.
In response to commenters who raised issues in the context of the payment adjustment for CAR T-cell clinical trial cases regarding two scenarios, as discussed elsewhere in this final rule, we are adjusting our proposed policy for the payment adjustment for CAR T-cell clinical trial cases to address these scenarios. Similarly, we are adjusting our methodology here such that (a) when the CAR T-cell therapy product is purchased in the usual manner, but the case involves a clinical trial of a different product, the claim will be included when calculating the average cost for cases not determined to be clinical trial cases to the extent such cases can be identified in the historical data, and (b) when there is expanded access use of immunotherapy, these cases will be included when calculating the average cost for cases determined to be clinical trial cases to the extent such cases can be identified in the historical data. To the best of our knowledge there are no claims in the historical data used in the calculation of the adjustment for cases involving a clinical trial of a different product, and to the extent the historical data contain claims for cases involving expanded access use of immunotherapy we believe those claims would have drug charges less than $373,000.
After consideration of public comments received, we are finalizing our proposal to not include claims determined to be clinical trial claims that group to new MS–DRG 018 when calculating the average cost for new MS–DRG 018 that is used to calculate the relative weight for this MS–DRG, with the additional refinements that (a) when the CAR T-cell therapy product is purchased in the usual manner, but the case involves a clinical trial of a different product, the claim will be included when calculating the average cost for new MS–DRG 018 to the extent such claims can be identified in the historical data, and (b) when there is expanded access use of immunotherapy, these cases will not be included when calculating the average cost for new MS–DRG 018 to the extent such claims can be identified in the historical data. We are also finalizing our proposal to calculate the adjustment described above to account for the CAR T-cell therapy cases determined to be clinical trial cases, with the additional refinement of including revenue center 891 in our calculation of standardized drug charges for MS–DRG 018. Applying this finalized methodology, based on the March 2020 update of the FY 2019 MedPAR file, we estimate that the average costs of CAR T-cell therapy cases determined to be clinical trial cases ($46,0662) are 17 percent of the average costs of CAR T cell therapy cases determined to be non-clinical trial cases ($276,042), and therefore, in calculating the national average cost per case for purposes of this final rule, each case identified as a clinical trial case was adjusted to 0.17. We also note that we are applying this finalized adjustor for cases determined to be CAR T-cell therapy clinical trial cases for purposes of budget neutrality and outlier simulations, as discussed further in section II.A. of the Addendum to the this final rule.
We developed the national average CCRs as follows:
Using the FY 2018 cost report data, we removed CAHs, Indian Health Service hospitals, all-inclusive rate hospitals, and cost reports that represented time periods of less than 1 year (365 days). We included hospitals located in Maryland because we include their charges in our claims database. Then we created CCRs for each provider for each cost center (see the supplemental data file for line items used in the calculations) and removed any CCRs that were greater than 10 or less than 0.01. We normalized the departmental CCRs by dividing the CCR for each department by the total CCR for the hospital for the purpose of trimming the data. Then we took the logs of the normalized cost center CCRs and removed any cost center CCRs where the log of the cost center CCR was greater or less than the mean log plus/minus 3 times the standard deviation for the log of that cost center CCR. Once the cost report data were trimmed, we calculated a Medicare-specific CCR. The Medicare-specific CCR was determined by taking the Medicare charges for each line item from Worksheet D–3 and deriving the Medicare-specific costs by applying the hospital-specific departmental CCRs to the Medicare-specific charges for each line item from Worksheet D–3. Once each hospital's Medicare-specific costs were established, we summed the total Medicare-specific costs and divided by the sum of the total Medicare-specific charges to produce national average, charge-weighted CCRs.
After we multiplied the total charges for each MS–DRG in each of the 19 cost centers by the corresponding national average CCR, we summed the 19 “costs” across each MS–DRG to produce a total standardized cost for the MS–DRG. The average standardized cost for each MS–DRG was then computed as the total standardized cost for the MS–DRG divided by the transfer-adjusted case count for the MS–DRG. The average cost for each MS–DRG was then divided by the national average standardized cost per case to determine the relative weight.
The FY 2021 cost-based relative weights were then normalized by an adjustment factor of 1.819227 so that the average case weight after recalibration was equal to the average case weight before recalibration. The normalization adjustment is intended to ensure that recalibration by itself neither increases nor decreases total payments under the IPPS, as required by section 1886(d)(4)(C)(iii) of the Act.
The 19 national average CCRs for FY 2021 are as follows:
Since FY 2009, the relative weights have been based on 100 percent cost weights based on our MS–DRG grouping system.
When we recalibrated the DRG weights for previous years, we set a threshold of 10 cases as the minimum number of cases required to compute a reasonable weight. We proposed to use that same case threshold in recalibrating the MS–DRG relative weights for FY 2021. Using data from the FY 2019 MedPAR file, there were 7 MS–DRGs that contain fewer than 10 cases. For FY 2021, because we do not have sufficient MedPAR data to set accurate and stable cost relative weights for these low-volume MS–DRGs, we proposed to compute relative weights for the low-volume MS–DRGs by adjusting their final FY 2020 relative weights by the percentage change in the average weight of the cases in other MS–DRGs from FY 2020 to FY 2021. The crosswalk table is as follows.
After consideration of the comments we received, we are finalizing our proposals, with the modifications for recalibrating the relative weights for FY 2021 for MS–DRG 018 by including the charges reported in revenue center 891 in determining whether the case should be determined to be a non-clinical trial case, and for MS–DRG 215 by setting the relative weight equal to the average of the FY 2020 relative weight and the otherwise applicable FY 2021 weight.
Sections 1886(d)(5)(K) and (L) of the Act establish a process of identifying and ensuring adequate payment for new medical services and technologies (sometimes collectively referred to in this section as “new technologies”) under the IPPS. Section 1886(d)(5)(K)(vi) of the Act specifies that a medical service or technology will be considered new if it meets criteria established by the Secretary after notice and opportunity for public comment. Section 1886(d)(5)(K)(ii)(I) of the Act specifies that a new medical service or technology may be considered for new technology add-on payment if, based on the estimated costs incurred with respect to discharges involving such service or technology, the DRG prospective payment rate otherwise applicable to such discharges under this subsection is inadequate. We note that, beginning with discharges occurring in FY 2008, CMS transitioned from CMS– DRGs to MS–DRGs. The regulations at 42 CFR 412.87 implement these provisions and § 412.87(b) specifies three criteria for a new medical service or technology to receive the additional payment: (1) The medical service or technology must be new; (2) the medical service or technology must be costly such that the DRG rate otherwise applicable to discharges involving the medical service or technology is determined to be inadequate; and (3) the service or technology must demonstrate a substantial clinical improvement over existing services or technologies. In addition, certain transformative new devices and Qualified Infectious Disease Products may qualify under an alternative inpatient new technology add-on payment pathway, as set forth in the regulations at § 412.87(c) and (d). In this rule, we highlight some of the major statutory and regulatory provisions relevant to the new technology add-on payment criteria, as well as other information. For a complete discussion on the new technology add-on payment criteria, we refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51572 through 51574) and the FY 2020 IPPS/LTCH PPS final rule (84 FR 42288 through 42300).
Under the first criterion, as reflected in § 412.87(b)(2), a specific medical service or technology will be considered “new” for purposes of new medical service or technology add-on payments until such time as Medicare data are available to fully reflect the cost of the technology in the MS–DRG weights through recalibration. We note that we do not consider a service or technology to be new if it is substantially similar to one or more existing technologies. That is, even if a medical product receives a new FDA approval or clearance, it may not necessarily be considered “new” for purposes of new technology add-on payments if it is “substantially similar” to another medical product that was approved or cleared by FDA and has been on the market for more than 2 to 3 years. In the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43813 through 43814), we established criteria for evaluating whether a new technology is substantially similar to an existing technology, specifically: (1) Whether a product uses the same or a similar mechanism of action to achieve a therapeutic outcome; (2) whether a product is assigned to the same or a different MS–DRG; and (3) whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population. If a technology meets all three of these criteria, it would be considered substantially similar to an existing technology and would not be considered “new” for purposes of new technology add-on payments. For a detailed discussion of the criteria for substantial similarity, we refer readers to the FY 2006 IPPS final rule (70 FR 47351 through 47352), and the FY 2010 IPPS/LTCH PPS final rule (74 FR 43813 through 43814).
Under the second criterion, § 412.87(b)(3) further provides that, to be eligible for the add-on payment for new medical services or technologies, the MS–DRG prospective payment rate otherwise applicable to discharges involving the new medical service or technology must be assessed for adequacy. Under the cost criterion, consistent with the formula specified in section 1886(d)(5)(K)(ii)(I) of the Act, to assess the adequacy of payment for a new technology paid under the applicable MS–DRG prospective payment rate, we evaluate whether the charges for cases involving the new
As finalized in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41275), beginning with FY 2020, we include the thresholds applicable to the next fiscal year (previously included in Table 10 of the annual IPPS/LTCH PPS proposed and final rules) in the data files associated with the prior fiscal year. Accordingly, the final thresholds for applications for new technology add-on payments for FY 2022 are presented in a data file that is available on the CMS website, along with the other data files associated with this FY 2021 final rule, by clicking on the FY 2021 IPPS Final Rule Home Page at:
In the FY 2021 IPPS/LTCH PPS proposed rule, we made proposals relating to our evaluation of the cost criterion for technologies that are proposed to be assigned to a new MS–DRG (85 FR 32643 and 32644 and 32650 and 32651). We noted that, as we have discussed in prior rulemaking with regard to the potential creation of a new MS–DRG for CAR T-cell therapies (83 FR 41172), if a new MS–DRG for CAR T-cell therapies were to be created, then consistent with section 1886(d)(5)(K)(ix) of the Act, there may no longer be a need for a new technology add-on payment under section 1886(d)(5)(K)(ii)(III) of the Act. Section 1886(d)(5)(K)(ix) of the Act requires that, before establishing any add-on payment for a new medical service or technology, the Secretary shall seek to identify one or more DRGs associated with the new technology, based on similar clinical or anatomical characteristics and the costs of the technology and shall assign the new technology into a DRG where the average costs of care most closely approximate the costs of care using the new technology. As discussed in previous rulemaking (71 FR 47996), no add-on payment will be made if the new technology is assigned to a DRG that most closely approximates its costs.
In the proposed rule, we referred readers to the FY 2016 IPPS/LTCH PPS final rule (80 FR 49481 and 49482), where we discussed whether the WATCHMAN® System met the cost criterion for a new technology add-on payment. Specifically, we discussed whether the threshold value associated with a proposed new MS–DRG should be considered in determining whether the applicant meets the cost criterion. We also discussed instances in the past where the coding associated with a new technology application is included in a finalized policy to change one or more MS–DRGs. For example, in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53360 through 53362), we described the cost analysis for the Zenith® Fenestrated Abdominal Aortic Aneurysm Endovascular Graft, which was identified by ICD–9–CM procedure code 39.78 (Endovascular implantation of branching or fenestrated graft(s) in aorta). In that same rule, we finalized a change to the assignment of that procedure code, reassigning it from MS– DRGs 252, 253, and 254 to MS–DRGs 237 and 238. Because of that change, we determined that, for FY 2013, in order for the Zenith® Fenestrated Abdominal Aortic Aneurysm Endovascular Graft to meet the cost criteria, it must demonstrate that the average case weighted standardized charge per case exceeded the thresholds for MS–DRGs 237 and 238. We noted that, in that example, MS–DRGs 237 and 238 existed previously; therefore, thresholds that were 75 percent of one standard deviation beyond the geometric mean standardized charge for these MS–DRGs were available to the public in Table 10 at the time the application was submitted. (We note that for fiscal years prior to FY 2020, Table 10 included the cost thresholds used to evaluate applications for new technology add-on payments for the next fiscal year.) We stated in the FY 2016 IPPS/LTCH PPS proposed rule (80 FR 24460) that in the case of WATCHMAN® System, if MS–DRGs 273 and 274 were to be finalized for FY 2016, we recognized that thresholds that are 75 percent of one standard deviation beyond the geometric mean standardized charge would not have been available at the time the application was submitted. We stated our belief that it could be appropriate for the applicant to demonstrate that the average case weighted standardized charge per case exceeded these thresholds for MS–DRGs 273 and 274, for which this technology would be reassigned. Accordingly, we made available supplemental threshold values on the CMS website at
We also noted that in the FY 2016 IPPS/LTCH PPS proposed rule, we invited public comments on whether considering these supplemental threshold values as part of the cost criterion evaluation for this application was appropriate and also on how to address similar future situations in a broader policy context should they occur. After consideration of the comments, in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49482) we stated that we agreed with the commenters that we should evaluate the cost threshold in effect at the time the new
In the FY 2021 IPPS/LTCH PPS proposed rule, we noted that at the time of the FY 2016 final rule, in applying this policy, we did not anticipate the onset of new, extremely high cost, technologies such as CAR T-cell therapy, nor such significant variance between the thresholds at the time of application and the thresholds based on the finalized MS–DRG assignment for the upcoming year. For example, in the FY 2016 final rule, the difference between the MS–DRG threshold amount for MS–DRGs 237 ($121,777) and 238 ($87,602) set forth in Table 10 associated with the FY 2015 final rule, and the supplemental MS– DRG threshold amount based on the proposed new MS–DRGs 273 ($95,542) and 274 ($77,230), was $26,235 and $10,372 respectively. By comparison, based on the data file released with the FY 2020 final rule (and corresponding correction notice) for FY 2021 applications, the threshold amount for MS–DRG 016 is $170,573. However, the threshold amount for proposed new MS–DRG 018 (in the data file released with this proposed rule) is $1,237,393, which is more than 7 times greater.
We stated that in light of the development of new technologies, such as CAR T-cell therapies, and the more substantial shifts in the MS–DRG threshold amounts that may result from the reassignment of new technologies for the upcoming fiscal year, we believe it is appropriate to revisit the policy described in the FY 2016 final rule. We stated that while we continue to believe that predictability for applicants is important, we also believe payment accuracy is equally important. We stated our belief that it is necessary to balance predictability with a more accurate evaluation of whether a new technology meets the new technology add-on payment cost criterion by using threshold values that are consistent with how the cases involving the use of the new technology will be paid for in the upcoming fiscal year. We proposed to revise our policy in situations when the procedure coding associated with a new technology application is proposed to be assigned to a proposed new MS–DRG. Specifically, we proposed that effective for FY 2022, for applications for new technology add-on payments and previously approved technologies that may continue to receive new technology add-on payments, the proposed threshold for a proposed new MS–DRG for the upcoming fiscal year would be used to evaluate the cost criterion for technologies that would be assigned to a proposed new MS–DRG. For example, consider a technology that would be coded using procedure codes assigned to MS–DRG ABC at the time of its application for FY 2022, and then the procedure coding associated with the new technology was proposed to be assigned to a proposed new MS–DRG XYZ in the FY 2022 proposed rule. Instead of using the threshold for MS–DRG ABC based on the data file released with the FY 2021 final rule for FY 2022 applications, we proposed to use the proposed threshold for the newly proposed MS–DRG XYZ based on the data file released with the FY 2022 proposed rule, which would otherwise contain the proposed thresholds for FY 2023 applications. We stated our belief that using the proposed rule thresholds for the proposed new MS–DRG would further promote payment accuracy by using the latest data available to assess how the technology would be paid for in the upcoming fiscal year, if the proposed reassignment to the new MS–DRG was finalized, while also providing the applicant and the public adequate time to analyze whether the technology meets the cost criterion using these proposed thresholds and to provide public comment following the proposed rule.
In the FY 2021 proposed rule, we stated that we believe it is important that the cost criterion be applied in a manner that accurately reflects the anticipated payment for the technology. In assessing the adequacy of the otherwise applicable MS–DRG payment rate for a high cost new technology, where the reassignment of such a technology to a proposed new MS–DRG may result in a substantial change in the MS–DRG threshold amounts, we stated our belief that it is necessary to evaluate that technology using the proposed thresholds for the newly proposed MS–DRG to which the technology would be reassigned.
We also stated that we believe this policy is consistent with section 1886(d)(5)(K)(ix) of the Act which, as previously noted, requires that before establishing any add-on payment for a new medical service or technology, the Secretary seek to identify one or more DRGs associated with the new technology, based on similar clinical or anatomical characteristics and the costs of the technology, and assign the new technology into a DRG where the average costs of care most closely approximate the costs of care using the new technology. This provision further states that no add-on payment will be made with respect to such new technology. As we have noted in prior rulemaking with regard to the CAR T cell therapies (83 FR 41172), if a new MS–DRG were to be created, then consistent with section 1886(d)(5)(K)(ix) of the Act, there may no longer be a need for a new technology add-on payment under section 1886(d)(5)(K)(ii)(III) of the Act. For these reasons, we also proposed, for purposes of FY 2021 new technology add-on payments, to evaluate the cost criterion for the CAR T-cell therapy technologies using the proposed threshold for the newly proposed MS–DRG to which the procedure codes describing the use of the CAR T-cell therapies would be assigned in FY 2021 (MS–DRG 018). We noted that this proposed policy would apply to the new FY 2021 CAR T-cell therapy applications, KTE–X19 and Liso-cel, and those CAR T-cell therapies previously approved for new technology add-on payments, KYMRIAH® and YESCARTA® (we note that KTE–X19 and Liso-cel did not meet the July 1 deadline as specified in § 412.87(e)). As discussed in section II.E.2.b. of the preamble of this final rule, we are finalizing our proposal to create a new MS–DRG 018 for cases reporting ICD–10–PCS procedure codes XW033C3 or XW043C3 for FY 2021.
Several commenters, who were also applicants for new technology add-on payments for FY 2021, disagreed with
We noted in the FY 2021 IPPS/LTCH PPS proposed rule that, if finalized, this policy would apply to the new FY 2021 CAR T-cell therapy applications, KTE–X19 and Liso-cel., and those CAR T-cell therapies previously approved for new technology add-on payments, KYMRIAH® and YESCARTA®. However, we note that neither Kite Pharma (the applicant for KTE–X19) nor Juno Therapeutics, a Bristol-Myers Squibb Company (the applicant for Liso-cel) received FDA approval for their therapies by July 1, and therefore, these technologies were not eligible for consideration for new technology add-on payments for FY 2021. We also note, as discussed later in this rule, that KYMRIAH® and YESCARTA® are no longer considered “new” for purposes of new technology add-on payments for FY 2021. Accordingly, we are not applying this policy to evaluate the cost criterion for CAR T-cell therapy technologies using the proposed threshold for MS–DRG 018 to which the procedure codes describing the use of the CAR T-cell therapies will be assigned beginning in FY 2021.
As discussed in the preamble of the proposed rule and this final rule, while we continue to believe that predictability for applicants is important, we also believe payment accuracy is equally important. In order to promote payment accuracy, as previously discussed, and after consideration of the comments received, we are finalizing our proposal to use the proposed threshold for the upcoming fiscal year for any proposed new MS–DRG to evaluate the cost criterion for technologies that would be assigned to the proposed new MS–DRG, beginning with FY 2022 new technology add-on payments for all applicants and previously approved technologies that may continue to receive new technology add-on payments in FY 2022. As we have noted in prior rulemaking with regard to the CAR T cell therapies (83 FR 41172), if a new MS–DRG were to be created, then consistent with section 1886(d)(5)(K)(ix) of the Act, there may no longer be a need for a new technology add-on payment under section 1886(d)(5)(K)(ii)(III) of the Act.
Finally, amidst our work on payment accuracy and coverage for CAR–T, we have heard from stakeholders that cell therapy goes beyond CAR–T to include Tumor-Infiltrating Lymphocyte (TIL) Therapy and Engineered T Cell Receptor (TCR) Therapy. While all of these treatments are autologous, CAR–T is currently limited to liquid tumors, and we foresee the need to address solid tumor treatments such as TIL and TCR in the near future. As the process and decisions on these issues take time, we plan to continue to engage with stakeholders to understand the needs necessary for patients and providers to get appropriate access as quickly as possible to these potentially lifesaving treatments. Our processes continue to evolve as innovative treatments evolve.
Under the third criterion at § 412.87(b)(1), a medical service or technology must represent an advance that substantially improves, relative to technologies previously available, the diagnosis or treatment of Medicare beneficiaries. In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42288 through 42292) we prospectively codified in our regulations at § 412.87(b) the following aspects of how we evaluate substantial clinical improvement for purposes of new technology add-on payments under the IPPS:
• The totality of the circumstances is considered when making a determination that a new medical service or technology represents an advance that substantially improves, relative to services or technologies previously available, the diagnosis or treatment of Medicare beneficiaries.
• A determination that a new medical service or technology represents an advance that substantially improves, relative to services or technologies previously available, the diagnosis or treatment of Medicare beneficiaries means—
++ The new medical service or technology offers a treatment option for a patient population unresponsive to, or ineligible for, currently available treatments;
++ The new medical service or technology offers the ability to diagnose a medical condition in a patient population where that medical condition is currently undetectable, or offers the ability to diagnose a medical condition earlier in a patient population than allowed by currently available methods, and there must also be evidence that use of the new medical service or technology to make a diagnosis affects the management of the patient;
++ The use of the new medical service or technology significantly improves clinical outcomes relative to services or technologies previously available as demonstrated by one or more of the following: A reduction in at least one clinically significant adverse event, including a reduction in mortality or a clinically significant complication; a decreased rate of at least one subsequent diagnostic or therapeutic intervention; a decreased number of future hospitalizations or physician visits; a more rapid beneficial resolution of the disease process treatment including, but not limited to, a reduced length of stay or recovery time; an improvement in one or more activities of daily living; an improved quality of life; or, a demonstrated greater medication adherence or compliance; or
++ The totality of the circumstances otherwise demonstrates that the new medical service or technology substantially improves, relative to technologies previously available, the diagnosis or treatment of Medicare beneficiaries.
• Evidence from the following published or unpublished information sources from within the United States or elsewhere may be sufficient to establish that a new medical service or technology represents an advance that substantially improves, relative to services or technologies previously available, the diagnosis or treatment of Medicare beneficiaries: Clinical trials, peer reviewed journal articles; study results; meta-analyses; consensus statements; white papers; patient surveys; case studies; reports; systematic literature reviews; letters from major healthcare associations;
• The medical condition diagnosed or treated by the new medical service or technology may have a low prevalence among Medicare beneficiaries.
• The new medical service or technology may represent an advance that substantially improves, relative to services or technologies previously available, the diagnosis or treatment of a subpopulation of patients with the medical condition diagnosed or treated by the new medical service or technology.
We refer the reader to the FY 2020 IPPS/LTCH PPS final rule for additional discussion of the evaluation of substantial clinical improvement for purposes of new technology add-on payments under the IPPS.
We note, consistent with the discussion in the FY 2003 IPPS Final Rule (67 FR 50015), although we are affiliated with FDA and we do not question FDA's regulatory responsibility for decisions related to marketing authorization (for example, approval, clearance, etc.), we do not use FDA criteria to determine what drugs, devices, or technologies qualify for new technology add-on payments under Medicare. Our criteria do not depend on the standard of safety and efficacy on which FDA relies but on a demonstration of substantial clinical improvement in the Medicare population (particularly patients over age 65).
Under § 412.87(c) and (d) of the regulations, beginning with applications for new technology add-on payments for FY 2021, certain transformative new devices and Qualified Infectious Disease Products (QIDPs) may qualify for the new technology add-on payment under an alternative pathway, as described in this section. We refer the reader to the FY 2020 IPPS/LTCH PPS final rule for complete discussion on this policy (84 FR 42292 through 42297). We note, in section II.G.9.b. of this preamble, we discuss our final policy to expand our current alternative new technology add-on payment pathway for QIDPs to include products approved under the Limited Population Pathway for Antibacterial and Antifungal Drugs (LPAD) pathway. In addition, we are finalizing our policy to refer more broadly to “certain antimicrobial products” rather than specifying the particular FDA programs for antimicrobial products (that is, QIDPs and LPADs) that are the subject of the alternative new technology add-on payment pathway. (We refer the reader to section II.G.9.b. of this preamble below for a complete discussion regarding this final policy.) We note that a technology is not required to have the specified FDA designation at the time the new technology add-on payment application is submitted. CMS will review the application based on the information provided by the applicant under the alternative pathway specified by the applicant. However, to receive approval for the new technology add-on payment under that alternative pathway, the technology must have the applicable designation and meet all other requirements in the regulations in § 412.87(c) and (d), as applicable.
For applications received for new technology add-on payments for FY 2021 and subsequent fiscal years, if a medical device is part of FDA's Breakthrough Devices Program and received FDA marketing authorization, it will be considered new and not substantially similar to an existing technology for purposes of the new technology add-on payment under the IPPS, and will not need to meet the requirement under § 412.87(b)(1) that it represent an advance that substantially improves, relative to technologies previously available, the diagnosis or treatment of Medicare beneficiaries. This policy is codified at § 412.87(c). Under this alternative pathway, a medical device that has received FDA marketing authorization (that is, has been approved or cleared by, or had a De Novo classification request granted by, FDA) and that is part of FDA's Breakthrough Devices Program will need to meet the cost criterion under § 412.87(b)(3), as reflected in § 412.87(c)(3), and will be considered new as reflected in § 412.87(c)(2). We note, in section II.G.8. of the preamble of this final rule, we are clarifying our policy that a new medical device under this alternative pathway must receive marketing authorization for the indication covered by the Breakthrough Devices Program designation. (We refer the reader to section II.G.8. of this preamble below for a complete discussion regarding this clarification.)
For applications received for new technology add-on payments for FY 2021 and subsequent fiscal years, if a technology is designated by FDA as a QIDP and received FDA marketing authorization, it will be considered new and not substantially similar to an existing technology for purposes of new technology add-on payments and will not need to meet the requirement that it represent an advance that substantially improves, relative to technologies previously available, the diagnosis or treatment of Medicare beneficiaries. We codified this policy at § 412.87(d). Under this alternative pathway for QIDPs, a medical product that has received FDA marketing authorization and is designated by FDA as a QIDP will need to meet the cost criterion under § 412.87(b)(3), as reflected in § 412.87(d)(3), and will be considered new as reflected in § 412.87(d)(2).
We refer the reader to the FY 2020 IPPS/LTCH PPS final rule for complete discussion on this policy (84 FR 42292 through 42297). We note, in section II.G.9.b. of the preamble of this final rule, we are clarifying a new medical product seeking approval for the new technology add-on payment under the alternative pathway for QIDPs must receive marketing authorization for the indication covered by the QIDP designation. (We refer the reader to section II.G.9.b. of this preamble below for a complete discussion regarding this clarification.)
The new medical service or technology add-on payment policy under the IPPS provides additional payments for cases with relatively high costs involving eligible new medical services or technologies, while preserving some of the incentives inherent under an average-based prospective payment system. The payment mechanism is based on the cost to hospitals for the new medical service or technology. For discharges occurring before October 1, 2019, under § 412.88, if the costs of the discharge (determined by applying CCRs as described in § 412.84(h)) exceed the full DRG payment (including payments for IME and DSH, but excluding outlier payments), Medicare made an add-on payment equal to the lesser of: (1) 50 percent of the costs of the new medical service or technology; or (2) 50 percent of the amount by which the costs of the case exceed the standard DRG payment.
Beginning with discharges on or after October 1, 2019, for the reasons discussed in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42297 through 42300), we finalized an increase in the new technology add-on payment percentage, as reflected at § 412.88(a)(2)(ii). Specifically, for a new technology other than a medical product designated by FDA as a QIDP, beginning
We refer the reader to the FY 2020 IPPS/LTCH PPS final rule (84 FR 42297 through 42300) for complete discussion on the increase in the new technology add on payment beginning with discharges on or after October 1, 2019. We note, in section II.G.9.b. of the preamble of this final rule, we discuss our final policy to increase the new technology add-on payment percentage to 75 percent for products approved under FDA's LPAD pathway. (We refer the reader to section II.G.9.b. of this preamble below for a complete discussion regarding this final policy.)
Section 503(d)(2) of Public Law 108–173 provides that there shall be no reduction or adjustment in aggregate payments under the IPPS due to add-on payments for new medical services and technologies. Therefore, in accordance with section 503(d)(2) of Public Law 108–173, add-on payments for new medical services or technologies for FY 2005 and subsequent years have not been subjected to budget neutrality.
In the FY 2009 IPPS final rule (73 FR 48561 through 48563), we modified our regulations at § 412.87 to codify our longstanding practice of how CMS evaluates the eligibility criteria for new medical service or technology add-on payment applications. That is, we first determine whether a medical service or technology meets the newness criterion, and only if so, do we then make a determination as to whether the technology meets the cost threshold and represents a substantial clinical improvement over existing medical services or technologies. We amended § 412.87(c) to specify that all applicants for new technology add-on payments must have FDA approval or clearance by July 1 of the year prior to the beginning of the fiscal year for which the application is being considered. We note, in section II.G.9.c. of the preamble of this final rule, we discuss our finalized process by which a technology for which an application for new technology add-on payments is submitted under the alternative pathway for certain antimicrobial products would receive conditional approval for such payment, provided the product receives FDA marketing authorization by July 1 of the year for which the new technology add-on payment application was submitted. (We refer the reader to section II.G.9.c. of this preamble of this final rule for a complete discussion regarding this final policy.)
The Council on Technology and Innovation at CMS oversees the agency's cross-cutting priority on coordinating coverage, coding and payment processes for Medicare with respect to new technologies and procedures, including new drug therapies, as well as promoting the exchange of information on new technologies and medical services between CMS and other entities. The CTI, composed of senior CMS staff and clinicians, was established under section 942(a) of Public Law 108–173. The Council is co-chaired by the Director of the Center for Clinical Standards and Quality (CCSQ) and the Director of the Center for Medicare (CM), who is also designated as the CTI's Executive Coordinator.
The specific processes for coverage, coding, and payment are implemented by CM, CCSQ, and the local Medicare Administrative Contractors (MACs) (in the case of local coverage and payment decisions). The CTI supplements, rather than replaces, these processes by working to assure that all of these activities reflect the agency-wide priority to promote high-quality, innovative care. At the same time, the CTI also works to streamline, accelerate, and improve coordination of these processes to ensure that they remain up to date as new issues arise. To achieve its goals, the CTI works to streamline and create a more transparent coding and payment process, improve the quality of medical decisions, and speed patient access to effective new treatments. It is also dedicated to supporting better decisions by patients and doctors in using Medicare-covered services through the promotion of better evidence development, which is critical for improving the quality of care for Medicare beneficiaries.
To improve the understanding of CMS' processes for coverage, coding, and payment and how to access them, the CTI has developed an “Innovator's Guide” to these processes. The intent is to consolidate this information, much of which is already available in a variety of CMS documents and in various places on the CMS website, in a user friendly format. This guide was published in 2010 and is available on the CMS website at:
As we indicated in the FY 2009 IPPS final rule (73 FR 48554), we invite any product developers or manufacturers of new medical services or technologies to contact the agency early in the process of product development if they have questions or concerns about the evidence that would be needed later in the development process for the agency's coverage decisions for Medicare.
The CTI aims to provide useful information on its activities and initiatives to stakeholders, including Medicare beneficiaries, advocates, medical product manufacturers, providers, and health policy experts. Stakeholders with further questions about Medicare's coverage, coding, and payment processes, or who want further guidance about how they can navigate these processes, can contact the CTI at
Applicants for add-on payments for new medical services or technologies for FY 2022 must submit a formal request, including a full description of the clinical applications of the medical service or technology and the results of any clinical evaluations demonstrating that the new medical service or technology represents a substantial clinical improvement (unless the application is under one of the alternative pathways as previously
As discussed previously, in the FY 2020 IPPS/LTCH PPS final rule, we adopted an alternative inpatient new technology add-on payment pathway for certain transformative new devices and for Qualified Infectious Disease Products, as set forth in the regulations at § 412.87(c) and (d). The change in burden associated with these changes to the new technology add-on payment application process were discussed in a revision of the information collection requirement (ICR) request currently approved under OMB control number 0938–1347. In accordance with the implementing regulations of the PRA, we detailed the revisions of the ICR and published the required 60-day notice on August 15, 2019 (84 FR 41723) and 30-day notice on December 17, 2019 (84 FR 68936) to solicit public comments. The ICR is currently pending OMB approval.
Section 1886(d)(5)(K)(viii) of the Act, as amended by section 503(b)(2) of Pub. L. 108–173, provides for a mechanism for public input before publication of a notice of proposed rulemaking regarding whether a medical service or technology represents a substantial clinical improvement or advancement. The process for evaluating new medical service and technology applications requires the Secretary to—
• Provide, before publication of a proposed rule, for public input regarding whether a new service or technology represents an advance in medical technology that substantially improves the diagnosis or treatment of Medicare beneficiaries;
• Make public and periodically update a list of the services and technologies for which applications for add-on payments are pending;
• Accept comments, recommendations, and data from the public regarding whether a service or technology represents a substantial clinical improvement; and
• Provide, before publication of a proposed rule, for a meeting at which organizations representing hospitals, physicians, manufacturers, and any other interested party may present comments, recommendations, and data regarding whether a new medical service or technology represents a substantial clinical improvement to the clinical staff of CMS.
In order to provide an opportunity for public input regarding add-on payments for new medical services and technologies for FY 2021 prior to publication of the FY 2021 IPPS/LTCH PPS proposed rule, we published a notice in the
We stated in the FY 2021 IPPS/LTCH PPS proposed rule that approximately 100 individuals registered to attend the town hall meeting in person, while additional individuals listened over an open telephone line. We also live-streamed the town hall meeting and posted the morning and afternoon sessions of the town hall on the CMS YouTube web page at:
In response to the published notice and the December 16, 2019 New Technology Town Hall meeting, we received written comments regarding the applications for FY 2021 new technology add-on payments. We also noted in the FY 2021 IPPS/LTCH PPS proposed rule that we do not summarize comments that are unrelated to the “substantial clinical improvement” criterion. As explained earlier and in the
As discussed in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49434), the ICD–10–PCS includes a new section containing the new Section “X” codes, which began being used with discharges occurring on or after October 1, 2015. Decisions regarding changes to ICD–10–PCS Section “X” codes will be handled in the same manner as the decisions for all of the other ICD–10–PCS code changes. That is, proposals to create, delete, or revise Section “X” codes under the ICD–10–PCS structure will be referred to the ICD–10 Coordination and Maintenance Committee. In addition, several of the new medical services and technologies that have been, or may be, approved for new technology add-on payments may now, and in the future, be assigned a Section “X” code within the structure of the ICD–10–PCS. We posted ICD–10–PCS Guidelines on the CMS website at:
In section II.G.4. of the proposed rule (85 FR 32572 through 32580), we discussed the proposed FY 2021 status of 18 technologies approved for FY 2020 new technology add-on payments. In general, we extend new technology add-on payments for an additional year only if the 3-year anniversary date of the product's entry onto the U.S. market occurs in the latter half of the upcoming fiscal year. We refer readers to a table at the end of this section summarizing for FY 2021 the name of each technology, newness start date, whether we are continuing or discontinuing the add-on payment for FY 2021, relevant final rule citations, final maximum add-on payment amount and coding assignments.
Two manufacturers, Novartis Pharmaceuticals Corporation and Kite Pharma, Inc., submitted separate applications for new technology add-on payments for FY 2019 for KYMRIAH® (tisagenlecleucel) and YESCARTA® (axicabtagene ciloleucel), respectively. Both of these technologies are CD–19- directed T-cell immunotherapies used for the purposes of treating patients with aggressive variants of non-Hodgkin lymphoma (NHL). On May 1, 2018, Novartis Pharmaceuticals Corporation received FDA approval for KYMRIAH®'s second indication, the treatment of adult patients with relapsed or refractory (r/r) large B-cell lymphoma after two or more lines of systemic therapy including diffuse large B-cell lymphoma (DLBCL) not otherwise specified, high grade B-cell lymphoma and DLBCL arising from follicular lymphoma. On October 18, 2017, Kite Pharma, Inc. received FDA approval for the use of YESCARTA® indicated for the treatment of adult patients with r/r large B-cell lymphoma after two or more lines of systemic therapy, including DLBCL not otherwise specified, primary mediastinal large B-cell lymphoma, high grade B-cell lymphoma, and DLBCL arising from follicular lymphoma. With respect to the newness criterion, because potential cases representing patients who may be eligible for treatment using KYMRIAH® and YESCARTA® would group to the same MS–DRGs (because the same ICD–10–CM diagnosis codes and ICD–10–PCS procedures codes are used to report treatment using either KYMRIAH® or YESCARTA®), and because we believed that these technologies are intended to treat the same or similar disease in the same or similar patient population, and are purposed to achieve the same therapeutic outcome using the same or similar mechanism of action, we considered these two technologies to be substantially similar to each other. We refer readers to the FY 2019 IPPS/LTCH PPS final rule (83 FR 41285 through 41286) and FY 2020 IPPS/LTCH/PPS final rule (84 FR 42185 through 42187) for a complete discussion. We stated in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41285 through 41286) and FY 2020 IPPS/LTCH PPS final rule (84 FR 42185 through 42186) that in accordance with our policy, since we consider the technologies to be substantially similar to each other, it is appropriate to use the earliest market availability date submitted as the beginning of the newness period for both technologies. According to the applicant for YESCARTA®, the first commercial shipment of YESCARTA® was received by a certified treatment center on November 22, 2017. Therefore, based on our policy, with regard to both technologies, we stated that the beginning of the newness period would be November 22, 2017. KYMRIAH® and YESCARTA® were approved for new technology add-on payments for FY 2019 (83 FR 41299). We refer readers to section II.H.5.a. of the preamble of the FY 2019 IPPS/LTCH PPS final rule (83 FR 41283 through 41299) and section II.H.4.d. of the preamble of the FY 2020 IPPS/LTCH PPS final rule (84 FR 42185 through 42187) for a complete discussion of the new technology add-on payment application, coding and payment amount for KYMRIAH® and YESCARTA® for FY 2019 and FY 2020.
Our policy is that a medical service or technology may continue to be considered “new” for purposes of new technology add-on payments within 2 or 3 years after the point at which data begin to become available reflecting the inpatient hospital code assigned to the new service or technology. Our practice has been to begin and end new technology add-on payments on the basis of a fiscal year, and we have generally followed a guideline that uses a 6-month window before and after the start of the fiscal year to determine whether to extend the new technology add-on payment for an additional fiscal year. In general, we extend new technology add-on payments for an additional year only if the 3-year anniversary date of the product's entry onto the U.S. market occurs in the latter half of the fiscal year (70 FR 47362).
With regard to the newness criterion for KYMRIAH® and YESCARTA®, as discussed in the FY 2019 IPPS/LTCH PPS final rule, according to the applicant for YESCARTA®, the first commercial shipment of YESCARTA® was received by a certified treatment center on November 22, 2017. As previously stated, we use the earliest market availability date submitted as the beginning of the newness period for both KYMRIAH® and YESCARTA®. Therefore, we consider the beginning of the newness period for both KYMRIAH® and YESCARTA® to commence November 22, 2017. Because the 3-year anniversary date of the entry of the technology onto the U.S. market (November 22, 2020) will occur in the first half of FY 2021, we proposed to discontinue new technology add-on payments for this technology for FY 2021. We invited public comments on our proposal to discontinue new technology add-on payments for KYMRIAH® and YESCARTA® for FY 2021.
We also received comments that were not supportive of the proposal. According to these commenters, the removal of new technology add-on payment eligibility for KYMRIAH® and YESCARTA® will widen the gap between therapy cost and reimbursement. According to the commenters, reimbursement provided through a new MS–DRG payment will not fully compensate providers for the extraordinarily high cost of the treatment and the expanding gaps between reimbursement and total cost of care may create barriers to this innovative treatment for Medicare beneficiaries. Another commenter offered that CMS has the authority to extend new technology add-on payments for CAR T-cell products into FY 2021 as the third program year. According to the commenter, although November 22, 2017 was the date the first FDA-approved CAR T-cell product was delivered for use to an approved facility, there were very few facilities even able to conduct these procedures, and of those, several were unwilling to do so due to the high cost of the product and low likelihood of getting paid for it. As such, the commenter indicated that November 22, 2017 is not the date to
With respect to the comment that CMS should consider the date when the market was “fully formed” as the start of the newness period, we note that while CMS may consider a documented delay in a technology's availability on the U.S. market in determining when the newness period begins, under our historical policy, we do not consider how frequently the medical service or technology has been used in our determination of newness (70 FR 47349). Similarly, our policy for determining whether to extend new technology add-on payments for a third year generally applies regardless of the claims volume for the technology after the start of the newness period. As discussed in the FY 2006 IPPS final rule (70 FR 47349), we do not believe that case volume is a relevant consideration for making the determination as to whether a product is “new.” Consistent with the statute, a technology no longer qualifies as “new” once it is more than 2 to 3 years old, irrespective of how frequently it has been used in the Medicare population. Therefore, if a product is more than 2 to 3 years old, we consider its costs to be included in the MS–DRG relative weights whether its use in the Medicare population has been frequent or infrequent.
For these reasons, we do not agree that we should use October 1, 2018 as the start of the newness period or otherwise modify our policy for determining whether to extend new technology add-on payments for a third year in considering whether to continue new technology add-on payments for FY 2021 for KYMRIAH® and YESCARTA®. Therefore, KYMRIAH® and YESCARTA® are no longer considered “new” for purposes of new technology add-on payments for FY 2021. We are finalizing our proposal to discontinue new technology add-on payments for KYMRIAH® and YESCARTA® for FY 2021.
As discussed in section II.E.2.b. of the preamble of this final rule, currently procedures involving CAR T-cell therapies are identified with ICD–10–PCS procedure codes XW033C3 (Introduction of engineered autologous chimeric antigen receptor t-cell immunotherapy into peripheral vein, percutaneous approach, new technology group 3) and XW043C3 (Introduction of engineered autologous chimeric antigen receptor t-cell immunotherapy into central vein, percutaneous approach, new technology group 3), which became effective October 1, 2017. As discussed in section II.E.2.b. of the preamble of this final rule, we are finalizing our proposal to create a new MS–DRG 018 for cases reporting ICD–10–PCS procedure codes XW033C3 or XW043C3 for FY 2021. We also refer readers to section II.G.1.a.(2).b. of the preamble of this final rule for a complete discussion of our final policy that, effective for FY 2022, for applications for new technology add-on payments and for previously approved technologies that may continue to receive new technology add-on payments, the proposed threshold for the upcoming fiscal year for a proposed new MS–DRG would be used to evaluate the cost criterion for any new technologies that would be assigned to a proposed new MS–DRG. As we also discuss in section II.G.1.a.(2)b. of the preamble of this final rule, in the proposed rule we stated that in light of the significant variance in the threshold amount for proposed new MS–DRG 018 for cases involving CAR T-cell therapies, we proposed to apply this policy in evaluating the CAR T-cell therapy technologies for FY 2021 new technology add-on payments. We stated that this would include both the new FY 2021 CAR T-cell therapy applications and those CAR T-cell therapy technologies previously approved for new technology add-on payments, KYMRIAH® and YESCARTA®. Therefore, in the proposed rule we stated that even if KYMRIAH® and/or YESCARTA® were still considered new and within the 3-year anniversary date of the entry of the technology onto the U.S. market, in determining whether these technologies would continue to be eligible for the new technology add-on payment, we proposed to evaluate whether they meet the cost criterion using the proposed threshold for the proposed new MS–DRG 018 for FY 2021 payment.
Per the applicants' cost analyses in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41291), the final inflated average case-weighted standardized charge per case for KYMRIAH® and YESCARTA® is $39,723 (not including the charges related to the technology) and $118,575 (not including the charges related to the technology), respectively. However, we stated in the proposed rule that we now have cases involving the use of CAR T-cell therapy within the FY 2019 MedPAR data that we believe represent cases that would be eligible for KYMRIAH® and YESCARTA® and which can be used to estimate the average standardized charge per case for purposes of the proposed rule. This charge information from the FY 2019 MedPAR data can be found in the FY 2021 Proposed Before Outliers Removed
Jazz Pharmaceuticals, Inc. submitted an application for new technology add-on payments for the VYXEOS
With regard to the newness criterion for VYXEOS
Melinta Therapeutics, Inc., submitted an application for new technology add-on payments for VABOMERE
With regard to the newness criterion for VABOMERE
Several commenters described what they asserted was the particular value of VABOMERE
In addition, and as discussed in the FY 2006 IPPS final rule (70 FR 47349), we do not believe that case volume is a relevant consideration for making the determination as to whether a product is “new.” Consistent with the statute, a technology no longer qualifies as “new” once it is more than 2 to 3 years old, irrespective of how frequently it has been used in the Medicare population, or how many MS–DRGs the technology may be spread across. Therefore, if a product is more than 2 to 3 years old, we consider its costs to be included in the MS–DRG relative weights whether its use in the Medicare population has been frequent or infrequent. Additionally, we did not propose any policies relating to a DRG carve-out for QIDPs but appreciate the commenter's suggestion.
Based on the reasons stated above, VABOMERE
Respicardia, Inc. submitted an application for new technology add-on payments for the remedē® System for FY 2019. The remedē® System is indicated for use as a transvenous phrenic nerve stimulator in the treatment of adult patients who have been diagnosed with moderate to severe central sleep apnea (CSA). On October 6, 2017, the remedē® System was approved by FDA. The remedē® System was approved for new technology add on payments for FY 2019. We refer readers to section II.H.5.d. of the preamble of the FY 2019 IPPS/LTCH PPS final rule (83 FR 41311 through 41320) and section II.H.4.g. of the preamble of the FY 2020 IPPS/LTCH PPS final rule (84 FR 42189 through 42190) for a complete discussion of the new technology add on payment application, coding and payment amount for the remedē® System for FY 2019 and FY 2020.
With regard to the newness criterion for the remedē® System, as we have discussed in prior rulemaking, we consider the beginning of the newness period to commence when the remedē® System was approved by FDA on October 6, 2017. However, as we summarized in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42189 through 42190), a commenter on the FY 2020 IPPS/LTCH PPS proposed rule, who was also the applicant, believed that the newness period for the remedē® System should start on February 1, 2018, instead of the FDA approval date of October 6, 2017. The commenter stated that due to the required build out of operational and commercial capabilities, the remedē® System was not commercially available upon FDA approval and the first case involving its use did not occur until February 1, 2018. The commenter asserted that the date of the first implant should mark the start of the newness period since before that, the technology was not commercially available. In response to that comment, we indicated that we would consider the additional information the applicant provided when proposing whether to continue new technology add-on payments for the remedē® System for FY 2021.
As we have discussed in prior rulemaking (77 FR 53348), generally, our policy is to begin the newness period on the date of FDA approval or clearance or, if later, the date of availability of the product on the U.S. market. With regard to the commenter's assertion that the date of the first implant should mark the start of the newness period, we note that while we may consider a documented delay in a technology's availability on the U.S. market in determining when the newness period begins, under our historical policy, we do not consider how frequently the medical service or technology has been used in our determination of newness (70 FR 47349). As we discussed in the proposed rule, without additional information from the applicant, we cannot determine a newness date based on such a documented delay in commercial availability (and not the first case involving use of the remedē® System on February 1, 2018). However, even if we were to consider the newness period to commence on February 1, 2018, as recommended by the commenter, such that the 3-year anniversary date of the entry of the remedē® System onto the U.S. market would be February 1, 2021 rather than October 6, 2020, that 3-year anniversary date would still occur within the first half of FY 2021. Because the 3-year anniversary date of the entry of the remedē® System onto the U.S. market will occur in the first half of FY 2021, we proposed to discontinue new technology add-on payments for this technology for FY 2021. We invited public comments on our proposal to discontinue new technology add-on payments for the remedē® System for FY 2021.
Based on the reasons stated above, the remedē® System is no longer considered “new” for purposes of new technology add-on payments for FY 2021. We are finalizing our proposal to discontinue new technology add-on payments for the remedē® System for FY 2021.
Achaogen, Inc. submitted an application for new technology add-on payments for ZEMDRI
With regard to the newness criterion for ZEMDRI
The La Jolla Pharmaceutical Company submitted an application for new technology add-on payments for GIAPREZA
With regard to the newness criterion for GIAPREZA
Claret Medical, Inc. submitted an application for new technology add-on
With regard to the newness criterion for the Sentinel® Cerebral Protection System, we consider the beginning of the newness period to commence when FDA granted the De Novo request for the Sentinel® Cerebral Protection System (June 1, 2017). Because the 3-year anniversary date of the entry of the Sentinel® Cerebral Protection System onto the U.S. market (June 1, 2020) will occur in FY 2020, we proposed to discontinue new technology add-on payments for this technology for FY 2021. We invited public comments on our proposal to discontinue new technology add-on payments for the Sentinel® Cerebral Protection System for FY 2021.
PROCEPT BioRobotics Corporation submitted an application for new technology add-on payments for the AQUABEAM System (Aquablation) for FY 2019. According to the applicant, the AQUABEAM System is indicated for the use in the treatment of patients experiencing lower urinary tract symptoms caused by a diagnosis of benign prostatic hyperplasia (BPH). FDA granted the AQUABEAM System's De Novo request on December 21, 2017, for use in the resection and removal of prostate tissue in males suffering from lower urinary tract symptoms (LUTS) due to benign prostatic hyperplasia. The AQUABEAM System was approved for new technology add on payments for FY 2019 (83 FR 41355). We refer readers to section II.H.5.i. of the preamble of the FY 2019 IPPS/LTCH PPS final rule (83 FR 41348 through 41355) and section II.H.4.k. of the preamble of the FY 2020 IPPS/LTCH PPS final rule (84 FR 42192 through 42193) for a complete discussion of the new technology add on payment application, coding, and payment for the AQUABEAM System for FY 2019 and FY 2020.
With regard to the newness criterion for the AQUABEAM System, we consider the beginning of the newness period to commence on the date FDA granted the De Novo request (December 21, 2017). As discussed previously in this section, in general, we extend new technology add-on payments for an additional year only if the 3-year anniversary date of the product's entry onto the U.S. market occurs in the latter half of the upcoming fiscal year. Because the 3-year anniversary date of the entry of the AQUABEAM System onto the U.S. market (December 21, 2020) will occur in the first half of FY 2021, we proposed to discontinue new technology add-on payments for this technology for FY 2021. We invited public comments on our proposal to discontinue new technology add-on payments for the AQUABEAM System for FY 2021.
Portola Pharmaceuticals, Inc. (Portola) submitted an application for new technology add-on payments for FY 2019 for the use of AndexXa
With regard to the newness criterion for AndexXa
Progenics Pharmaceuticals, Inc. submitted an application for new technology add-on payments for AZEDRA® (iobenguane Iodine-131) for FY 2020. AZEDRA® is a drug solution formulated for intravenous (IV) use in the treatment of patients who have been diagnosed with obenguane avid malignant and/or recurrent and/or unresectable pheochromocytoma and paraganglioma (PPGL). AZEDRA was approved by FDA on July 30, 2018, as a radioactive therapeutic agent indicated for the treatment of adult and pediatric patients 12 years and older with iobenguane scan positive, unresectable, locally advanced or metastatic pheochromocytoma or paraganglioma who require systemic anticancer therapy. AZEDRA® was approved for new technology add on payments for FY 2020. We refer readers to section II.H.5.a. of the preamble of the FY 2020 IPPS/LTCH PPS final rule (84 FR 42194 through 42201) for a complete discussion of the new technology add on payment application, coding and payment amount for AZEDRA® for FY 2020.
With regard to the newness criterion for AZEDRA®, we consider the beginning of the newness period to commence when AZEDRA® was approved by FDA (July 30, 2018). As discussed previously in this section, in general, we extend new technology add-on payments for an additional year only if the 3-year anniversary date of the product's entry onto the U.S. market occurs in the latter half of the upcoming fiscal year. Because the 3-year anniversary date of the entry of AZEDRA® onto the U.S. market (July 30, 2021) will occur in the second half of FY 2021, we proposed to continue new technology add-on payments for this technology for FY 2021. We proposed that the maximum new technology add-on payment for a case involving AZEDRA® would remain at $98,150 for FY 2021 (we refer readers to the FY 2020 IPPS/LTCH PPS final rule for complete discussion of the calculation of the new technology add on payment amount for AZEDRA®). Cases involving the use of AZEDRA® that are eligible for new technology add-on payments are identified by ICD–10–PCS procedure codes XW033S5 (Introduction of Iobenguane I–131 antineoplastic into peripheral vein, percutaneous approach, new technology group 5), and XW043S5 (Introduction of Iobenguane I–131 antineoplastic into central vein, percutaneous approach, new technology group 5). We invited public comments on our proposal to continue new technology add-on payments for AZEDRA® for FY 2021.
The Sanofi Company submitted an application for new technology add-on payments for CABLIVI® (caplacizumab-yhdp) for FY 2020. The applicant described CABLIVI® as a humanized bivalent nanobody consisting of two identical building blocks joined by a tri alanine linker, which is administered through intravenous and subcutaneous injection to inhibit microclot formation in adult patients who have been diagnosed with acquired thrombotic thrombocytopenic purpura (aTTP). CABLIVI® received FDA approval on February 6, 2019, for the treatment of adult patients with acquired aTTP, in combination with plasma exchange and immunosuppressive therapy. CABLIVI® was approved for new technology add on payments for FY 2020. We refer readers to section II.H.5.b. of the preamble of the FY 2020 IPPS/LTCH PPS final rule (84 FR 42201 through 42208) for a complete discussion of the new technology add on payment application, coding, and payment amount for CABLIVI® for FY2020.
With regard to the newness criterion for CABLIVI®, we consider the beginning of the newness period to commence when CABLIVI® was approved by FDA (February 6, 2019). Because the 3-year anniversary date of the entry of CABLIVI® onto the U.S. market (February 6, 2022) will occur after FY 2021, we proposed to continue new technology add-on payments for this technology for FY 2021. We proposed that the maximum new technology add-on payment for a case involving CABLIVI® would remain at $33,215 for FY 2021 (we refer readers to the FY 2020 IPPS/LTCH PPS final rule for complete discussion of the calculation of the new technology add on payment amount for CABLIVI®). Cases involving the use of CABLIVI® that are eligible for new technology add-on payments are identified by ICD–10–PCS procedure codes XW013W5 (Introduction of Caplacizumab into subcutaneous tissue, percutaneous approach, new technology group 5), XW033W5 (Introduction of Caplacizumab into peripheral vein, percutaneous approach, new technology group 5) and XW043W5 (Introduction of Caplacizumab into central vein, percutaneous approach, new technology group 5). We invited public comments on our proposal to continue new technology add-on payments for CABLIVI® for FY 2021.
Stemline Therapeutics submitted an application for new technology add-on payments for ELZONRIS
With regard to the newness criterion for ELZONRIS
Johnson & Johnson Health Care Systems, Inc. (on behalf of Janssen Oncology, Inc.) submitted an application for new technology add-on payments for Balversa
With regard to the newness criterion for Balversa
Johnson & Johnson Health Care Systems Inc., on behalf of Janssen Products, LP, Inc., submitted an application for new technology add-on payments for ERLEADA
With regard to the newness criterion for ERLEADA
Johnson & Johnson Health Care Systems, Inc., on behalf of Janssen Pharmaceuticals, Inc., submitted an application for new technology add-on payments for SPRAVATO
With regard to the newness criterion for SPRAVATO
In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19329), we noted that the applicant had submitted a request to the ICD–10 Coordination and Maintenance Committee for approval for a unique ICD–10–PCS procedure code to specifically identify cases involving the use of SPRAVATO
Astellas Pharma U.S., Inc. submitted an application for new technology add-on payments for XOSPATA® (gilteritinib) for FY 2020. XOSPATA® received FDA approval November 28, 2018 and is indicated for the treatment of adult patients who have been diagnosed with relapsed or refractory acute myeloid leukemia (AML) with a FMS-like tyrosine kinase 3 (FLT3) mutation as detected by an FDA approved test. XOSPATA® was approved for new technology add on payments for FY 2020. We refer readers to section II.H.5.i. of the preamble of the FY 2020 IPPS/LTCH PPS final rule (84 FR 42256 through 42260) for a complete discussion of the new technology add on payment application, coding and payment amount for XOSPATA®.
With regard to the newness criterion for XOSPATA®, we consider the beginning of the newness period to commence when XOSPATA® was approved by FDA (November 28, 2018). Because the 3-year anniversary date of the entry of XOSPATA® onto the U.S. market (November 28, 2021) will occur after FY 2021, we proposed to continue new technology add-on payments for this technology for FY 2021. We proposed that the maximum new technology add-on payment for a case involving XOSPATA® would remain at $7,312.50 for FY 2021 (we refer readers to the FY 2020 IPPS/LTCH PPS final rule for complete discussion of the calculation of the new technology add on payment amount for XOSPATA®). Cases involving the use of XOSPATA® that are eligible for new technology add-on payments are identified by ICD–10–PCS procedure code XW0DXV5 (Introduction of Gilteritinib antineoplastic into mouth and pharynx, external approach, new technology group 5). We invited public comments on our proposal to continue new technology add-on payments for XOSPATA® for FY 2021.
Incyte Corporation submitted an application for new technology add-on payments for JAKAFI
With regard to the newness criterion for JAKAFI
One commenter, who was also the applicant, presented results from a randomized, open-label, multicenter, Phase 3 REACH 2 study comparing ruxolitinib (JAKAFI
The same commenter provided updated cost information and requested that we revise the maximum add-on payment amount for JAKAFI
After consideration of the public comments we received, we are finalizing our proposal, with modification, to continue new technology add-on payments for JAKAFI
T2Biosystems, Inc. submitted an application for new technology add-on payments for the T2Bacteria Test Panel (T2Bacteria® Panel) for FY 2020. The T2Bacteria® Panel received 510(k) clearance from FDA on May 24, 2018 for use as an aid in the diagnosis of bacteremia, bacterial presence in the blood, which is a precursor for sepsis. Per the FDA-cleared indication, results from the T2Bacteria® Panel are not intended to be used as the sole basis for diagnosis, treatment, or other patient management decisions in patients with suspected bacteremia. Concomitant blood cultures are necessary to recover organisms for susceptibility testing or further identification, and for organisms not detected by the T2Bacteria® Panel. The T2Bacteria® Panel was approved for new technology add on payments for FY 2020. We refer readers to section II.H.5.m. of the preamble of the FY 2020 IPPS/LTCH PPS final rule (84 FR 42278 through 42288) for a complete discussion of the new technology add on payment application, coding and payment amount for the T2Bacteria® Panel for FY 2020.
With regard to the newness criterion for the T2Bacteria ® Panel, we consider the beginning of the newness period to commence when the T2Bacteria ® Panel was cleared by FDA (May 24, 2018). As discussed previously in this section, in general, we extend new technology add-on payments for an additional year only if the 3-year anniversary date of the product's entry onto the U.S. market occurs in the latter half of the upcoming fiscal year. Because the 3-year anniversary date of the entry of the T2Bacteria ® Panel onto the U.S. market (May 24, 2021) will occur in the second half of FY 2021, we proposed to continue new technology add-on payments for this technology for FY 2021. We proposed that the maximum new technology add-on payment for a case involving the T2Bacteria ® Panel would remain at $97.50 for FY 2021 (we refer readers to the FY 2020 IPPS/LTCH PPS final rule for complete discussion of the calculation of the new technology add on payment amount for the T2Bacteria ® Panel). Cases involving the use of the T2Bacteria ® Panel that are eligible for new technology add-on payments are identified by ICD–10–PCS procedure code XXE5XM5 (Measurement of infection, whole blood nucleic acid-base microbial detection, new technology group 5). We invited public comments on our proposal to continue new technology add-on payments for the T2Bacteria ® Panel for FY 2021.
We received 17 applications for new technology add-on payments for FY 2021. In accordance with the regulations under § 412.87(e), applicants for new technology add-on payments must have FDA approval or clearance by July 1 of the year prior to the beginning of the fiscal year for which the application is being considered. Two applicants withdrew their applications prior to the issuance of the proposed rule. Three applicants, Accelerate Diagnostics, Inc (the applicant for Accelerate PhenoTest
BioFire Diagnostics, LLC submitted an application for new technology add-on payments for the BioFire ® FilmArray ® Pneumonia Panel for FY 2021. According to the applicant, the BioFire ® FilmArray ® Pneumonia Panel identifies 33 clinically relevant targets, including bacterial and viral targets, from sputum (including endotracheal aspirate) and bronchoalveolar lavage (including mini-BAL) samples in about an hour. The applicant also stated that for 15 bacteria, the BioFire ® FilmArray ® Pneumonia Panel provides semi-quantitative results, which may help determine whether an organism is a colonizer or a pathogen.
According to the applicant, lower respiratory tract infections are a leading cause of morbidity and mortality. The applicant stated that world-wide, they are the leading cause of infectious disease death and the 5th leading overall cause of death.
According to the applicant, timely administration of effective antibiotics is essential for ensuring a good prognosis. The applicant stated that mortality increases for each hour of delay in initiating antibiotic therapy for hospitalized pneumonia patients,
According to the applicant, there are three current methods for determining the causative organism of pneumonia: bacterial culture, lab developed and commercial singleplex PCR (polymerase chain reaction) tests, and off-label use of upper respiratory multiplex syndromic panels.
According to the applicant, semi-quantitative bacterial culture is routinely performed on lower respiratory specimens. The applicant explained that a calibrated loop is used to spread sample on appropriate media. A quadrant streak method is generally employed and, depending on how many of the quadrants the organism grows in, determines its semi-quantification.
According to the applicant, there are also FDA and lab-developed tests for single targets that cause pneumonia. The applicant stated that these are for the more serious pathogens (for example, Methicillin resistant
According to the applicant, a number of academic hospital labs have also performed off-label validation of commercially available respiratory panels designed for upper respiratory syndromes. The applicant stated that these tests are used primarily on BAL specimens for the rapid detection of viral causes of Pneumonia.
With respect to the newness criterion, the BioFire® FilmArray® Pneumonia Panel received FDA clearance via 510(k) on November 9, 2018, based on a determination of substantial equivalence to a legally marketed predicate device (Curetis Unyvero
As discussed previously, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and would not be considered “new” for purposes of new technology add-on payments.
With regard to the first criterion, whether a product uses the same or similar mechanism of action to achieve a therapeutic outcome, according to the applicant, the BioFire® FilmArray® Pneumonia Panel is the only sample-to-answer, rapid (~1 hour), and comprehensive molecular panel available for the diagnosis of the major bacterial and viral causes of infectious pneumonia. The applicant further explained that the BioFire® FilmArray® Pneumonia Panel is also the only semi-quantitative molecular solution available for rapidly diagnosing infectious causes of pneumonia. The applicant noted that this important feature allows labs and clinicians to better differentiate whether an organism is normal flora or the cause of the patient's illness. The applicant asserted that the current best practice is standard culture technique, discussed previously. The applicant further stated that other comprehensive molecular technologies include Curetis Unyvero
With respect to the second criterion, whether a product is assigned to the same or a different MS–DRG, the applicant stated that potential cases representing patients who may be eligible for treatment involving the BioFire® FilmArray® Pneumonia Panel would be assigned to the same MS–DRGs as cases representing patients who receive diagnostic information from competing technologies.
With respect to the third criterion, whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population, according to the applicant, the BioFire® FilmArray® Pneumonia Panel is the only FDA cleared comprehensive molecular panel approved for use on both sputum (including endotracheal aspirate) and bronchoalveolar lavage (including mini-BAL) samples allowing for diagnosis of pneumonia in hospital, community, and ventilator associated populations. The applicant stated that the BioFire® FilmArray® Pneumonia Panel is also the only molecular panel that detects both bacterial and viral causes of lower respiratory infections and pneumonia.
In addition, the applicant added that the ability of the BioFire® FilmArray® Pneumonia Panel to detect pathogens and related susceptibility traits is a unique feature of the panel that differentiates it from existing respiratory panels that have been designed and approved for use on upper respiratory specimens and not lower respiratory specimens. The applicant stated that Furukawa, D., et al., evaluated the ability of the BioFire® FilmArray® Pneumonia Panel to detect pathogens and related susceptibility traits, specifically looking at the impact of MRSA detection, and showed that the BioFire® FilmArray® Pneumonia panel has the potential to significantly expedite time to MRSA results allowing for rapid escalation or de-escalation of therapy.
We stated in the proposed rule that based on the applicant's statements as presented previously, we are concerned there is insufficient information to determine whether the BioFire® FilmArray® Pneumonia Panel mechanism of action is different from existing products. In the FDA decision summary, the test is described as a multiplex nucleic acid test, or PCR accompanied by the applicant's software. However, it is unclear from the new technology add-on payment application how the mechanism of action is new or different from other products that utilize PCR. While the applicant described this test as the only sample-to-answer, rapid (~1 hour), and comprehensive molecular panel available for the diagnosis of the major causes of infectious pneumonia and as also semi-quantitative, and further described another comprehensive molecular product (Curetis Unyvero
We did not receive any public comments on whether the BioFire® FilmArray® Pneumonia Panel meets the newness criterion. We continue to have the same concerns as summarized in the proposed rule that the BioFire® FilmArray® Pneumonia Panel is substantially similar to other products that are currently available on the U.S. market. Despite the information the applicant previously submitted with its application describing the BioFire® FilmArray® Pneumonia Panel as the only sample-to-answer, rapid (~1 hour), and comprehensive molecular panel available for the diagnosis of the major causes of infectious pneumonia and as also semi-quantitative, it remains unclear how the mechanism of action is specifically new or different from other products that utilize PCR. Moreover, it appears that the patient population of cases that may be eligible for tests using the BioFire® FilmArray® Pneumonia Panel also currently has access to other PCR-based tests and similar technologies that are also used in the testing of similar conditions. Therefore, we are unable to determine that the BioFire® FilmArray® Pneumonia Panel meets the newness criterion.
With regard to the cost criterion, the applicant conducted the following analysis to demonstrate that the technology meets the cost criterion.
The applicant stated that it used 2018 data from Definitive Health Care at
In its analysis, the applicant stated that no charges were removed for any prior technologies as the BioFire® FilmArray® Pneumonia Panel does not eliminate culture testing of specimens. The applicant standardized the charges and then inflated the charges. The applicant reported using an inflation factor of 5.50 percent based on the charge inflation factor published by CMS in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42629). The applicant appears to have made a minor error in this inflation factor, since the actual, 1-year inflation factor in the FY 2020 IPPS/LTCH PPS final rule was 5.4 percent. To estimate the cost of the technology, the applicant used the per-test list price cost of the BioFire® FilmArray® Pneumonia Panel. The applicant indicated that it did not incorporate an estimate of technician time spent administering the test, asserting that “2–5 minutes of technician time is nearly obsolete due to ease of use of the test.” The applicant also indicated that it did not incorporate an estimate of instrumentation cost into its costing of the BioFire® FilmArray® Pneumonia Panel, noting that “a number of” labs already have sufficient instrumentation to run the BioFire® FilmArray® Pneumonia Panel test. The applicant added charges for the BioFire® FilmArray® Pneumonia Panel based on an estimated range of projected patient charges for the BioFire® FilmArray® Pneumonia Panel technology. The applicant stated that the charge to the patient varies by location and the methodology of the hospital or lab charge master. The applicant noted that the estimate was based on patient charges for other BioFire® products that had been reported by hospitals and reference labs. Based on this analysis, the applicant computed a final inflated average case-weighted standardized charge per case of $78,156, as compared to an average case-weighted threshold amount of $42,812. Because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount, the applicant asserted that the technology meets the cost criterion.
We stated in the proposed rule that we are concerned that many of the calculated values in the applicant's analysis, such as the average-cost-per case, unweighted and unstandardized, were reportedly based on proprietary claims data that came from one hospital in Indianapolis. We are concerned that an analysis based on one hospital would not adequately represent the cost of cases using the BioFire® FilmArray® Pneumonia Panel as the data could be skewed or biased based on one hospital. We stated in the proposed rule that we are also concerned with the lack of description of how the BioFire® FilmArray® Pneumonia Panel maps to the three MS–DRGs for simple pneumonia (that is, MS–DRGs 193, 194 and 195); for example, whether the analysis included all the cases in these MS–DRGs or was limited to specific cases. We note there are several additional pneumonia-related MS–DRGs to which we believe potential cases that may be eligible for the use of the product could be mapped, but which were not included in the cost analysis; for example, MS–DRGs 177, 178 and 179 (Respiratory Infections and Inflammations with MCC, with CC, and without CC/MCC, respectively) and MS–DRGs 974, 975, and 976 (HIV with Major Related Condition with MCC, with CC, and without CC/MCC, respectively). We invited public comments on whether the BioFire® FilmArray® Pneumonia Panel meets the cost criterion.
We did not receive any public comments on whether the BioFire® FilmArray® Pneumonia Panel meets the cost criterion. We continue to have the same concerns regarding the cost analysis for the BioFire® FilmArray® Pneumonia Panel as summarized previously. We remain concerned that many of the calculated values in the applicant's analysis would not adequately represent the cost of cases using the BioFire® FilmArray® Pneumonia Panel as they are based on proprietary claims data that came from one hospital. We also continue to be concerned with the lack of description of how the BioFire® FilmArray® Pneumonia Panel maps to the three MS–DRGs for simple pneumonia (that is, MS–DRGs 193, 194 and 195); for example, whether the analysis included all the cases in these MS–DRGs or was limited to specific cases. Therefore, we are unable to determine that the BioFire® FilmArray® Pneumonia Panel meets the cost criterion.
With respect to the substantial clinical improvement criterion, the applicant asserted that data from studies conducted with the BioFire® FilmArray® Pneumonia Panel show that it can detect major causes of pneumonia with a high degree of sensitivity and specificity in a clinically relevant timeframe. The applicant explained that results from the BioFire® FilmArray®
The applicant submitted four studies presented as posters at national conferences to support its assertion that the product represents a substantial clinical improvement, noting that data for this test is still new and has not yet been published in academic journals.
According to the applicant, Buchan, et al. compared the results of conventional testing (bacterial culture and clinician directed molecular testing for viruses and atypical bacteria) with the results from the BioFire® FilmArray® Pneumonia Panel for 259 BAL and 48 sputum samples.
According to the applicant, an important feature of the BioFire® FilmArray® Pneumonia Panel is the inclusion of assays for viral agents. The applicant noted that in Buchan, et al., the BioFire® FilmArray® Pneumonia Panel identified at least 1 virus in 19 percent of 259 BAL samples from hospitalized adults
According to the applicant, the ability of the BioFire® FilmArray® Pneumonia Panel to impact patient management has been evaluated by two different groups (Buchan, et al. and Enne, et al). The applicant stated that Buchan, et al. performed a theoretical outcomes analysis by using the result of the BioFire® FilmArray® Pneumonia Panel to modify antimicrobial therapy and then judge if the modification was correct using the final microbiology results. The applicant explained that in this analysis of 243 BAL samples, 68 percent (n=165) could have had an antibiotic adjustment; 48 percent (n=122) would have had antibiotics appropriately de-escalated or discontinued, 31 percent (n=78) would have had no change, and 2 percent (n=5) would have had appropriate escalation or initiation of antibiotics.
According to the applicant, in an analysis of 120 ICU patients (79 males and 41 females; 33 children, with a median age of 1; and adults with a median age of 68) in the UK by Enne, et al., patients were divided into a group with positive outcomes (pneumonia resolved within 21 days) and negative outcomes (pneumonia not resolved in 21 days or contributed to the patient's death). Enne, et al., evaluated the appropriateness of antimicrobials used for HAP/VAP versus both routine culture and two rapid PCR tests, BioFire® FilmArray® Pneumonia Panel (1h) and Curetis Unyvero
The applicant also submitted Rand et al., which conducted a retrospective analysis of BAL (n=197) and endotracheal aspirates (n=93) samples from 270 unique hospitalized patients that were collected and stored at −70° C until thawed and tested on the BioFire® FilmArray® Pneumonia Panel compared to routine microbiology results.
The applicant also submitted White, et al., which conducted a comparison of the BioFire® FilmArray® Pneumonia Panel on sputum samples to a multi-test diagnostic bundle for patients admitted from the emergency department (ED) with community acquired pneumonia (CAP).
The applicant also submitted a poster by Furukawa, et al. which reported a retrospective case review of 43 samples (17 used for clinical use and 26 obtained randomly by microbiology lab) in which BioFire® FilmArray® Multiplex PCR was utilized.
The applicant asserted that Buchan, et al. and Rand, et al. support their claim of decreased time to actionable results based on: (1) The conclusion in Buchan, et al., that greater than 60 percent of patients potentially could have had an antibiotic adjustment 3–4 days earlier than standard methods based on BioFire® FilmArray® Pneumonia Panel results, and (2) the conclusion in Rand, et al., that the BioFire® FilmArray® Pneumonia Panel would have a major impact on the time to report potential pathogens that may cause Pneumonia in intubated/ICU patients.
The applicant asserted that Buchan, et al., and Enne, et al. support their claim of improved antibiotic stewardship. The applicant pointed to the conclusions in Buchan, et al., that >60 percent of patients potentially could have had an antibiotic adjustment with BioFire® FilmArray® Pneumonia Panel results and 50 percent of potential antibiotic adjustments from BioFire® FilmArray® Pneumonia Panel testing were discontinuation or narrowing, as well as the estimate that the BioFire® FilmArray® Pneumonia Panel results enabled >18,000 antibiotic hours saved on 243 patients. The applicant pointed to Enne, et al. for the results that of the 27 percent of patients who had negative outcomes, 15.6 percent had a pathogen resistant to initial therapy based on culture and 41.9 percent were resistant to initial therapy based on BioFire® FilmArray® Pneumonia Panel results (p=0.029).
The applicant asserted that White, et al. and Enne, et al. support its claim of increased diagnostic yield because White, et al. concluded that of patients with a final diagnosis of pneumonia, BioFire® FilmArray® Pneumonia Panel detected a potential pathogen in 90.6 percent compared to 81 percent with standard methods, and Enne, et al. reported that routine methods detected a pathogen in 41.7 percent of specimens compared to the BioFire® FilmArray® Pneumonia Panel which detected a pathogen in 66.7 percent of specimens.
In summary, the applicant explained that lower respiratory tract infections are a common and serious health care problem, current diagnostic tests are slow and do not identify a causative pathogen in over 50 percent of patients, and the BioFire® FilmArray® Pneumonia Panel is an easy-to-use multiplex panel that has been shown to increase diagnostic yield and significantly decrease time to results when compared to standard testing both because of improved test sensitivity and because it includes assays for typical bacteria, viruses and selected antibiotic resistance genes. According to the applicant, retrospective review of BioFire® FilmArray® Pneumonia Panel and patient data indicates a potential to impact antibiotic utilization to ensure patients are on appropriate therapy in a timely manner. The applicant also noted that molecular testing for pneumonia is relatively new and there is a lot to learn about how to best use these tests, and that there are currently several prospective studies underway to clarify the role that this tool may play in improving the outcomes for patients with pneumonia, reducing use of unnecessary antibiotics, improving targeted therapy and potentially reducing health care costs due to more directed and efficient patient
We noted in the proposed rule that the studies the applicant submitted to support its assertions regarding substantial clinical improvement were presented only as posters, and that information pertaining to full manuscripts with further study details were not provided. We stated that it is also unclear if the studies described in the posters have been submitted for peer-reviewed publication or whether full manuscripts with detailed methods and data tables are available.
We stated in the proposed rule that we are concerned that the studies do not appear to be designed or powered to be able to show conclusive evidence of clinical impact. In particular, the studies appear to describe analysis of clinical results for patients and state that there is potential for the results to impact clinical decisions about antimicrobial therapy. However, it appears the applicant did not submit evidence of the BioFire® FilmArray® Pneumonia Panel product in real-world, prospective use (randomized or non-randomized) with actual antimicrobial decisions or effect on patient management. This may require larger sample sizes. We stated that we are also concerned that only one study provided by the applicant (Enne, et al.) compared BioFire® FilmArray® Pneumonia Panel to Curetis Unyvero
We did not receive any public comments addressing the concerns we indicated in the proposed rule regarding whether the BioFire® FilmArray® Pneumonia Panel meets the substantial clinical improvement criterion. Accordingly, after consideration of the public comment we received, we are unable to determine that the BioFire® FilmArray® Pneumonia Panel represents a substantial clinical improvement over the currently available technologies.
After consideration of the information previously submitted in the BioFire® FilmArray® Pneumonia Panel application and previously summarized in this final rule, and the public comment we received, we are unable to determine that the BioFire® FilmArray® Pneumonia Panel meets the newness, cost and substantial clinical improvement criteria. Therefore, we are not approving new technology add-on payments for the BioFire® FilmArray® Pneumonia Panel for FY 2021.
Viz.ai Inc. submitted an application for new technology add-on payments for ContaCT for FY 2021. The individual components of ContaCT are currently marketed by Viz.ai, Inc. under the tradenames “Viz LVO” (for the algorithm), “Viz Hub” (for the text messaging and calling platform), and “Viz View” (for the mobile image viewer). According to the applicant, ContaCT is a radiological computer-assisted triage and notification software system intended for use by hospital networks and trained clinicians. The applicant asserted that ContaCT analyzes computed tomography angiogram (CTA) images of the brain acquired in the acute setting, sends notifications to a neurovascular specialist(s) that a suspected large vessel occlusion (LVO) has been identified, and recommends review of those images.
The applicant asserted early notification of the stroke team can reduce time to treatment and increase access to effective specialist treatments, like mechanical thrombectomy. Specifically, the applicant asserted that shortening the time to identification of LVO is critical because the efficacy of thrombectomy in patients with acute ischemic stroke decreases as the time from symptom onset to treatment increases. The applicant also asserted in a condition like stroke, where 1.9 million neurons die every minute and for which 34 percent of patients hospitalized are under the age of 65, reducing time to treatment results in reduced disability.
With respect to the newness criterion, according to the applicant, FDA granted marketing authorization to ContaCT on February 13, 2018 under the
The applicant asserted that ContaCT was not available immediately after FDA's marketing authorization due to establishing Quality Management Systems and processes for distributing ContaCT as well as staff training and installation. Per the applicant, ContaCT was not commercially available until October 2018. The applicant submitted a request for approval for a unique ICD–10–PCS procedure code for the administration of ContaCT beginning in FY 2021 and was granted approval for the following procedure code effective October 1, 2020: 4A03X5D (Measurement of arterial flow, intracranial, external approach).
As discussed above, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and would not be considered “new” for purposes of new technology add-on payments.
With regard to the first criterion, whether a product uses the same or a similar mechanism of action to achieve a therapeutic outcome, the applicant asserted no existing technology is comparable to ContaCT. The applicant further asserted, because of the technology's novelty, the product was reviewed under FDA's
1—Patient presents with stroke/suspected stroke to hospital emergency department (ED).
2—Patient receives stroke CT/CTA imaging after brief initial evaluation by hospital ED physician.
3—Technologist processes and reconstructs the CT/CTA imaging and manually routes to hospital picture archiving and communication system (PACS).
4—Radiologist reads CT/CTA imaging.
5—If needed, a neuroradiology consult is sought.
6—A radiological diagnosis of LVO is made.
7—The radiologist informs hospital ED physician of positive LVO either verbally or in the radiologist report.
8—ED physician performs comprehensive exam and refers the patient to a stroke neurologist.
9—The stroke neurologist reviews the CT/CTA imaging and clinical history and determines whether to prescribe or recommend prescription of thrombolysis with tissue plasminogen activator (tPA).
10—The stroke neurologist refers the patient to a neurointerventional surgeon. Together they decide whether the patient is a candidate for mechanical thrombectomy.
11—If appropriate, the patient proceeds to treatment with mechanical thrombectomy.
The applicant asserted that facilities utilizing the ContaCT system can substantially shorten the period of time between when the patient receives stroke CT/CTA imaging (step 2) and when the patient is referred to a stroke neurologist and neurointerventional surgeon (steps 9 and 10). They further asserted that ContaCT streamlines this workflow using artificial intelligence to analyze CTA images of the brain automatically and notifies the stroke neurologist and neurointerventional surgeon that a suspected LVO has been identified, and then enables them to review imaging and make a treatment decision faster. The applicant concluded that shortening the time to identification of LVO is critical because the efficacy of thrombectomy in patients with acute ischemic stroke decreases as the time from symptom onset to treatment increases.
With regard to the second criterion, whether the technology is assigned to the same or a different MS–DRG, the applicant did not specifically address whether the technology meets this criterion. However, we believe that cases involving the use of the technology would be assigned to the same MS–DRGs as cases without the technology where the patient moves through the hospital according to the traditional workflow outlined above.
With regard to the third criterion, whether the use of the new technology involves the treatment of the same or similar type of disease and the same or similar patient population, the applicant also did not specifically address whether the technology meets this criterion. However, we stated in the proposed rule that we believe cases involving the use of the technology would treat the same or similar type of disease and the same or similar patient population as the traditional workflow outlined above.
We noted that the applicant described ContaCT's mechanism of action as shortening the time to identification of LVO through artificial intelligence (AI). Specifically, the applicant asserted that facilities utilizing the ContaCT system can substantially shorten the period of time between when the patient receives stroke CT/CTA imaging and when the patient is referred to a stroke neurologist and neurointerventional surgeon. We stated in the proposed rule that we were unclear as to whether the streamlining of hospital workflow would represent a unique mechanism of action. Rather, we stated that it seems that the mechanism of action for ContaCT would be the use of AI to analyze images and notify physicians rather than streamlining hospital workflow. However, we also referred the reader to our discussion below and in the proposed rule regarding our concerns with respect to general parameters for identifying a unique mechanism of action based on the use of AI, an algorithm and/or software.
To the extent that the applicant asserted that streamlined hospital workflow through the use of ContaCT represents a unique mechanism of action, we stated in the proposed rule that it was unclear to us the degree to which ContaCT changes the traditional workflow. Per the FDA, “ContaCT is limited to analysis of imaging data and should not be used in-lieu of full patient evaluation or relied upon to confirm diagnosis.”
We stated in the proposed rule that we were also generally concerned as to whether the use of AI, an algorithm or software, which are not tangible, may be considered or used to identify a unique mechanism of action. In addition, we questioned how updates to AI, an algorithm or software would affect an already approved technology or a competing technology, including whether software changes for an already approved technology could be considered a new mechanism of action. We also questioned whether, if there were competing technologies to an already approved AI new technology, an improved algorithm by a competitor would represent a unique mechanism of action if the outcome is the same as the technology first approved. We welcomed comments from the public regarding the general parameters for identifying a unique mechanism of
We also invited public comments on whether the applicant meets the newness criterion, including specifically with respect to the mechanism of action.
The applicant asserted that no existing technology is comparable to ContaCT. According to the applicant, with regard to the first criterion for newness, ContaCT does not use the same or a similar mechanism of action as compared to an existing technology. The applicant stated that ContaCT was reviewed through FDA's
With respect to the first substantial similarity criterion, the applicant asserted that computer-assisted triage and notification is the mechanism of action for ContaCT and that the mechanism of action for ContaCT is not AI per se. According to the applicant, AI is a necessary component of ContaCT, but is not sufficient to achieve therapeutic effect. Furthermore, the applicant stated that under 42 CFR 412.87(b)(2) and CMS criteria for evaluating a technology with respect to newness, there are no requirements that a new technology have a specific type of mechanism of action to be eligible for new technology add-on payments.
The applicant expressed concern that CMS is questioning whether AI, an algorithm or software may never be considered a unique mechanism of action, because such technology may simulate human intelligence or human processes that already exist. According to the applicant, CMS has defined an existing technology as another FDA approved or cleared technology. Human intelligence and human processes are not FDA approved or cleared technologies and, therefore, should not be used as a comparator to evaluate whether ContaCT, or any technology, meets the definition of newness. The applicant stated that, as for other new technologies, comparators for AI, algorithm or software-based devices should be other FDA approved or cleared technologies. More broadly, the applicant urged CMS not to make a broad determination that technologies that use AI, an algorithm or software to achieve a therapeutic effect are ineligible for new technology add-on payments. They stated CMS should evaluate each new technology individually with respect to whether it meets the established criteria.
In addressing CMS concerns about whether software changes for an already approved technology could be considered a new mechanism of action, the applicant stated that an update to the ContaCT algorithm that does not alter this mechanism of action would have the same or a similar mechanism of action. In addressing CMS concerns about whether an improved algorithm by a competitor would represent a unique mechanism of action if the outcome is the same as the technology first approved, the applicant likewise stated that a different technology that shortens time to notification in patients with acute ischemic stroke caused by large vessel occlusions by using an AI algorithm to identify suspected LVO, triage patients and notify the stroke team more rapidly would likely be determined to have a mechanism of action that is the same or similar to ContaCT.
In addition, the applicant stated that the newness of the overall mechanism of action or the means by which a product achieves the therapeutic outcome should be assessed, rather than the newness of the individual inputs or components. They provided an example from FY 2017 when CMS determined MIRODERM not to be “new” because the product achieved the intended therapeutic outcome, wound healing, in the same way as other acellular skin substitutes by providing a scaffold of collagen with a mix of matrix proteins (81 FR 56893). The applicant stated that CMS acknowledged that MIRODERM matrix proteins were different from the proteins found in other acellular skin substitutes, but the determination of newness was based on MIRODERM's overall mechanism of action—a collagen scaffold that promotes wound healing. Just as in the MIRODERM example where the matrix proteins were not sufficient to establish the technology as new, changes to the AI, algorithm and/or software would not be sufficient to establish future computer-aided triage and notification systems for large vessel occlusion ischemic stroke as new if these involve essentially the same mechanism of action as ContaCT. The applicant thus argued that technologies that utilize AI, an algorithm and/or software should be evaluated for newness in the same way as CMS evaluates any other medical device applying for new technology add-on payments.
Other commenters responded to CMS' concerns about whether the applicant meets the newness criterion. In response to our stated uncertainty regarding how ContaCT streamlines the workflow for stroke treatment via AI if it is not to be used for diagnostic purposes per the FDA and still requires personnel to order the scan and make the diagnosis, a commenter responded that ContaCT will enhance, not replace, human action as it relates to patient outcomes, and asserted that all innovation will be based upon AI in some fashion moving forward. Another commenter responded to our concerns as to whether the use of AI, an algorithm or software may be considered or used to identify a unique mechanism of action and also how updates to AI, an algorithm or software would affect an already approved technology or a competing technology for purposes of new technology add-on payments. The commenter stated that technologies that utilize AI, an algorithm and/or software may be evaluated for newness in the same way CMS evaluates any other medical device applying for new technology add-on payments. Such a technology would not be new if there is an existing FDA-approved technology that has been on the market for more than 2 to 3 years and that has the same mechanism of action, is assigned to the same DRGs, or is used in the same or similar type of disease and patient population. The commenter further suggested that this apply to both incremental changes to
We will continue to consider the issues related to determining newness for technologies that use AI, an algorithm or software, including devices classified as radiological computer aided triage and notification software, as discussed in the proposed rule, including how these technologies may be considered or used to identify a unique mechanism of action, how updates to AI, an algorithm or software would affect an already approved technology or a competing technology, whether software changes for an already approved technology could be considered a new mechanism of action, and whether an improved algorithm by competing technologies would represent a unique mechanism of action if the outcome is the same as an already approved AI new technology, as we gain more experience in this area.
With respect to the cost criterion, the applicant provided the following analysis. First, the applicant extracted claims from the FY 2018 MedPAR dataset. The applicant explained that many patients present to the emergency department with signs or symptoms suggesting an LVO. That presentation would be the basis for ordering a CTA with ContaCT added. Of these patients, some will be identified as stroke and LVO, some as stroke but not from an LVO, and others will have diagnoses completely unrelated to stroke. As a result, according to the applicant, there may be a very broad range of principal diagnoses and MS–DRGs representing patients who would be eligible for and receive a CTA with ContaCT. The applicant noted that it used admitting diagnoses codes rather than principal or secondary diagnosis codes to identify cases of stroke due to LVO, stroke not due to LVO, and no stroke. The applicant utilized a multi-step approach:
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The applicant identified a total of 375,925 cases across 143 MS–DRGs, with approximately 66 percent of cases mapping to MS–DRGs 039, 057, 064, 065, 066, 069 and 312. The average unstandardized case-weighted charge per case was $52,001. The applicant noted it did not remove any charges for a prior technology, as it asserted that no other technology is comparable to ContaCT. Based on the results of a research study,
The applicant then added the charges for the new technology. The applicant explained it calculated the cost per patient by dividing the total overall cost of ContaCT per year per hospital by the number of total estimated cases for which ContaCT was used at each hospital that currently subscribes to ContaCT (based on the estimated number of cases receiving CTA), and averaging across all such hospitals. The following is the methodology the applicant used to determine the cost per case:
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The applicant calculated a case-weighted threshold amount of $51,358 and a final inflated average case-weighted standardized charge per case of $62,006. Based on this analysis, the applicant asserted that ContaCT meets the cost criterion because the final inflated average case-weighted standardized charge per case exceeds the case-weighted threshold amount.
The applicant submitted three additional cost analyses to demonstrate that it meets the cost criterion using the same methodology above but with limits on the cases. The first alternative limited the analysis to only those cases in the primary stroke-related MS–DRGs 023, 024, 061, 062, 063, 064, 065, 066, 067, 068, and 069. This first alternative method resulted in a case-weighted threshold of $53,885 and a final inflated average case weighted standardized charge per case of $62,175. The second alternative limited the analysis to cases in MDC 01 (Diseases and Disorders of the Nervous System) with the following MS–DRGs:
This second alternative method resulted in a case-weighted threshold of $55,053 and a final inflated average case weighted standardized charge per case of $63,741. The third alternative limited cases to MS–DRGs where the total volume of cases was greater than 100. This third alternative method resulted in a case-weighted threshold of $49,652 and a final inflated average case-weighted standardized charge per case of $59,365. Across all cost-analysis methods, the applicant maintained that the technology meets the cost criterion because the final inflated average case-weighted standardized charge per case exceeds the average case-weighted threshold amount.
We noted in the proposed rule that we believe a case weight would provide more accuracy in determining the average cost per case as compared to the average of costs per case across all hospitals that was used by the applicant in Step 6 as summarized previously. We therefore computed a case-weighted cost per case across all current subscriber hospitals. We then inflated the case-weighted cost per case to a charge based on Step 7 above and used this amount in the comparison of the case-weighted threshold amount to the final inflated average case-weighted standardized charge per case (rather than the applicant's average cost per case). In all the scenarios above, the final inflated average case-weighted standardized charge per case exceeded the case-weighted threshold amount by an average of $2,961.
We stated in the proposed rule that we had the following concerns regarding whether the technology meets the cost criterion. The applicant used a single list price of ContaCT per hospital
We stated in the proposed rule that an alternative to the applicant's calculation may be a methodology that expands the applicant's sample from total cases (which include both Medicare and non-Medicare cases) receiving CTA at subscriber hospitals in Step 1 to all inpatient hospitals for the use of ContaCT (and then using the same steps after Step 1 for the rest of the analysis). In this alternative, the applicant would continue to extract cases representing patients that are eligible for the use of ContaCT from MedPAR, but the cost per patient would be determined by dividing the overall cost per year per hospital by the average number of patients eligible for the use of ContaCT across all such hospitals. For example, if the cost for ContaCT is $25,000 per year and the average hospital has 500 patients who are eligible to receive ContaCT per year, then under this alternative methodology, the total cost per patient would be $50 ($25,000/500).
We noted in the proposed rule that if ContaCT were to be approved for new technology add-on payments for FY 2021, we believed the cost per case from the cost analysis above may also be used to determine the maximum new technology add-on payment (that is, 65 percent of the cost determined above). We stated that we understood there are unique circumstances to determining a cost per case for a technology that utilizes a subscription for its cost. We welcomed comments from the public as to the appropriate method to determine a cost per case for such technologies, including comments on whether the cost per case should be estimated based on subscriber hospital data as described previously, and if so, whether the cost analysis should be updated based on the most recent subscriber data for each year for which the technology may be eligible for the new technology add-on payment.
We also invited public comments on whether the applicant meets the cost criterion.
First, the applicant updated its cost analyses to include all IPPS hospitals, utilizing the same methodology described in detail in the proposed rule. Under this methodology, the cost per patient is calculated by dividing the total overall cost of ContaCT per year per hospital by the number of total estimated cases for which ContaCT would be used at each hospital (based on the estimated number of cases receiving CTA), and then averaging across all such hospitals. The applicant's updated cost analysis included 3,035 Medicare provider numbers representing 3,062 general acute care hospitals. The updated analysis yielded a final inflated average case-weighted standardized charge per case of $71,568, which exceeded the threshold amount of $51,358.
The applicant also updated the three alternative analyses (which used the same methodology as above but limited the cases included) to include all IPPS hospitals. The parameters of these analyses were discussed in detail in the proposed rule (85 FR 32602 through 32603). Per the applicant, the first alternative analysis resulted in a case-weighted threshold of $53,885 and a final inflated average case-weighted standardized charge per case of $71,736; the second alternative analysis resulted in a case-weighted threshold of $55,053 and a final inflated average case weighted standardized charge per case of $73,302; and the third resulted in a case-weighted threshold of $49,652 and a final inflated average case-weighted standardized charge per case of $68,925. In all three alternative analyses, the final average case-weighted standardized charge per case exceeded the average case-weighted threshold amount, meeting the cost criterion.
The applicant also calculated a case-weighted average cost per case for each of the analyses above in response to CMS' suggestion that a case-weighted average cost per case would be more accurate compared to the average of costs per case across all hospitals, as the applicant had done initially. The applicant analyzed the average number of patients eligible to receive ContaCT per hospital among subscribers and compared it to the average number of patients eligible to receive ContaCT among all IPPS hospitals. The applicant found that, among ContaCT subscribers, the average number of patients eligible to receive ContaCT per Medicare provider number and per hospital are 141 and 121, respectively. In contrast, among all IPPS hospitals, the applicant found that the average number of patients eligible to receive ContaCT per Medicare provider number and per hospital are 99 and 82, respectively. The applicant concluded that ContaCT subscribers have a higher average number of patients eligible to receive ContaCT compared to all IPPS hospitals, and that the cost per patient for ContaCT is skewed to yield a higher cost per patient across all IPPS hospitals than among ContaCT subscribers alone. The applicant noted that the cost per patient among ContaCT subscribers is lower than if all IPPS hospitals adopted ContaCT, and that expanding the analyses above to include all IPPS hospitals increased the cost per patient.
Per the applicant, ContaCT would meet the cost criterion in each of these average number of patients eligible to receive ContaCT across all cost-analysis methods. Using a case-weighted cost per case, the applicant also met the cost criterion across all cost-analysis methods, as the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount.
The applicant also noted that technologies sold on a subscription basis are provided to the customer at a recurring price at regular intervals. As a result, the cost per unit for a subscription technology is directly impacted not only by the price, but how frequently the customer utilizes the technology, in that customers with low utilization of a subscription-based technology have a higher cost per unit than customers with high utilization. The commenter stated that, because the overall cost per unit of subscription technologies is determined by each customer's ratio of price to utilization, an analysis that requires an estimate of cost per unit should be limited to subscribers. The commenter believed that including estimates of cost per unit for potential customers that do not currently subscribe to the technology may result in a cost-per-case that does not reflect the actual costs of current users. The commenter recommended that the cost per unit of technologies sold on a subscription basis, like ContaCT, should be based on data from current subscribers only. However, the applicant agreed with CMS that yearly updates to the cost per unit analysis are reasonable to reflect changes in subscribers and thus the overall cost per unit.
The commenter offered several examples of how its recommendation is consistent with CMS' methodology in calculating costs across a variety of payment systems and programs. The commenter noted that CMS considers only costs from hospitals for cases billed
With respect to the substantial clinical improvement criterion, according to the applicant, ContaCT represents an advance that substantially improves the ability to diagnose a large vessel occlusion stroke earlier by automatically identifying suspected disease in CTA images and notifying the neurovascular specialist directly in parallel to the standard of care. The applicant further asserted a major limitation in the traditional acute stroke workflow is the time delay from initial image acquisition of a suspected LVO patient (CT, CT angiography, and CT perfusion), notification of the interventional team, and execution of an endovascular thrombectomy. The time from stroke onset to reperfusion (when blood supply returns to tissue after a period of ischemia or lack of oxygen) is negatively correlated with the probability of an independent functional status.
The applicant asserted that ContaCT facilitates a workflow parallel to the standard of care workflow and results in a notified specialist entering the workflow earlier. In the applicant's study to support the De Novo request, ContaCT's performance was compared with standard of care workflow, demonstrating that ContaCT resulted in faster specialist notification. According to the applicant, the average time to specialist notification for ContaCT was 7.32 minutes [95% CI: 5.51, 9.13] whereas time to notification for standard of care workflow was 58.72 minutes [95% CI: 46.21, 71.23]. The applicant also asserted that ContaCT saved an average of 51.4 minutes, an improvement that could markedly improve time to intervention for LVO patients. In addition, the applicant noted that the standard deviation was reduced from 41.14 minutes in the standard of care workflow to 5.95 minutes with ContaCT, demonstrating ContaCT's potential to reduce variation in care and patient outcome across geographies and time of day.
To support the applicant's assertion that ContaCT substantially improves the ability to diagnose a large vessel occlusion stroke earlier, the applicant presented a multicenter prospective observational trial, DISTINCTION, which is ongoing and compares a prospective cohort of patients in which ContaCT is used (intervention arm) to a retrospective cohort in which ContaCT was not used (control arm). Patients are also segmented based on whether they initially present to a non-interventional center or an interventional center. Per the applicant, early data from one non-interventional hospital in the Erlanger Health System indicates that for the control arm the median time from CTA to clinician notification was 59.0 minutes. For the intervention arm, early data indicates that the median time from CTA to clinician notification was 5.3 minutes. The applicant stated that these early data indicate time savings of approximately 53 minutes, which is consistent with the 51.4 minute time savings demonstrated in the studies sponsored/conducted by the De Novo requester.
Next, the applicant presented the Automated Large Artery Occlusion Detection In Stroke Imaging Study (ALADIN), a multicenter retrospective analysis of CTAs randomly picked from a retrospective cohort of acute ischemic stroke patients, with and without anterior circulation LVOs, admitted at three tertiary stroke centers, from 2014–2017. Per the applicant, ALADIN evaluated ContaCT's performance characteristics including area under the curve, sensitivity, specificity, positive predictive value, negative predictive value, and processing or running time. The applicant asserted that, through this study, researchers concluded that the ContaCT algorithm may permit early and accurate identification of LVO stroke patients and timely notification to emergency teams, enabling quick decision-making for reperfusion therapies or transfer to specialized centers if needed.
According to the applicant, the use of ContaCT to facilitate a faster diagnosis and treatment decision directly affects management of the patient by enabling early notification of the neurovascular specialist and faster time to treatment utilizing mechanical thrombectomy to remove the large vessel occlusion. The applicant stated that mechanical thrombectomy with stent retrievers is one of the standards of care for treatment of acute ischemic stroke patients caused by LVO and that mechanical thrombectomy therapy is highly time-critical with each minute saved in onset-to-treatment time resulting in a reported average of 4.2 days of extra healthy life.
The applicant stated that according to five clinical trials, the clinical efficacy of endovascular mechanical thrombectomy has been demonstrated for patients with LVO strokes up to 6 hours after onset of stroke.
The applicant also asserted that real world evidence further supports the efficacy of mechanical thrombectomy. Data from the STRATIS registry (Systematic Evaluation of Patients Treated With Neurothrombectomy Devices for Acute Ischemic Stroke), which prospectively enrolled patients treated in the United States with a Solitaire Revascularization Device and Mindframe Capture Low Profile Revascularization Device within 8 hours from symptom onset, was compared with the interventional cohort from the patient-level meta-analysis from Campbell et al. to assess whether similar process timelines and technical and functional outcomes could be achieved in a large real-world cohort as in the randomized trials. The article concluded that the results indicate randomized trials can be reproduced in the real world (Mueller-Kronast et al., 2017).
The applicant stated that based on these data, U.S. clinical guidelines now recommend mechanical thrombectomy for the treatment of large vessel occlusion strokes when performed ≤6 hours from symptom onset. The American Stroke Association/American Heart Association (ASA/AHA) “2018 Guidelines for the Early Management of Patients With Acute Ischemic Stroke” recommended mechanical thrombectomy with a stent retriever in patients that meet the following criteria: (1) Prestroke modified Rankin Scale (mRS) 0–1; (2) causative occlusion of the internal carotid artery (ICA) or middle cerebral artery (MCA) segment 1 (M1); (3) age ≥18; (4) National Institute of Health Stroke Scale (NIHSS) ≥6; (5) Alberta Stroke Program Early CT Score (ASPECTS) ≥6; and (6) treatment can be initiated within 6 hours of symptom onset (Powers et al., 2018). The ASA/AHA notes the need for expeditious treatment with both intravenous thrombolysis and mechanical thrombectomy.
The applicant also stated that recently, randomized trials have demonstrated the clinical efficacy of mechanical thrombectomy for large vessel occlusion strokes for select patients from 6 to 24 hours after symptom onset.
The applicant asserted that the use of ContaCT reduces time to treatment by notifying the stroke team faster than the standard of care and enabling the team to diagnose and treat the patient earlier, which is known to improve clinical outcomes in stroke, and that mechanical thrombectomy has been shown to reduce disability, reduce length of stay and recovery time (Campbell et al., 2017).
According to the applicant, other studies have also demonstrated that time to reperfusion is a predictor of patient outcomes. The applicant asserted that several major randomized controlled trials for mechanical thrombectomy have demonstrated improvements in functionality with faster time to reperfusion. The primary outcome of some of these trials was the modified Rankin scale (mRs) score, a categorical scale measure of functional outcome, with scores ranging from 0 (no symptoms) to 6 (death) at 90 days.
The applicant referred to the American Stroke Association/American Heart Association (ASA/AHA) “2018 Guidelines for the Early Management of Patients With Acute Ischemic Stroke,” which recognized that the benefit of mechanical thrombectomy is time dependent, with earlier treatment within the therapeutic window leading to bigger proportional benefits. The guidelines also state that any cause for delay to mechanical thrombectomy, including observing for a clinical response after intravenous alteplase, should be avoided.
The applicant asserted that the phrase “time is brain” emphasizes that human nervous tissue is rapidly lost as stroke progresses. Per the applicant, recent advances in quantitative neurostereology and stroke neuroimaging permit calculation of just how much brain is lost per unit time in acute ischemic stroke. To illustrate this point, the applicant stated that in the event of a large vessel acute ischemic stroke, the typical patient loses 1.9 million neurons, 13.8 billion synapses, and 12 km (7 miles) of axonal fibers each minute in which stroke is untreated. Furthermore, for each hour in which treatment fails to occur, the brain loses as many neurons as it does in almost 3.6 years of normal aging.
We stated in the proposed rule that we had the following concerns regarding whether the technology meets the substantial clinical improvement criterion. The applicant provided a total of 19 articles specifically for the purposes of addressing the substantial clinical improvement criterion: four retrospective studies/analyses, nine randomized clinical trials (RCTs), three meta-analyses, one registry, one guideline, and one systematic review.
The four retrospective studies/analyses included the FDA decision memorandum, a single site of a RCT, and two abstracts related to the Automated Large Artery Occlusion Detection in Stroke Imaging (ALADIN) study. The applicant stated that the studies sponsored/conducted by the De Novo requester indicated that ContaCT substantially shortens the time to notifying the specialist for LVO cases as compared with the standard of care. However, the sample size was limited to only 85 out of 300 patients having sufficient data of CTA to notification time available. To calculate the sensitivity and specificity of ContaCT, neuro-radiologists reviewed images and established the empirical evidence. Specifically, the sensitivity and specificity was 87.8 percent (95% CI: 81.2–92.5%) and 89.6 percent (83.7–93.9%), respectively. In the proposed rule, we stated that we had concerns regarding whether this represents a substantial clinical improvement, as ContaCT missed approximately 12 percent of images with a true LVO and incorrectly identified approximately 10 percent as having an LVO. Additionally, the small sample size of less than 100 raises concerns for generalizability. Additionally, we agree with the FDA that ContaCT is limited to analysis of imaging data and should not be used in lieu of full patient evaluation or relied upon to make or confirm diagnosis.
With respect to the study that was a single site of an RCT
The applicant also submitted two separate abstracts for a retrospective analysis of the ALADIN study, which only provide interim results. The applicant noted for the primary analysis, the algorithm obtained sensitivity of 0.97 and specificity of 0.52, with a positive predictive value (PPV) of 0.74 and negative predictive (NPV) of 0.91, and overall accuracy of
The RCTs included the following: (1) Multicenter Randomized Clinical Trial of Endovascular Treatment of Acute Ischemic Stroke in the Netherlands (MR CLEAN);(2) Thrombolysis in Emergency Neurological Deficits—Intra-Arterial (EXTEND–IA) Trial; (3) The Endovascular Treatment for Small Core and Anterior Circulation Proximal Occlusion with Emphasis on Minimizing CT to Recanalization Times (ESCAPE) trial; (4) Randomized Trial of Revascularization with Solitaire FR Device versus Best Medical Therapy in the Treatment of Acute Stroke Due to Anterior Circulation Large Vessel Occlusion Presenting within Eight Hours of Symptom Onset (REVASCAT); (5) Solitaire with the Intention for Thrombectomy as Primary Endocascular Treatment (SWIFT PRIME) trial; (6) Endovascular Therapy Following Imaging Evaluation for Ischemic Stroke; (7) DWI or CTP Assessment with Clinical Mismatch in the Triage of Wake-Up and Late Presenting Strokes Undergoing Neurointervention with Trevo (DAWN) trial; and (8) Interventional Manage of Stroke (IMS) Phase I and II trials. The MR CLEAN trial, EXTEND–IA trial, ESCAPE trial, REVASCAT trial, SWIFT PRIME trial, Endovascular Therapy Following Imaging Evaluation for Ischemic Stroke trial, and DAWN were all multicenter prospective RCTs evaluating a treatment group of either a microcatheter with a thrombolytic agent or mechanical thrombectomy versus a control group of the standard of care. These RCTs were evaluating the outcomes from specific treatment for patients who suffered from various strokes and not the time of imaging to treatment. While each study may have included a time-element as an experimental analysis or additional end-point, we stated that we are unsure how they support the use of ContaCT as a substantial clinical improvement over existing technologies. Also, while the IMS trials provided evidence to support a positive clinical outcome following technically successful angiographic reperfusion using time from stroke onset to procedure termination, they did not specify which part of the overall standard of care treatment affected an increase or decrease of time. The three meta-analyses utilized data from the RCTs. The Safety and Efficacy of Solitaire Stent Thrombectomy examined four trials, ESCAPE, REVASCAT, SWIFT PRIME, and EXTEND–IA. The Highly Effective Reperfusion evaluated in Multiple Endovascular Stroke Trials (HERMES) collaboration authored two of the three meta-analyses. The HERMES collaboration examined data and results from five RCTs, MR CLEAN, ESCAPE, REVASCAT, SWIFT PRIME, and EXTEND–IA. These meta-analyses confirmed the results of each of the individual RCTs of the benefits of thrombectomy versus the standard of care. However, we stated that we have concerns as to whether these meta-analyses, along with the RCTs, indicate a substantial clinical improvement with shorter notification times of an LVO.
Two articles submitted by the applicant evaluated data using the STRATIS registry. One article
Lastly, the applicant submitted the AHA/ASA guidelines and a systematic literature review as support for clinical improvement. We stated that we are concerned the guidelines do not support a finding of substantial clinical improvement for ContaCT because the guidelines are for the current standard of care. The systematic literature review identified the quantitative estimates of the pace of neural circuity loss in human ischemic stroke. While this supports the urgency of stroke care, we stated that we were unsure how it demonstrates a substantial clinical improvement in how ContaCT supports the urgency of stroke care.
We invited public comment as to whether ContaCT meets the substantial clinical improvement criterion.
With respect to improved clinical outcomes, the applicant described a study submitted for publication that used a prospectively-maintained database of patients undergoing thrombectomy for LVO and assessed the impact of ContaCT implementation on door-to-treatment time and patient outcomes for all patients who presented to a Primary Stroke Center currently utilizing ContaCT in the Mount Sinai Health System in New York and who subsequently underwent mechanical thrombectomy. To evaluate impact in a controlled fashion, data from pre-ContaCT implementation (October 1, 2018 to March 15, 2019) and post-ContaCT implementation (October 1, 2019 to March 15, 2020) were compared from a total of 42 patients who met the inclusion criteria. According to the applicant, the study investigators found that the post-ContaCT cohort had significantly better clinical outcomes and level of disability, as measured by a lower 5-day NIH Stroke Scores (NIHSS) and lower discharge modified Rankin Score (mRS) scores compared to the pre-ContaCT cohort, 10.78 vs. 21.93 (p=0.02) and 2.92 vs. 4.62 (p=0.03), respectively. The post-ContaCT cohort also demonstrated significantly lower median 90-day mRS scores compared to the pre-ContaCT cohort (3 vs. 5; p=0.02). In addition to these outcome measures, the post-ContaCT cohort also had significantly shorter median door-to-interventional radiologist (INR)
With respect to shorter time to treatment, the applicant summarized unpublished data from three distinct single center, retrospective investigator-initiated reviews from hospital systems that have implemented ContaCT in Colorado, Georgia, and Tennessee. The three reviews evaluated ContaCT's impact on the time from hospital arrival (Door) to skin puncture (Puncture), or DTSP, for LVO patients initially presenting to the clinical site.
At the first site, 32 patients initially presented to the emergency department at SkyRidge Medical Center in Colorado. Patients included in the analysis were divided into two cohorts. The pre-ContaCT cohort included the 16 thrombectomy patients immediately preceding ContaCT implementation and the post-ContaCT cohort included the 16 thrombectomy patients immediately after ContaCT implementation. Overall, ContaCT implementation resulted in an average reduction in door-to-puncture time of 24 minutes. Additionally, ContaCT implementation resulted in statistically significant improvements in the percentage of patients with door to puncture times of less than 90 minutes (p=0.013) and less than 60 minutes (p=.005). After installing ContaCT, 94 percent of thrombectomy cases had DTSP <90 minutes (p=0.013).
At the second site, 120 patients initially presented to the emergency department at Wellstar Hospital in Georgia. Patients included in the analysis were divided into two cohorts. Patients from pre-ContaCT implementation (July 2018 through June 2019) and patients from post-ContaCT implementation (July 2019 to June 2020) were compared. Overall, ContaCT implementation resulted in an average reduction in door to puncture time of 30 minutes (p=0.01).
At the third site, 46 patients initially presented to a Primary Stroke Center currently utilizing ContaCT in the Methodist LeBonheur Healthcare System in Tennessee. Patients included in the analysis were divided into two cohorts: Patients with LVOs identified by ContaCT and patients with LVOs not identified by ContaCT. Overall, ContaCT implementation resulted in an average reduction in door-to-puncture time of 44 minutes (p=0.03).
With respect to shorter time to notification, the applicant described data maintained by Viz.ai indicating that real-world performance of ContaCT is consistent with the results achieved in the FDA clinical study. Across 4,763 patients analyzed by ContaCT in the past six months, the median time from CT angiogram to notification of the specialist was 4.31 minutes. This compares with 5.6 minutes in the ContaCT cohort (compared with 58.7 minutes in the standard of care cohort) in the FDA clinical trial. The percentage of notifications viewed by the specialist within five minutes was 90 percent in the same cohort of patients.
In addressing concerns raised by CMS in the proposed rule regarding whether the clinical study supporting the applicant's De Novo request for ContaCT represents a substantial clinical improvement, the applicant stated that the sensitivity and specificity (87% and 90%, respectively) of ContaCT are consistent with the performance characteristic for other diagnostic services that inform clinical care and that no tests have perfect performance. Moreover, the applicant stated that because ContaCT is a triage and notification system, no harm is expected to result from false positives or false negatives. ContaCT will triage and alert on false positives resulting in an earlier read of the CT angiogram image than what otherwise would be and are quickly reviewed and appropriately triaged to non-treatment. False negatives, when no alert is sent, are managed exactly the same as today's standard of care without ContaCT, as no alert is sent in the standard of care. The applicant noted the benefit for patients with LVO that are correctly identified by ContaCT (true positives).
In addressing concerns raised by CMS in the proposed rule regarding whether the results of the clinical study supporting the applicant's De Novo request for ContaCT are generalizable, the applicant stated that data maintained by Viz.ai (and referenced above) suggest that real-world performance of ContaCT is even faster than what was found in the FDA clinical trial. According to the applicant, these internal data are supported by the additional clinical evidence provided to CMS that demonstrate not only does ContaCT reduce time to notification of the neurointerventionalist, it reduces time to treatment and improves clinical outcomes as demonstrated by lower 5-day NIHSS and lower discharge mRS.
The applicant also addressed concerns noted by CMS that results provided in the new technology application from the ALADIN study were partial results and showed somewhat more variable accuracy estimates than the FDA study. The applicant stated that complete results from the ALADIN study were unnecessary to support the performance of the ContaCT system as the primary objective of the ALADIN study was to fine-tune and optimize the ContaCT algorithm prior to the FDA study. According to the applicant, the best and most reliable data on the performance of the ContaCT device is the data from the pivotal study conducted for and submitted to the FDA as part of the
In the proposed rule, CMS pointed to the multiple steps and variables that impact time to treatment and clinical outcomes in LVO, questioning the ability of ContaCT to shorten time to treatment. In their comment, the applicant stated that the existence of other variables that impact time to treatment and clinical outcomes does not preclude clinical benefits from one variable, such as time to notification. The applicant stated that alerting the stroke specialist earlier than the standard of care enables them to make treatment decisions earlier, shortening the amount of time to treatment and improving clinical outcomes.
The applicant also addressed CMS' concern about whether and how utilization of faster analysis and notification of suspected LVOs derived from CTA images would affect the clinical outcome of patients, considering evidence demonstrating that obtainment of advanced imaging like CTA contributed to a 57-minute delay in decision making.
Finally, with regards to CMS' concerns about whether ContaCT provides substantial clinical improvement, the applicant stated that all available clinical guidelines support faster time to treatment. They reiterated that the importance of time in stroke care is well established, and that reducing time to treatment improves clinical outcomes. They asserted that the new clinical evidence provided in their comment demonstrated the direct effect that ContaCT has on both time to treatment and patient outcomes and they maintained that these data are consistent with a well-established body of evidence that reduced time to notification and treatment of LVO improves outcomes in patients with ischemic stroke.
We also received comments from many other commenters expressing their support for new technologies that reduce time to treatment for stroke patients, noting that rapid identification and treatment of these patients at comprehensive stroke centers offers the possibility to minimize the stroke burden and deficit and maximize the potential of a good outcome and return to function. Several commenters also recognized that rapid triaging of stroke patients has been endorsed as a best practice in published clinical guidelines. Some commenters supported the use of AI in the care of stroke patients and neuroscience patients generally, but did not endorse a particular technology, device, product, or manufacturer.
Several commenters noted their direct experience with ContaCT upon implementation of the new technology at their hospitals, asserting that communication between all providers involved in the acute care of patients with stroke has significantly improved. A commenter stated that the ContaCT triage and notification system directly saved the lives of many patients at their hospital. The commenter referenced that their hospital team performed analyses which demonstrated that the use of the ContaCT system resulted in a statistically significant improvement on transfer patient outcomes. Another commenter experienced with the ContaCT system stated it led to a dramatic improvement in patient workflow for acute stroke patients and has significantly decreased door-in door-out times for patients needing emergent treatment who present to spoke hospitals, improved decision times for “go” or “no go” for endovascular therapy at patients presenting to both spoke and hub hospitals, and has led to improved overall outcomes of patients.
Some commenters stated that rapid identification of stroke patients is especially pressing at smaller hospitals that are trying their best to transfer stroke patients to the nearest stroke center. A commenter noted that the reduction of time to treatment by ContaCT is leading to better outcomes clinically, less societal drain of resources, and fewer financial burdens to families requiring the incomes of the patients suffering from stroke disability. Another commenter asserted that if ContaCT receives approval for add-on payments, more hospitals would be able to implement this technology and, as a result, more patients would have access to life saving treatment, leading to a significant reduction of disability from stroke. According to the commenter, allowing hospitals to receive reimbursement for ContaCT would not only benefit communities in large metro areas but, more importantly, in rural areas where access to stroke care and technology is limited due to limited resources.
After consideration of the public comments we received, we have determined that ContaCT meets all of the criteria for approval for new technology add-on payments. Therefore, we are approving new technology add-on payments for ContaCT for FY 2021. Cases involving the use of ContaCT that are eligible for new technology add-on payments will be identified by ICD–10–PCS procedure code 4A03X5D.
In its application, the applicant stated that the cost per patient of ContaCT will vary based on the number of cases. As discussed previously, per the applicant, the cost per patient is calculated based on the annual list price of ContaCT multiplied by the number of subscribers, and divided by the number of ContaCT cases across such subscribers. We noted that, if ContaCT were to be approved for new technology add-on payments for FY 2021, we believed the cost per case from the applicant's original cost analysis above may also be used to determine the maximum new technology add-on payment (that is, 65 percent of the cost determined above). The applicant estimated that the average cost of ContaCT to the hospital is $1,600 based on customer data. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the costs of the new medical service or technology, or 65 percent of the amount by which the costs of the case exceed the MS–DRG payment. As a result, the maximum new technology add-on payment for a case involving the use of ContaCT is $1,040 for FY 2021.
TherOx, Inc. submitted an application for new technology add-on payments for Supersaturated Oxygen (SSO
Per the applicant, The DownStream® System is an adjunctive therapy that creates and superoxygenated arterial blood and delivers it directly to reperfused areas of myocardial tissue which may be at risk after an acute myocardial infarction (AMI), or heart attack. Per FDA, SSO
SSO
The applicant for the SSO
As discussed previously, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and would therefore not be considered “new” for purposes of new technology add-on payments. We note that in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42275), we stated that based on the information submitted by the applicant as part of its FY 2020 new technology add-on payment application for SSO
Based on consideration of the comments received and information submitted by the applicant as part of its FY 2021 new technology add-on payment application for SSO
With regard to the cost criterion, the applicant conducted the following analysis to demonstrate that SSO
The applicant determined that the average case-weighted unstandardized charge per case was $97,049. The applicant then standardized the charges. The applicant did not remove charges for the current treatment because, as previously discussed, SSO
We invited public comments on whether the SSO
With regard to the substantial clinical improvement criterion, the applicant asserted that SSO
As stated above, TherOx, Inc. submitted an application for new technology add-on payments for FY 2020 that was denied on the basis of substantial clinical improvement. In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42278), we stated that we were not approving new technology add-on payments for SSO
In the FY 2020 application, as summarized in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42275), and the FY 2021 application, the applicant cited an analysis of the Collaborative Organization for RheothRx Evaluation (CORE) trial and a pooled patient-level analysis to support the claims that infarct size reduction improves mortality and heart failure outcomes.
• The CORE trial was a prospective, randomized, double-blinded, placebo-controlled trial of Poloxamer 188, a novel therapy adjunctive to thrombolysis at the time the study was conducted.
• The pooled patient-level analysis was performed from 10 randomized, controlled trials (with a total of 2,632 patients) that used primary PCI with stenting.
In the FY 2020 application, the applicant also cited the AMIHOT I and II studies to support the claim that SSO
• The AMIHOT I clinical trial was designed as a prospective, randomized evaluation of patients who had been diagnosed with AMI, including both anterior and inferior patients, and received treatment with either PCI with stenting alone or with SSO
• The AMIHOT II trial randomized 301 patients who had been diagnosed with and were receiving treatment for anterior AMI with either PCI plus the SSO
Next, to support the claim that SSO
Finally, to support the claim that SSO
The applicant also performed controlled studies in both porcine and canine AMI models to determine the safety, effectiveness, and mechanism of action of the SSO
• SSO
• SSO
• SSO
• SSO
• A significant reduction in myeloperoxidase (MPO) levels in the SSO
• Transmission electron microscopy (TEM) photographs showing amelioration of endothelial cell edema and restoration of capillary patency in ischemic zone cross-sectional histological examination of the SSO
In the FY 2020 final rule (84 FR 42278), after consideration of all the information from the applicant, as well as the public comments we received, we stated that we were unable to determine that SSO
For FY 2021, the applicant submitted new information that, according to the applicant, demonstrates that there is an unmet medical need for STEMI, and that SSO
With regard to CMS's concern that it is unclear whether use of SSO
• A plateau in STEMI 1-year mortality rates at 10 percent with the advent of drug-eluting stents, according to reports from the SWEDEHEART registry. This statistic is in agreement with the 9% 1 year STEMI mortality rate following PCI reported in a 2015 paper by Bullock et al.
• No improvement in U.S. in-hospital post-PCI STEMI mortality rates between 2001 and 2011 based on work done by Sugiyama et al.
• No decrease in one-year mortality risk as illustrated by Kalesan et al.,
• A markedly higher one-year mortality rate at 19.4% for the Medicare population as compared to the total population of PCI-treated anterior wall STEMI patients, according to the most recent Medicare Standard Analytic File (SAF) data (2017).
• No improvement in congestive heart failure (CHF) rates after STEMI treated pPCI; the applicant referenced Szummer et al.'s
• A decrease in 30-day STEMI re-hospitalizations due to the evolution of PCI therapy; the applicant cited the work of Kim et al.,
The applicant reiterated statements from its prior application that, in order to reduce outcomes like mortality and heart failure in the STEMI population, therapies must be available above and beyond PCI to reduce the size of the infarct that results from a STEMI event. Per the applicant, the benefits shown in the AMIHOT I 6-hour sub-study, AMIHOT II and IC–HOT studies show statistically significant and clinically meaningful improvements in infarct size, left ventricular size and function, and long term outcomes that support the claim that SSO
With regard to CMS's second concern that the current data does not adequately support a sufficient association between the outcome measures of heart failure, rehospitalization, and mortality with the use of SSO
The applicant further noted the CORE trial and associated studies were conducted when thrombolytic therapy was the standard of care for coronary artery reperfusion. The transition to PCI led directly to a measured absolute infarct size reduction of 5.1 percent in STEMI patients treated with PCI as compared to thrombolytic therapy, which correlated to a significant decrease in cardiovascular events. The applicant asserted that the infarct size reduction demonstrated with PCI compared to thrombolytic therapy helped establish PCI as the preferred standard of care, and that the results demonstrating the importance of infarct size reduction hold true in randomized PCI trials of STEMI patients, with infarct size evaluated by either Tc-99 sestabmibi SPECT imaging or cardiac MRI. The applicant referred to the substudy of CORE trial data by Burns et al., which found that, among the three clinical prognostic outcomes studied, ejection fraction (EF) was superior to infarct size (IS) and end-systolic volume index (ESVI) in predicting 6-month mortality.
The applicant also provided a study by Stone et al.
Finally, with regard to CMS's third concern that SSO
• Death;
• New onset of heart failure and readmission for heart failure;
• Composite rate of death and new onset of heart failure;
• Composite rate of death, new onset of heart failure or readmission for heart failure, or clinically-driven target vessel revascularization;
• Composite of death, reinfarction/spontaneous MI, clinically driven target vessel revascularization or new onset heart failure or readmission for heart failure.
The applicant concluded that, taken together, there is abundant evidence to support the claim that SSO
We thank the applicant for the additional information to address the concerns discussed in the FY 2020 IPPS/LTCH PPS final rule. We appreciate how this information, and specifically the seven studies referenced in response to the applicant's restatement of our first concern, illustrates a potential unmet medical need. However, we stated in the proposed rule that we are concerned that the AMIHOT I and AMIHOT II data may not adequately demonstrate the relevant outcomes in the control (standard of care PCI) because the standard of care has evolved since the two trials were performed. Additionally, we stated that we are concerned that the results presented in these seven studies may be based on patients with all types of STEMI and are not specific to the FDA-approved indicated use of SSO
We invited public comments on whether the SSO
As discussed in the FY 2020 IPPS/LTCH PPS final rule and the FY 2021 IPPS/LTCH PPS proposed rule, the AMIHOT I was a prospective, randomized study that enrolled both inferior and anterior STEMI patients assigned to either PCI with stenting alone (control group) or with SSO
The AMIHOT II trial only enrolled anterior STEMI patients randomized to either PCI with stenting alone (control) or with SSO
Finally, the manufacturer undertook a third study, IC–HOT.
Next, the applicant presented two new studies that had not been available at the time its FY 2021 new technology add-on payment application was submitted. The first (which the applicant referred to as the Chen paper) was an analysis of mortality and heart failure rates found in IC–HOT patients as compared to a historical propensity-matched population of anterior STEMI patients from the 2012 INFUSE–AMI trial. The applicant referenced this analysis in its FY 2021 new technology add-on payment application and has since had it peer-reviewed and accepted for publication. The analysis presented one-year follow-up data showing mortality and heart failure rates between the two groups. This new data showed treatment with SSO
The applicant also commissioned the Medicare Mortality Analysis, which matched the IC–HOT patients with a population of anterior STEMI patients from 2018 Medicare inpatient data. The populations were matched for multiple covariates, using propensity scores and regression analysis. The applicant applied the same inclusion and exclusion criteria as the IC–HOT study, resulting in an eligible comparison group of 2,587 cases. The applicant then developed one-year follow-up data showing mortality rates between the two groups. Per the applicant, the IC–HOT treatment group had no mortality over the 30-day and 1-year follow-up periods, in contrast to the matched Medicare comparison group, which had a 30-day mortality of 5 percent and a 1-year mortality of 7.3 percent. The applicant stated that the differences in mortality between the IC–HOT sample and the matched Medicare sample were statistically significant at a 5 percent significance level. The applicant further developed data showing differences in the rate of re-hospitalization for chronic heart failure. The applicant found that the mortality rate in the IC–HOT sample was 1 percent over the 30-day and 1-year follow-up periods, but that the difference between the two populations was not statistically significant.
The applicant also presented a Medicare Longitudinal Analysis of heart failure outcomes in anterior STEMI patients treated with PCI. The applicant obtained Medicare inpatient claims data from 2005–2008 (when the AMIHOT trials were conducted) and from 2016–2018 (during enrollment of the IC–HOT trial). Because the 2005–2007 Medicare Inpatient Limited Datasets only report the quarter of discharge from the hospital, the applicant examined outcomes by quarters and divided their sample into two cohorts based on year of discharge from the hospital. The early cohort included cases discharged in 2005 and 2007, and the later cohort included cases discharged in 2016, 2017, and 2018. The applicant found that, among Medicare beneficiaries diagnosed with STEMI who are treated with PCI with stenting, 4-quarter mortality rates following hospitalization was 8.9 percent in the 2005/2007 cohort and 10.3 percent in the 2016/2017/2018 cohort. While the difference in these mortality rates between the early and later cohorts was statistically insignificant, the 8-quarter mortality rate increased from 11.4 percent in 2005 to 14.5 percent in 2016/2017, yielding a statistically significant difference of 3.1 percentage points. Per the applicant, controlling for differences in clinical characteristics between the early and later cohorts using Elixhauser comorbidities yielded a 4 quarter mortality rate that increased by 2.3 percentage points, and an 8-quarter mortality rate that increased by 4.2 percentage points between early and later cohorts. Per the applicant, risk-adjusted 4-quarter rehospitalization rates for chronic heart failure decreased by 6.9 percentage points between the 2005/2007 cohort and the 2016/2017/2018 cohort. The applicant found no statistically significant change in 8-quarter rehospitalization rate for chronic heart failure between the two cohorts. Per the applicant, these results demonstrate that mortality and heart failure outcomes in anterior STEMI patients treated with PCI have not improved since 2005 between the matched population of the earlier cohort and the later cohort.
The applicant then addressed CMS' concerns (85 FR 32613) individually. With respect to the concern that the AMIHOT I and AMIHOT II data may not adequately demonstrate the relevant outcomes in the control group because the standard of care has evolved since the two trials were performed, the applicant responded that refinements to the standard of care have not improved mortality or heart failure since the studies were conducted. According to the applicant, the changes to the standard of care since AMIHOT I and AMIHOT II were conducted have been modest rather than transformative, and largely comprised of (1) earlier PCI intervention through reduced door-to-balloon times, (2) new adjunctive pharmacological alternatives, and (3) incremental improvements in stent design and delivery tools and techniques. The applicant reiterated that these changes have led to a reduction in rehospitalization and revascularization, but no improvement in mortality or heart failure rates.
The applicant further noted that, with respect to earlier PCI intervention, it is important to recognize that door-to-balloon times in the AMIHOT control groups were already at the optimized levels seen in clinical practice today, as evidenced by the requirement in the AMIHOT trials to perform successful PCI within 6 hours of symptom onset, and the adherence to prompt door-to-balloon times in the PCI centers that participated in the study.
The applicant concluded that both the clinical literature and Medicare's own anterior STEMI patient data demonstrate refinements to the PCI standard of care have not resulted in improved heart failure or mortality for anterior STEMI patients since the conduct of the AMIHOT trials, and that the AMIHOT I and II control group continues to be relevant. The applicant reiterated that, without a therapy to address microvascular injury in the heart muscle following an anterior STEMI, outcomes that are strongly correlated to microvascular injury are unlikely to improve. The applicant stated that in contrast to PCI refinements, SSO
With respect to the concern that the results presented in the seven studies submitted with the applicant's FY 2021 application were based on patients with all types of STEMI and are not specific to the FDA-approved indicated use of SSO
The applicant noted that its FY 2021 application included a wide array of data demonstrating the absence of progress in mortality or heart failure outcomes in all types of STEMI patients, since large, longitudinal STEMI studies reported by infarct location are limited. As seen in AMIHOT I and the Medicare Mortality Analysis, clinical outcomes are worse in anterior STEMI patients and this population drives overall STEMI mortality and heart failure rates. The applicant again referenced the Medicare Longitudinal Analysis, which is derived from CMS data and specific to the anterior STEMI and matched population to support their assertion that there is a lack of progress in improving mortality and heart failure outcomes in anterior STEMI patients between 2005 and 2018. The applicant explained that anterior STEMI carries a higher heart failure and mortality risk and thus any data presented that is not specific to the anterior STEMI population would tend to cause a bias towards underestimating adverse outcomes with anterior STEMI and therefore underestimate the clinical benefit from SSO
With respect to CMS' third concern that the current data does not support a sufficient association between the outcome measures of heart failure, rehospitalization, and mortality with the use of SSO
Finally, the applicant also compared outcomes of this same matched IC–HOT population to outcomes from the PCI standard of care control group from the CONDI–2/ERIC PPCI study, which to the commenter's knowledge is the most recently reported study with a large PCI control group.
The applicant reiterated that, as seen in the AMIHOT I, AMIHOT II, and IC–HOT trials, SSO
In conclusion, the commenter stated that the data presented in the FY2021 new technology add-on payment application supplemented by the data presented in its comment letter show that SSO
We also received comments from several other commenters asserting that SSO
Several commenters cited their personal experience treating patients with SSO
The IC–HOT study was a single-arm study that recruited a treatment-only group to confirm an objective safety performance goal, and was not statistically powered to look at any efficacy endpoint. The applicant compared one-year clinical outcomes to a propensity-matched control group of similar patients with anterior STEMI enrolled in the INFUSE–AMI trial. We recognize that the results show all-cause mortality, driven by cardiovascular mortality, and new-onset heart failure or heart failure hospitalization, were each individually lower in patients treated with SSO
As stated by the applicant and summarized above, the Chen paper was an analysis of mortality and heart failure rates found in IC–HOT patients as compared to a propensity-matched population enrolled in the INFUSE–AMI trial. Chen et al. noted the following study limitations: (1) The population represents a selected cohort of patients and, therefore, its findings may not apply to all patients with STEMI, such as those with cardiogenic shock, nonanterior MI, and others who did not undergo pPCI with stenting within six hours of symptom onset; (2) because patients from the comparator control group were drawn from the randomized INFUSE–AMI trial, there may be variability from the types of patients enrolled in a single-arm registry such as IC–HOT; and (3) they could not rule out the possibility that its analysis was confounded by other unmeasured factors that are correlated with SSO
We also reviewed two additional studies the applicant submitted, the Medicare Mortality Analysis and the Medicare Longitudinal Analysis. Per the applicant, these studies show that there is an unmet medical need in the population of anterior STEMI patients, as well as the superiority of SSO
We also note that the FDA ordered a post-approval study to confirm the safety and effectiveness of SSO
In summary, while the applicant has submitted additional data to respond to our concerns, we do not believe that this data provides sufficient evidence that use of SSO
After consideration of all the information from the applicant, as well as the comments we received, we are unable to determine that SSO
Boston Scientific submitted an application for new technology add-on payments for the Eluvia
According to the applicant, the Eluvia
The applicant asserted that the Eluvia
Peripheral artery disease (PAD) is a circulatory problem in which narrowed arteries reduce blood flow to the limbs, usually in the legs. Symptoms of PAD may include lower extremity pain due to varying degrees of ischemia and claudication, which is characterized by pain induced by exercise and relieved with rest. Risk factors for PAD include age ≥70 years; age 50 to 69 years with a history of smoking or diabetes; age 40 to 49 with diabetes and at least one other risk factor for atherosclerosis; leg symptoms suggestive of claudication with exertion, or ischemic pain at rest; abnormal lower extremity pulse examination; known atherosclerosis at other sites (for example, coronary, carotid, renal artery disease); smoking; hypertension, hyperlipidemia, and homocysteinemia.
A diagnosis of PAD is established with the measurement of an ankle-brachial index (ABI) ≤0.9. The ABI is a comparison of the resting systolic blood pressure at the ankle to the higher systolic brachial pressure. Duplex ultrasonography is commonly used in conjunction with the ABI to identify the location and severity of arterial obstruction.
Management of PAD is aimed at improving symptoms, improving functional capacity, and preventing amputations and death. Management of patients with lower extremity PAD may include medical therapies to reduce the risk for future cardiovascular events related to atherosclerosis, such as myocardial infarction, stroke, and peripheral arterial thrombosis. Such therapies may include antiplatelet therapy, smoking cessation, lipid-lowering therapy, and treatment of diabetes and hypertension. For patients with significant or disabling symptoms unresponsive to lifestyle adjustment and pharmacologic therapy, intervention (percutaneous, surgical) may be needed. Surgical intervention includes angioplasty, a procedure in which a balloon-tip catheter is inserted into the artery and inflated to dilate the narrowed artery lumen. The balloon is then deflated and removed with the catheter. For patients with limb-threatening ischemia (for example pain while at rest and or ulceration), revascularization is a priority to reestablish arterial blood flow. According to the applicant, treatment of the SFA is problematic due to multiple issues, including high rate of restenosis and significant forces of compression.
The applicant asserted that the Eluvia
According to the applicant, there are four principal treatment options for PAD, including two endovascular approaches (angioplasty and stenting):
• Medical therapy, typically for those with mild to medium symptoms. This may include pharmacotherapy (for example, cilostazil) and exercise therapy.
• Angioplasty, a procedure in which a catheter with a balloon on the tip is inserted into an artery and inflated to expand the artery and reduce the blockage. The balloon is then deflated and removed with the catheter. Some procedures use drug coated balloons, in which a drug is applied to the lesion at the time of balloon inflation.
• Stenting via a procedure in which a stent is placed in the artery to keep the artery open and prevent it from re-narrowing. This can be done with a bare metal stent or with a drug-eluting stent, which also releases a drug that helps slow the re-narrowing of the vessel.
• For patients with severe narrowing that is blocking blood flow, bypass surgery may be warranted. In the procedure, a healthy vein is used to make a new path around the narrowed or blocked artery.
The applicant further asserted that aside from Eluvia
The Eluvia
As discussed previously, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and would therefore not be considered “new” for purposes of new technology add-on payments. We note that in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42227), we stated that after consideration of the applicant's comments, we believe that the Eluvia
The commenter also noted that the applicant stated that “Paclitaxel is released directly to the target lesion with the polymer matrix stent and that paclitaxel release is non-specific to the target lesion with paclitaxel-coated stents.” According to the commenter, the clinical, scientific, or logical basis for this statement is unclear. The commenter further stated that the Eluvia
The commenter further stated that avoiding the use of a polymer, if possible, is a preferred stent design. Additionally, the commenter noted that the applicant reiterates that the Eluvia
The applicant commented that the Eluvia
The applicant also noted CMS's concerns regarding newness expressed in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42228) and provided the following reiteration of their FY2020 comments which compared the Eluvia
The applicant also commented that CMS determined that Eluvia satisfied the newness and cost criteria in the FY2020 Final Rule and committed to “monitor new information and recommendations as they become available.”
With regard to the cost criterion, the applicant conducted two analyses based on 100 percent of identified claims and 76 percent of identified claims. To identify potential cases where Eluvia
Under the analysis based on 76 percent of identified claims, the applicant used the same methodology, which identified 8,335 cases across 8 MS–DRGs. The applicant determined the average case-weighted threshold amount of $98,196 and a final inflated average standardized charge per case of $147,343. Because the final inflated average standardized charge per case exceeded the case-weighted threshold amount under both analyses, the applicant asserted that the technology meets the cost criterion. In the proposed rule, we invited public comments on whether Eluvia
With regard to the substantial clinical improvement criterion, the applicant asserted that Eluvia
As stated above, Boston Scientific submitted an application for new technology add-on payments for the Eluvia
The applicant submitted the results of the MAJESTIC study, a single-arm first-in-human study of Eluvia
Subjects who had previously stented target lesion/vessels treated with drug-coated balloon <12 months prior to randomization/enrollment and subjects who had undergone prior surgery of the SFA/PPA in the target limb to treat atherosclerotic disease were excluded from the study. Two concurrent single-group (Eluvia
The applicant noted that lesion characteristics for the Eluvia
The applicant asserted that in the IMPERIAL study, the Eluvia
The IMPERIAL study included two concurrent single-group (Eluvia
The IMPERIAL sub study long lesion subgroup consisted of 50 patients with average lesion length of 162.8 mm that were each treated with two Eluvia
With regard to reducing the rate of subsequent therapeutic interventions, secondary outcomes in the IMPERIAL study included repeat re-intervention on the same lesion, TLR. The rate of subsequent interventions, or TLRs, in the Eluvia
With regard to decreasing the number of future hospitalizations or physician visits, the applicant asserted that the substantial reduction in the lesion revascularization rate led to a reduced need to provide additional intensive care, distinguishing the Eluvia
With regard to reducing hospital readmission rates, the applicant asserted that patients treated in the Eluvia
With regard to reducing the rate of device related complications, the applicant asserted that while the rates of adverse events were similar in total between treatment arms in the IMPERIAL study, there were measurable differences in device-related complications. Device-related adverse-events were reported in 8% of patients in the Eluvia
Lastly, with regard to achieving similar functional outcomes and EQ–5D index values, while associated with half the rate of TLRs, the applicant asserted that narrowed or blocked arteries within the SFA can limit the supply of oxygen-rich blood throughout the lower extremities, causing pain or discomfort when walking. The applicant further asserted that performing physical activities is often challenging because of decreased blood supply to the legs, typically causing symptoms to become more challenging overtime unless treated. The applicant asserted that while functional outcomes appear similar between the Eluvia
• Hemodynamic improvement in walking—80.8 percent versus 78.7 percent;
• Walking impairment questionnaire scores (change from baseline)—40.8 (36.5) versus 35.8 (39.5);
• Distance (change from baseline)—33.2 (38.3) versus 29.5 (38.2);
• Speed (change from baseline)—18.3 (29.5) versus 18.1 (28.7);
• Stair climbing (change from baseline)—19.4 (36.7) versus 21.1 (34.6); and
• 6-Minute walk test distance (m) (change from baseline)—44.5 (119.5) versus 51.8 (130.5).
As summarized in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42230), in our discussion of the comments received regarding substantial clinical improvement with respect to the new technology add-on payment application for Eluvia
We stated in response that we were aware of FDA's March 15, 2019 letter to healthcare providers regarding the “Treatment of Peripheral Arterial Disease with Paclitaxel-Coated Balloons and Paclitaxel-Eluting Stents Potentially Associated with Increased Mortality”. We noted that in March 2019, FDA conducted a preliminary analysis of long-term follow-up data (up to 5 years in some studies) of the pivotal premarket randomized trials for paclitaxel-coated products indicated for PAD. We stated that while the analyses are ongoing, according to FDA, the preliminary review of the data had identified a potentially concerning signal of increased long-term mortality in study subjects treated with paclitaxel-coated products compared to patients treated with uncoated devices.
We also noted that FDA stated that the data should be interpreted with caution for several reasons. First, there is large variability in the risk estimate of mortality due to the limited amount of long-term data. Second, the studies were not originally designed to be pooled, introducing greater uncertainty in the results. Third, the specific cause and mechanism of the increased mortality is unknown.
We further stated that based on the preliminary review of available data, FDA made the following recommendations regarding the use of paclitaxel-coated balloons and paclitaxel-eluting stents: That health care providers consider the following until further information is available; continue diligent monitoring of patients who have been treated with paclitaxel-coated balloons and paclitaxel-eluting stents; when making treatment recommendations and as part of the informed consent process, consider that there may be an increased rate of long-term mortality in patients treated with paclitaxel-coated balloons and paclitaxel-eluting stents; discuss the risks and benefits of all available PAD treatment options with your patients; for most patients, alternative treatment options to paclitaxel-coated balloons and paclitaxel-eluting stents should generally be used until additional analysis of the safety signal has been performed; for some individual patients at particularly high risk for restenosis, clinicians may determine that the benefits of using a paclitaxel-coated product may outweigh the risks; ensure patients receive optimal medical therapy for PAD and other cardiovascular risk factors as well as guidance on healthy lifestyles including weight control, smoking cessation, and exercise.
We also noted that FDA further stated that paclitaxel-coated balloons and stents are known to improve blood flow
Furthermore, we stated that because of concerns regarding this issue, FDA convened an Advisory Committee meeting of the Circulatory System Devices Panel on June 19 and 20, 2019 to: Facilitate a public, transparent, and unbiased discussion on the presence and magnitude of a long-term mortality signal; discuss plausible reasons, including any potential biological mechanisms, for a long-term mortality signal; re-examine the benefit-risk profile of this group of devices; consider modifications to ongoing and future U.S. clinical trials evaluating devices containing paclitaxel, including added surveillance, updated informed consent, and enhanced adjudication for drug-related adverse events and deaths; and guide other regulatory actions, as needed. The June 19 and 20, 2019 Advisory Committee meeting of the Circulatory System Devices Panel concluded that analyses of available data from FDA-approved devices show an increase in late mortality (between 2 and 5 years) associated with paclitaxel-coated devices intended to treat femoropopliteal disease.
We stated that FDA continues to recommend that health care providers report any adverse events or suspected adverse events experienced with the use of paclitaxel-coated balloons and paclitaxel-eluting stents. FDA stated that it will keep the public informed as any new information or recommendations become available.
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42231), after consideration of the public comments we received and the latest available information from the FDA advisory panel, we noted the FDA panel's preliminary review of the data had identified a potentially concerning signal of increased long-term mortality in study subjects treated with paclitaxel-coated products compared to patients treated with uncoated devices. We stated that additionally, since FDA has stated that it believes alternative treatment options should generally be used for most patients while it continues to further evaluate the increased long-term mortality signal and its impact on the overall benefit-risk profile of these devices, we remained concerned that we did not have enough information to determine that the Eluvia
Since the FY 2020 IPPS/LTCH PPS final rule, the FDA issued an August 7, 2019 update: “Treatment of Peripheral Arterial Disease with Paclitaxel-Coated Balloons and Paclitaxel-Eluting Stents Potentially Associated with Increased Mortality”.
• Continue diligent monitoring of patients who have been treated with paclitaxel-coated balloons and paclitaxel-eluting stents.
• When making treatment recommendations, and as part of the informed consent process, consider that there may be an increased rate of long-term mortality in patients treated with paclitaxel-coated balloons and paclitaxel-eluting stents.
• Discuss the risks and benefits of all available PAD treatment options with your patients. For many patients, alternative treatment options to paclitaxel-coated balloons and paclitaxel-eluting stents provide a more favorable benefit-risk profile based on currently available information.
• For individual patients judged to be at particularly high risk for restenosis and repeat femoropopliteal interventions, clinicians may determine that the benefits of using a paclitaxel-coated device outweigh the risk of late mortality.
• In discussing treatment options, physicians should explore their patients' expectations, concerns and treatment preferences.
• Ensure patients receive optimal medical therapy for PAD and other cardiovascular risk factors as well as guidance on healthy lifestyles including weight control, smoking cessation, and exercise.
• Report any adverse events or suspected adverse events experienced with the use of paclitaxel-coated balloons and paclitaxel-eluting stents.
In addition, the August 7, 2019 update noted the following. Based on the conclusions of its analysis and recommendations of the advisory panel, FDA stated that it is taking additional steps to address this signal, including working with manufacturers on updates to device labeling and clinical trial informed consent documents to incorporate information about the late mortality signal. FDA also stated that it is continuing to actively work with the manufacturers and investigators on additional clinical evidence development for assessment of the long-term safety of paclitaxel-coated devices. FDA noted that paclitaxel-coated balloons and stents improve blood flow to the legs and decrease the likelihood of repeat procedures to reopen blocked blood vessels compared to uncoated devices. The update stated that the panel concluded that the benefits of paclitaxel-coated devices (for example, reduced reinterventions) should be considered in individual patients along with potential risks (for example, late mortality).
The applicant stated in its FY 2021 application that while CMS denied the application for new technology add-on payments for Eluvia
In its application for FY 2021, the applicant stated that they respectfully disagree with CMS's conclusion that Eluvia
The applicant also noted that it has worked closely with FDA to address questions about the late mortality signal associated with some peripheral paclitaxel-coated devices, as identified in the meta-analysis. The applicant noted that Eluvia
Additionally, the applicant stated that it has demonstrated (a) the absence of a mortality signal with Eluvia
With regard to the absence of a mortality signal with Eluvia
As it relates to Eluvia
The applicant added that additional analyses have been conducted since the publication of the meta-analysis. In a Medicare claims analysis of over 150,000 patients who underwent femoropopliteal artery revascularization, the applicant noted that no mortality signal was seen in the group treated with paclitaxel-coated devices.
Finally, the applicant stated that it believes the FDA recognized the value of allowing physicians to treat their PAD patients with paclitaxel devices in its letter published on August 7, 2019, acknowledging the signal in the meta-analysis and recognizing the benefits that paclitaxel devices offer for these patients.
In summary, the applicant stated that Eluvia
• Updated August 2019 FDA letter to providers issued after the FY 2020 IPPS/LTCH PPS final rule, maintaining peripheral paclitaxel devices on the market;
• Multiple recently published studies
• An analysis of over 150,000 Medicare beneficiaries, designed with FDA input, demonstrating no difference in mortality between patients treated with peripheral paclitaxel devices
• Confounding factors in the 2018 JAHA Katsanos et al. meta-analysis (meta-analysis)
• The rate of mortality for patients treated with Eluvia
Although the Eluvia
We also noted the FDA's statement in the August 2019 letter that because of the demonstrated short-term benefits of the devices, the limitations of the available data, and uncertainty regarding the long-term benefit-risk profile of paclitaxel-coated devices, the FDA believes clinical studies of these devices may continue and should collect long-term safety (including mortality) and effectiveness data. Per the FDA, these studies require appropriate informed consent and close safety monitoring to protect enrolled patients.
The commenter also stated that there are errors in the published 1-year IMPERIAL study primary patency results, which is the primary endpoint of the study which require a correction of the 1-year publication and results. The commenter stated that although the errors have been identified, to their knowledge no correction to the paper has yet been published. As such, according to the commenter, the ability to understand the outcomes of this study, particularly patency, which is the primary endpoint of the study, is hindered.
The commenter also stated that patency results are inconsistently presented. The primary endpoint of 12-month patency was reported after the required sample size of 409 patients completed 12-month follow-up or had an endpoint event; these results indicate primary patency of 86.8% (231/266) for Eluvia vs. 81.5% (106/130) for Zilver PTX. However, a post-hoc analysis reports a larger difference of 86.8% (243/280) for Eluvia vs. 77.5% (110/142) for Zilver PTX. This represents an additional 14 Eluvia patients and 12 Zilver PTX patients compared to the primary analysis. While the results for the Eluvia patients are consistent between the primary and post-hoc analyses (86.8% [231/266] vs. 85.7% [12/14]), the results for the final 12 Zilver PTX patients added to the post-hoc analysis appear to be outliers who had significantly worse outcomes than the primary patient cohort (patency 77.5% [110/142] in primary cohort vs. 33.3% [4/12] in post-hoc cohort, p=0.002); according to the commenter, this raises questions about the pooling of data between the primary cohort and the post-hoc cohort that is used in the post-hoc analysis and reporting.
The commenter further stated that claims of “superior primary patency” and “highest reported” two-year primary patency are misleading. From the most recently presented two-year results (with data correction), there is no significant difference in patency between Eluvia and Zilver PTX at two years (83.0% vs. 77.1%, p=0.10, not significant). Based on these results, a claim of superior primary patency cannot be maintained, according to the commenter. The commenter also expressed concerns regarding the claim of “highest reported” two-year patency. The commenter stated that by its very nature, this claim can only be made by comparing results across numerous distinct clinical trials, each enrolling patients and analyzing outcomes based on study-specific criteria and variable definitions. For example, the commenter noted that the Zilver PTX randomized trial included the enrollment of patients with critical limb ischemia, a group with known poor outcomes that were excluded from the IMPERIAL trial. The Zilver PTX trial also had a more stringent definition for patency, requiring the peak systolic velocity ratio (PSVR) to be <2.0 for a lesion to be considered patent.
The commenter also stated that the secondary randomization (that is, the provisional DES arm) of the Zilver PTX RCT was specifically excluded from this comparison. These Zilver PTX patients actually had a higher two-year primary patency rate of 83.4% compared with 83.0% for Eluvia. According to the commenter, this blanket claim of superiority appears to be in stark contrast to traditionally accepted criteria established by FDA to allow such superiority claims. The commenter further stated that the FDA has not indicated that Eluvia provides a substantial clinical improvement.
We also received a comment stating that section § 412.87(b) describes the eligibility criteria associated with the substantial clinical improvement criterion, specifically that it “improves clinical outcomes relative to services or technologies previously available...” The commenter stated that CMS' conclusions that there is insufficient evidence to determine substantial clinical improvement included in both the FY 2020 and 2021 rules does not articulate why the clinical trial information provided by the applicant is not sufficient. Instead, CMS relies on the potential signal described in the meta-analysis and the FDA review of the data on paclitaxel-coated devices.
The commenter further stated that despite the various deliberations by the FDA, it has not limited the use of paclitaxel devices and more importantly, CMS has not limited coverage of paclitaxel devices. Per the language in § 412.87(b), the substantial clinical improvement criterion is to be evaluated “relative to services or technologies previously available.” The commenter stated that it appears the applicant has provided a comparison of the Eluvia device to existing, comparable devices for the treatment of peripheral arterial disease. The commenter contended this is the data that should be utilized to determine if the technology represents a SCI.
The commenter also asserted that if the FDA had removed existing paclitaxel devices from the market, or CMS had issued non-coverage for paclitaxel devices at the national or local level based on the FDA analyses, they would concur that there would be insufficient data to determine SCI. The commenter stated that since the FDA has not materially changed the label for paclitaxel devices nor has CMS issued non-coverage policies for any paclitaxel devices, existing paclitaxel devices represent an appropriate comparison when evaluating substantial clinical improvement in the new technology add-on payment application as they represent a medically reasonable medical option for Medicare patients.
The commenter contended that the Eluvia
The applicant commented that the IMPERIAL trial was designed as a non-inferiority study, as are many head-to-head trials of medical devices. Boston Scientific defined a pre-specified, post-hoc superiority analysis before evaluation of the clinical trial results; therefore, the non-inferiority and subsequent superiority testing methodology and results were not subjected to bias. The superiority testing was performed after the 12-month follow-up window for all enrolled subjects had closed.
According to the applicant, from a statistical perspective, the pre-specified success criteria for superiority used the same logic as the pre-specified success criteria for non-inferiority: “ELUVIA will be concluded to be superior to Zilver PTX for device effectiveness if the one-sided lower 95% confidence bound on the difference between treatment groups in 12-month primary patency is greater than zero.” The commenter stated that a more stringent one-sided lower 97.5% confidence bound (shown as two-sided 95% confidence interval) on the difference between treatment groups was observed to be greater than zero and the corresponding p-value was 0.0144.
In addition to the internal analysis performed by Boston Scientific, these data were published in The Lancet following its peer-review process. As stated in The Lancet, “The superiority analysis of primary patency in the full-analysis cohort was a pre-specified post-hoc analysis” and “In this head-to-head randomized trial, the primary non-inferiority endpoints for efficacy and safety at 12 months were met, and post-hoc analysis of the 12-month patency rate showed superiority for Eluvia over Zilver PTX.”
The applicant also provided a comment in response to CMS' request for comments on the implications of the recent meta-analysis addressing paclitaxel-coated balloons and stents. The applicant maintained that Eluvia
Consequently, the applicant does not believe that the findings of limited generalizability suggested in the meta-analysis should inhibit CMS from determining that Eluvia
The applicant further commented that given the differences between Eluvia
The applicant commented that in the Taxus stent family series of coronary studies, paclitaxel-based treatment showed consistent benefits compared to bare metal stenting and did not differentially affect long-term all-cause mortality as compared to bare stent treatment. Stone
These analyses represent approximately triple the sample size of the studies with >2 year data included in the Katsanos meta-analysis and in FDA's analysis of 5-year data from paclitaxel-coated devices. In addition, long-term data from more than 4000 patients who received coronary Taxus in randomized and nonrandomized studies show mortality rates consistent with those expected for this patient population.
The applicant also commented that it remains questionable and unproven that the root cause of the observed higher mortality in certain retrospective meta-analyses has a direct relationship to the presence of paclitaxel in the evaluated devices. In the March 15 Letter to Health Care Providers,
The applicant commented that notably, the number of studies, patients, and devices contributing to the mortality calculations significantly decreased with the longer follow-up time frames. In addition, the applicant asserted that understanding possible effects of paclitaxel exposure is not possible without complete analysis of uniformly re-adjudicated patient level data, particularly with treatment arm crossover and previous interventions or subsequent re-interventions with paclitaxel-coated devices, which occurred in the analyzed studies.
The applicant commented that explanations unrelated to drug exposure may account for the signal observed in the meta-analysis by Katsanos et al.
The applicant further commented that currently, no plausible mechanistic link between paclitaxel and death has been postulated or established. To the contrary, the applicant stated that systemic paclitaxel infusions are known to improve survival among cancer patients.
Interv. 2014;83(1):132–140.
The applicant commented that as no local vascular-based causes of mortality have been identified, any paclitaxel effect on mortality would occur via a systemic or non-vascular mechanism and would be apparent following paclitaxel exposure regardless of the administration route or implant location. The applicant asserted that no such effect on mortality was seen among thousands of patients who received a TAXUS paclitaxel-eluting coronary stent with a design very similar to that of Eluvia
CMS has always considered all evidence in its decision whether a technology represents a substantial clinical improvement over existing technologies. We refer the commenter to the regulations at § 412.87 which states a new medical service or technology represents an advance that substantially improves, relative to technologies previously available, the diagnosis or treatment of Medicare beneficiaries. Some highlights of what we consider includes the following but not limited to are:
• The totality of the circumstances when making a determination that a new medical service or technology represents an advance that substantially improves, relative to services or technologies previously available, the diagnosis or treatment of Medicare beneficiaries.
• The totality of the information otherwise demonstrates that the new medical service or technology substantially improves, relative to technologies previously available, the diagnosis or treatment of Medicare beneficiaries.
• Evidence from published or unpublished information sources from within the United States or elsewhere such as clinical trials, peer reviewed journal articles, study results, meta-analyses, consensus statements and white papers may be sufficient to establish that a new medical service or technology represents an advance that substantially improves, relative to services or technologies previously available, the diagnosis or treatment of Medicare beneficiaries. Information sources we consider are listed including “other appropriate information sources may be considered”.
We believe the IMPERIAL and MAJESTIC trials show a number of improved outcomes such as primary patency rates and decreased need for subsequent interventions. As stated above, the applicant provided the following two-year results from the IMPERIAL global randomized controlled clinical trial, comparing Eluvia
• Eluvia
• Eluvia
• In a subgroup analysis of patients 65 years and older (Medicare population), the primary patency rate in the Eluvia
Additionally, after the FY 2020 IPPS/LTCH final rule last year, as noted above, in its August 7, 2019 update, the FDA stated that “Paclitaxel-coated balloons and stents improve blood flow to the legs and decrease the likelihood of repeat procedures to reopen blocked blood vessels compared to uncoated devices. The Panel concluded that the benefits of paclitaxel-coated devices (for example, reduced reinterventions) should be considered in individual patients along with potential risks (for example, late mortality).”
After consideration of the public comments we received and for the reasons discussed, including the IMPERIAL and MAJESTIC trials which show a number of improved outcomes and the FDA August 7, 2019 update which concluded that the benefits of paclitaxel-coated devices (for example, reduced reinterventions) should be considered in individual patients along with potential risks (for example, late mortality) as well as for individual patients judged to be at particularly high risk for restenosis and repeat femoropopliteal interventions, clinicians may determine that the benefits of using a paclitaxel-coated device outweigh the risk of late mortality, we believe Eluvia
According to the applicant, the cost per case for the Eluvia
GT Medical Technologies, Inc. submitted an application for new technology add-on payments for FY 2021 for the GammaTile
The GammaTile
The GammaTile
As discussed previously, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and would therefore not be considered “new” for purposes of new technology add-on payments. We note that in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42261), we stated that after consideration of comments, we believe that the GammaTile
With regard to the cost criterion, the applicant conducted the following analysis. The applicant worked with the Barrow Neurological Institute at St. Joseph's Hospital and Medical Center (St. Joseph's) to obtain actual claims from mid-2015 through mid-2016 for craniotomies that did not involve placement of the GammaTile
The applicant stated that its analysis does not include a reduction in costs due to reduced operating room times. According to the applicant, the cost analysis reflects the time associated with a craniotomy and device placement. The applicant does not anticipate any reduction in operating room time relative to prior operative methods. We invited public comments on whether the GammaTile
With regard to substantial clinical improvement, the applicant stated that the GammaTile
The applicant summarized how the GammaTile
The applicant cited several sources of data to support these assertions. The applicant referenced a paper by Brachman, Dardis et al., which was published in the
An additional source of clinical data is from Gamma Tech's internal review of data from two centers treating brain tumors with GammaTile
Another source of data that the applicant cited to support its assertions regarding substantial clinical improvement is an abstract by Pinnaduwage, D., et al. Also submitted in the application were abstracts from 2014 through 2018 in which updates from the progression-free survival study and the BNI study were presented at specialty society clinical conferences. The following summarizes the findings cited by the applicant to support its assertions regarding substantial clinical improvement.
Regarding the assertion of local control, the 2018 article which was published in the
With regard to outcomes, the applicant stated that, after their initial treatment, patients had a median progression-free survival time of 5.8 months; post treatment with the prototype GammaTile
The applicant stated that it received two peer-reviewed awards for comprehensive clinical trial reporting on the treatment of 79 recurrent brain tumors treated with GammaTile. The applicant provided a recent summary presentation titled: “Surgically Targeted Radiation Therapy: A Prospective Trial in 79 Recurrent, Previously Irradiated Intracranial Neoplasms” at
The applicant also cited the findings from Brachman, et al. to support local control of recurrent brain tumors. At the Society for Neuro-Oncology Conference on Meningioma in June 2016,
A third prospective study was accepted for presentation at the November 2016 Society for Neuro-Oncology annual meeting.
In support of its assertion of a reduction in radiation necrosis, the applicant also included discussion of a presentation by D.S. Pinnaduwage, Ph.D., at the August 2017 annual meeting of the American Association of Physicists in Medicine. Dr. Pinnaduwage compared the brain radiation dose of the GammaTile
The applicant asserted that, when considered in total, the data reported in these presentations and studies and the intermittent data presented in their abstracts support the conclusion that a significant therapeutic effect results from the addition of GammaTile
Regarding the assertion that GammaTile
The applicant further stated that the use of the GammaTile
The applicant also asserted that the use of the GammaTile
• Tumor recurrence at the excision site could require additional surgical removal;
• Symptomatic radiation necrosis could require excision of the affected tissue; and
• Certain forms of brain brachytherapy require the removal of brachytherapy sources after a given period of time.
However, according to the applicant, because of the high local control rates, low rates of symptomatic radiation necrosis, and short half-life of cesium-131, the GammaTile
Additionally, the applicant stated that the use of the GammaTile
Based on consideration of all of the previously presented data, the applicant believed that the use of the GammaTile
We stated in the proposed rule that we continue to have concerns that, while the applicant described increases in median time to disease recurrence for certain intra-cranial tumors (in a small number of patients with different histologies) in support of clinical improvement, the lack of analysis, meta-analysis, or statistical tests indicates that the clinical efficacy and safety data for seeded brachytherapy is limited. While we acknowledged the difficulty in establishing randomized control groups in studies involving recurrent brain tumors, we stated that we are concerned that GammaTile
We invited public comments on whether the GammaTile
The applicant included new data to show substantial clinical improvement using GammaTile
The applicant cited two abstracts submitted to the 2020 annual Congress of Neurological Surgeons and 2020 annual meeting of the Society for Neuro-Oncology to report updated data on GammaTile
The applicant noted that in the update of the GammaTile
The applicant cited two abstracts submitted to the 2020 annual meeting of the Society for Neuro-Oncology Metastases and 2020 annual Congress of Neurological Surgeons as well as an unpublished manuscript submitted to
According to the applicant, it performed a pooled meta-analysis of 16 articles with 695 patients, and included three articles involved in the treatment of recurrent brain metastases in 86 patients. The applicant stated it could not perform statistical analyses on these outcomes due to the small number of studies and inconsistent reporting of PFS and OS. The applicant stated that results from the meta-analysis showed mean rates of symptomatic radiation necrosis and radiation necrosis requiring surgical intervention of 22.4 percent (SE=7.0 percent) and 10.0 percent (SE=7.3 percent), respectively,
The applicant noted that in the update of the GammaTile
The applicant stated that it conducted a survey of 27 early adopters at 14 institutions who were involved in 51 commercial cases involving use of the GammaTile
The applicant also claimed that GammaTile
The applicant further stated that CMS data demonstrates the unique ICD–10–PCS code for GammaTile
Other commenters expressed their support for GammaTile
Some commenters stated their direct experience with GammaTile
Some commenters suggested that GammaTile
After further review, including review of the additional clinical data and information submitted by the applicant, CMS continues to have concerns with respect to whether GammaTile
After review of all data received to date, we continue to have the same concerns as noted in the FY 2020 final rule and the FY 2021 proposed rule, discussed previously. Therefore, based on the information stated above, we are unable to make a determination that GammaTile
Cook Medical submitted an application for new technology add-on payments for the Hemospray ® Endoscopic Hemostat (Hemospray) for FY 2021. According to the applicant, Hemospray 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 powder, bentonite, is propelled through the application catheter, either a 7 or 10 French polyethylene catheter, by release of CO
According to the applicant, current standard of care hemostatic modalities used for the management of nonvariceal gastrointestinal bleeding have a failure rate of 8 to 15 percent and a rebleeding rate of 10 to 25 percent, or worse, depending on patient etiology and morbidity.
The applicant asserted that, in addition to increased morbidity and mortality, the financial impact of failure to achieve hemostasis is considerable. Based on a retrospective claims analysis by the applicant of the 2012 MedPAR file and the Provider of Services file, 13,501 cases were identified which showed all-cause mortality for patients requiring more than 1 endoscopy (6%), IRH (9%), or surgery (14%) was significantly higher than for patients requiring only 1 endoscopy (3%).
With respect to the newness criterion, the applicant for Hemospray was granted a FDA
According to information submitted by the applicant, Cook Medical recalled Hemospray ® 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 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 initiated an investigation to determine the appropriate corrective action(s) to prevent recurrence of this issue. According to the applicant, although the recall did restrict availability of the device, they wished to continue their application for new technology add-on payment as they believe the use of Hemospray significantly improves clinical outcomes for certain patient populations compared to currently available treatments.
As discussed earlier, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and would not be considered “new” for purposes of new technology add-on payments. The applicant identified three treatment options currently available for the treatment of bleeding of the gastrointestinal system, which were thermal modalities, injection needles, and mechanical modalities. The applicant stated that thermal modalities are those endoscopic methods that treat gastrointestinal hemorrhage by means of bipolar electrocautery, hemostatic graspers, and argon plasma coagulation. These devices generate heat resulting in edema, coagulation of tissue protein, and contraction of vessels and indirect activation of the coagulation cascade. The applicant stated that injection needles treat gastrointestinal hemorrhage through the injection of various materials including epinephrine, saline, histoacryl, ethanolamine, and ethanol. This method achieves hemostasis by both mechanical tamponade and cytochemical mechanisms.
With regard to the first criterion, whether a product uses the same or similar mechanism of action to achieve a therapeutic outcome, the application asserted that Hemospray is a novel device in which the mechanism of action differs from alternative treatments by creating a diffuse mechanical barrier over the site of bleeding with a non-thermal, non-traumatic, noncontact modality.
With respect to the second criterion, whether a product is assigned to the same or different MS–DRG, the applicant did not specifically comment. The applicant stated that cases involving the use of Hemospray would span a wide variety of MS–DRGs, but that the technology would most likely be used for cases in MS–DRGs 377, 378, and 379 (G.I. Hemorrhage with MCC, with CC, and without CC/MCC, respectively). We believe that cases involving the use of the technology would be assigned to the same MS–DRG as cases involving the current standard of care treatments.
With respect to the third criterion, whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population, we noted that the applicant also did not comment specifically on this criterion. However, we noted that we believed that this technology would be used to treat the same or similar type of disease and the same or similar patient population as the current standard of care treatments.
Based on the applicant's statements as summarized previously, the applicant believed that Hemospray was not substantially similar to other currently available therapies and/or technologies and met the “newness” criterion. However, we stated in the proposed rule that we were concerned that the mechanism of action of Hemospray may be similar to existing endoscopic hemostatic treatments. Specifically, we noted that as described in literature provided by the applicant, technologies such as Ankaferd Bloodstopper and EndoClot Polysaccharide Hemostatic System appeared to utilize a similar mechanism of action as Hemospray to achieve hemostasis.
In regard to the first substantial similarity criterion, the applicant stated that Hemospray has a different mechanism of action as compared to ABS and the EndoClot systems which are, according to the applicant, comprised of biologically active materials or absorbable polysaccharides. The applicant stated that ABS uses an active process related to proteins, via the formation of an encapsulated protein network that provides focal points for vital erythrocyte aggregation, that is substantially different from Hemospray. The applicant then stated with regard to EndoClot that the product produces a gelled matrix that adheres to and seals bleeding tissue; according to the applicant EndoClot substantially differs from Hemospray in its composition and properties that permit dissolution and degradation. Furthermore, the applicant stated that labeling in markets where EndoClot is commercially available limits its use to non-bleeding wounds within the GI tract, while Hemospray is indicated for active bleeding.
With regard to the second substantial similarity criterion, the applicant maintained that currently all control of GI bleeding no matter the treatment is typically grouped to MS–DRGs 377, 378, and 379.
With regard to the third substantial similarity criterion, the applicant stated that Hemospray will treat the same or similar type of disease and a similar patient population. They added that the unique features of the product differ substantially from other treatments and therefore, Hemospray meets the newness criterion.
With regard to the cost criterion, the applicant provided the following analysis to demonstrate the technology meets the cost criterion. The applicant asserted patients who would use Hemospray are identified by using a combination of one ICD–10–PCS procedure code and one ICD–10–CM diagnosis code. The applicant provided a list of 39 ICD–10–PCS procedure codes that included 21 Non O.R. digestive system procedures and 18 Extensive O.R. digestive system procedures. The applicant provided a list of 32 ICD–10–CM diagnosis codes that included 29 principal diagnoses in MS–DRGs 377, 378, and 379 (G.I. Hemorrhage with MCC, with CC, and without CC/MCC, respectively) and 3 principal diagnoses in MDC 06 (Diseases and Disorders of the Digestive System) across 10 MS–DRG classifications. The applicant extracted claims from the FY 2018 MedPAR final rule dataset based on the presence of one procedure and one diagnosis code in the list provided. The applicant stated MS–DRGs 377, 378, and 379 made up 3 of the top 4 MS–DRGs by volume and about 64 percent of cases were grouped to these 3 MS–DRGs. The applicant stated consequently they limited their analysis to the cases assigned to MS–DRGs 377, 378, and 379 and those claims that would be used for IPPS rate setting. The applicant identified a total of 40,012 cases.
The applicant first calculated a case weighted threshold of $46,568 based upon the dollar threshold for each MS–DRG grouping and the proportion of cases in each MS–DRG. The applicant then calculated the average charge per case. The applicant stated Hemospray may not replace other therapies occurring during an inpatient stay and therefore chose to not remove charges for the prior technology or technology being replaced. Next the applicant calculated the average standardized charge per case using the FY 2018 IPPS Final Rule Impact file. The 2-year inflation factor of 11.1% (1.11100) was obtained from the FY 2020 IPPS/LTCH PPS final rule and applied to the average standardized charge per case. To determine the charges for Hemospray, the applicant used the inverse of the FY 2020 IPPS/LTCH PPS final rule supplies and equipment national average CCR of 0.299, based on an assumption that hospitals would use the inverse of the national average CCR for supplies and equipment to mark-up charges, and therefore assumed an average charge for Hemospray of $8,361.20. The applicant calculated the final inflated average case-weighted standardized charge per case by adding the charges for the new technology to the inflated average standardized charge per case. The applicant determined a final inflated average case-weighted standardized charge per case of $60,193, which exceeds the average case-weighted threshold amount of $46,568. We invited public comments on whether Hemospray meets the cost criterion.
With respect to the substantial clinical improvement criterion, the applicant asserted that Hemospray represents a substantial clinical improvement over existing technologies. According to the applicant, Hemospray 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 asserted Hemospray would provide a substantial clinical improvement: (1) As a primary treatment or a rescue treatment after the failure of a conventional method, and (2) for the treatment of malignant lesions.
The applicant provided eight articles specifically for the purpose of addressing the substantial clinical improvement criterion. Three articles are systematic reviews, three are prospective studies, and two are retrospective studies.
The first article provided by the applicant was a prospective single armed multicenter phase two safety and efficacy study performed in France.
A second article provided by the applicant contained a systematic review of published Hemospray case data summarizing 17 human and 2 animal studies.
The applicant provided a third article consisting of an abstract from another systematic review article.
A fourth article provided by the applicant described a single-arm retrospective analytical study of 261 enrolled patients conducted at 21 hospitals in Spain.
A fifth 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.
The fifth article also described the utility of Hemospray 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.
A sixth article provided by the applicant consisted of a systematic
The applicant provided a seventh article which consisted of a journal pre-proof article detailing a 1:1 randomized control trial of 20 patients treated with Hemospray versus the standard of care (for example, thermal and injection therapies) in the treatment of malignant gastrointestinal bleeding.
An eighth 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.
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 asserted Hemospray 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 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 asserted Hemospray is an important
We noted in the proposed rule that the majority of studies provided lack a comparator when assessing the effectiveness of Hemospray. Three of the articles provided were systematic reviews of the literature. We noted that while we found these articles helpful in establishing a background for the use of Hemospray, we were concerned that they may not provide strong evidence of substantial clinical improvement. Four studies appeared to be single-armed studies assessing the efficacy of Hemospray in the patient setting. We stated that in all of these articles, comparisons were made between Hemospray and standard of care treatments; however, without the ability to control for factors such as study design, patient characteristics, etc., it was difficult to determine if any differences seen result from Hemospray or confounding variables. Furthermore, within the retrospective and prospective studies lacking a control subset, some level of selection bias appeared 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 appeared to be in the process of peer-review and was not yet published. Furthermore, we noted that this article was written as a feasibility study for a potentially larger randomized control trial and contains a sample of only 20 patients. This small sample size left us concerned that the results are not representative of any larger population. Lastly, as described, we were 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 was not an acceptable treatment for endoscopic bleeding. Accordingly, it was not clear whether performance seen in the treated group as compared to the control group is due to Hemospray itself or due to confounding factors.
Third, we were concerned with the samples chosen in many of the studies presented. Firstly, we noted that the Medicare population is a diverse group of men and women. Many of the samples provided by the applicant were overwhelmingly male. Secondly, many of the studies provided were performed in European and other settings outside of the United States. We were therefore concerned that the samples chosen within the literature provided may not represent the Medicare population.
Lastly, we were concerned about the potential for adverse events resulting from Hemospray. It was unclear from the literature provided by the applicant what the likelihood of these events were and whether or not an evaluation for the safety of Hemospray was performed. About one-third of the articles submitted specifically addressed adverse events with Hemospray. 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 stated the potential for severe adverse reactions (for example, abdominal distension, visceral perforation, biliary obstruction, splenic infarct). Specifically, one article
The applicant agreed with CMS that the use of single arm and retrospective studies potentially suffer from selection bias. The applicant asserted that while this bias is inevitable, the retrospective studies specifically exclude those cases successfully treated with conventional dual therapy. According to the applicant, this therefore ensured the bias was toward the patients with the highest risk of treatment failure, morbidity, and mortality, and representing the most challenging hemostasis cases. The applicant stated that in both the Rodriguez de Santiago et al. and Alzoubaidi et al. articles, there was an overall treatment success with no rebleeding in 70% of cases where Hemospray was used after all other conventional treatments failed.
In response to CMS' concerns about the randomized control trial (RCT), the applicant stated that the study evaluated patients with bleeding from malignant lesions and has now been published. According to the applicant, the comparator treatment used in this study, injection only, is consistent with the 2016 guidelines of the European Society of Gastrointestinal Endoscopy for the treatment of bleeding from upper GI malignancies which recommends, “endoscopic monotherapy with epinephrine injection . . . or saline injection . . .”.
In response to CMS' concerns about the study samples presented, the applicant acknowledged that the majority of data came from outside of the United States due to commercial availability. The applicant stated that the FDA considered the outside of the United States data to be representative of the US population when granting a de novo classification request for the product. In response to CMS' concern that the provided literature showed a predominance of males, the applicant stated that the 2016 Healthcare Cost and Utilization Project (HCUP) showed that 60% of patients that underwent endoscopic control of bleeding were male. Lastly, the applicant stated that
In response to CMS' concerns about potential adverse events, the applicant stated that the FDA determined the product is safe and effective for its intended use and has an acceptable risk/benefit ratio when it granted de Novo classification request and authorization to market in the United States. According to the applicant, any procedure is associated with risks. The applicant stated that they understand the potential risks associated with Hemospray and that they clearly labeled their product with such information. The applicant also conducts physician training to ensure physicians understand the risks and select patients who they believe would benefit most from Hemospray. In addition, the applicant conveyed that they diligently monitor reported complaints or complications related to a device once it is in the real world. According to the applicant, the same will be done with Hemospray and if the risk ratio increases to an unacceptable level; the applicant will take appropriate steps to correct it. According to the applicant, these are the standard processes with any device and the applicant does not see a reason to divert from these processes for Hemospray.
The applicant acknowledged that it had initiated a voluntary recall of Hemospray due to complaints received that the handle and/or activation knob on the device in some cases had cracked or broken when the device was activated and in some cases had caused the carbon dioxide cartridge to exit the handle. According to the applicant, as of June 10, 2020, the FDA cleared Hemospray to return to the market (K200972) after the applicant sufficiently addressed the issue that led to the cartridge exiting the handle. As such, Hemospray will return to the US market in July 2020.
One commenter stated that they frequently use Hemospray and believe it is irreplaceable in the role of controlling tumor bleeding. The commenter added that Hemospray has a critical role in rescue bleeding in cases that preclude contact hemostatic methods due to the risk of perforation. They stated that Hemospray's ability to buy time to resuscitate during challenging bleeding cases is the most understated benefit of the device. Lastly, the commenter stated that there are currently no hemostatic powder alternatives on the market in the United States.
While we acknowledge the limitations of some of the data, we believe that Hemospray represents a substantial clinical improvement for the treatment of gastrointestinal bleeding for the following reasons. We believe that given the results from the RCT trials and the single-armed studies Hemospray provides a treatment benefit particularly for those with bleeding from GI malignancies. We also see the clinical importance of Hemospray as an alternative to invasive treatments traditionally used as salvage therapy. Lastly, we note that Hemospray provides treatment for bleeding without requiring tissue trauma or precise targeting.
After consideration of the public comments we received and the information included in the applicant's new technology add-on payment application, we have determined that Hemospray meets the criteria for approval of the new technology add-on payment. Therefore, we are approving new technology add-on payments for this technology for FY 2021. Cases involving the use of Hemospray that are eligible for new technology add-on payments will be identified by procedure codes XW0G886 (Introduction of mineral-based topical hemostatic agent into upper GI, via natural or artificial opening endoscopic, new technology group 6) and XW0H886 (Introduction of mineral-based topical hemostatic agent into lower GI, via natural or artificial opening endoscopic, new technology group 6).
In its application, the applicant estimated that the cost of Hemospray is $2,500.00 per patient. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS–DRG payment for the case. As a result, the maximum new technology add-on payment for a case involving the use of Hemospray is $1,625.00 for FY 2021.
Two manufacturers, AstraZeneca PLC and Genentech, Inc., submitted separate applications for new technology add-on payments for FY 2021 for IMFINZI® (durvalumab) and TECENTRIQ® (atezolizumab), respectively. Both of these technologies are programmed death-ligand 1 (PD–L1) blocking antibodies used for the treatment of patients with extensive-stage small cell lung cancer (ES–SCLC).
In the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32631) we noted, and as summarized in the following table, the FDA initially approved IMFINZI® on May 1, 2017 for the indicated treatment of patients with locally advanced or metastatic urothelial carcinoma who have disease
In the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32663), we noted that the applicant for TECENTRIQ® submitted a request for a unique ICD–
According to the applicant for TECENTRIQ®, lung cancer is the second most commonly diagnosed cancer and the leading cause of cancer-related death among men and women in the United States.
According to the applicant for TECENTRIQ®, the current SOC treatment for ES–SCLC is a combination of etoposide, which is FDA-approved in SCLC only in combination with cisplatin, and carboplatin, which is used in preference to cisplatin for toxicity reasons, despite being off-label.
The applicant for IMFINZI® further stated that diagnosis often occurs at later stages and SCLC patients may be sicker at the time of diagnosis, presenting with comorbidities.
According to the applicant for TECENTRIQ®, progress in the treatment of ES–SCLC has been limited. Over the past 40 years, the 2-year OS has increased from 3.4 percent to 5.6 percent, and the median OS has remained at about 10 months since the 1980s.
As stated earlier and for the reasons discussed further later in this section, we believe that IMFINZI® and TECENTRIQ® are substantially similar to each other such that it is appropriate to analyze these two applications as one technology for purposes of new technology add-on payments, in accordance with our policy. Below we discuss the information provided by the applicants, as summarized in the proposed rule, regarding whether IMFINZI® and TECENTRIQ® are substantially similar to existing technologies prior to their approval by the FDA and their release onto the U.S. market. As discussed earlier, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and would not be considered “new” for purposes of new technology add-on payments.
With regard to the first criterion, whether a product uses the same or a similar mechanism of action to achieve a therapeutic outcome, the applicant for TECENTRIQ® asserted that the mechanism of action of ES–SCLC is not the same as or similar to an existing technology. The applicant described TECENTRIQ® as a programmed PD–L1 blocking antibody, and as the first and only blocking antibody to target the PD–L1/PD–1 pathway that is FDA-approved for the treatment of ES–SCLC. The applicant explained that PD–L1 is a protein expressed on the surface of cancer cells, which allows them to inactivate the T-cells of the patient's immune system which would normally attack the cancer cells. The applicant asserted that TECENTRIQ® blocks the PD–L1 protein, rendering the cancer cells susceptible to attack.
The applicant for IMFINZI® asserted that IMFINZI® offers a novel mechanism of action for the treatment of ES–SCLC compared to the SOC chemotherapy. The applicant for IMFINZI® stated that first line SOC treatment of ES–SCLC is standard chemotherapy, including a platinum agent (typically carboplatin or cisplatin) plus etoposide.
The applicant for IMFINZI® asserted that etoposide phosphate is a plant alkaloid prodrug that is converted to its active moiety, etoposide, by dephosphorylation. Further, the applicant explained etoposide causes the induction of DNA strand breaks by an interaction with DNA-topoisomerase II or the formation of free radicals, leading to cell cycle arrest, primarily at the G2 stage of the cell cycle, and cell death.
The applicant stated IMFINZI® is a selective, high-affinity, human IgG1κ monoclonal antibody that blocks PD–L1 binding to programmed cell death-1 and CD80 without antibody-dependent cell-mediated cytotoxicity.
With regard to the second criterion, whether IMFINZI® and TECENTRIQ® will be assigned to the same or a different MS–DRG, the applicant for TECENTRIQ® referenced the FY 2016 IPPS/LTCH PPS Final Rule (80 FR 49445) to support that this criterion is not met in cases where the subject technology is treating a disease for which the current SOC involves non-FDA-approved therapies that are also associated with different MS–DRGs. As previously noted, the applicant stated that the current SOC treatment for ES–SCLC is a combination of etoposide, which is FDA-approved in SCLC only in combination with cisplatin, and carboplatin, which is used in preference to cisplatin for toxicity reasons, despite being off-label. The applicant for TECENTRIQ® also pointed out that irinotecan, a topoisomerase inhibitor indicated in colon and rectal cancers, is sometimes used in place of etoposide.
The applicant for TECENTRIQ® also stated that the MS–DRG payment system cannot differentiate between patients with NSCLC and ES–SCLC and noted that MS–DRGs 180 (Respiratory Neoplasms with MCC) and 181 (Respiratory Neoplasms with CC) are applicable to both diseases. The applicant for TECENTRIQ® also noted that category C34 (Malignant neoplasm of bronchus and lung) of the ICD–10–CM diagnosis coding classification system can be used to identify NSCLC and SCLC cases but does not differentiate between them. As a result, the applicant for TECENTRIQ® suggested both TECENTRIQ® and an existing technology (such as one used to treat NSCLC) may be assigned to either of these MS DRGs, even though, as previously noted, the NSCLC and SCLC patient populations are different.
The applicant for IMFINZI® asserted that extensive stage small cell lung cancer patients are identified under category C34 (Malignant neoplasm of bronchus and lung) of the ICD–10–CM coding classification system. According to the applicant for IMFINZI®, category C34 is all encompassing and does not distinguish between the lung cancer subtypes. The applicant also stated that both non-small cell lung cancer patients as well as earlier stages of small cell lung cancer (that is, limited stage) are captured under category C34, all of
To further identify the patient population of interest, the applicant for IMFINZI® searched charge level data from the Premier Hospital Database to determine which MS–DRGs these cases are mapping to, beyond relying on the broad lung cancer category C34. The applicant asserted that the Premier Hospital database is a large U.S. hospital-based, all payer database that contains discharge information from geographically diverse non-governmental, community, and teaching hospitals and health systems across both rural and urban areas. The applicant for IMFINZI® stated that this database contains data from standard hospital discharge files providing access to all procedures, diagnoses, drugs, and devices received for each patient regardless of the insurance or disease state. The applicant for IMFINZI® used charge level hospital data from the Premier Hospital Database to identify cases that used category C34 as well as carboplatin or cisplatin plus etoposide, the chemotherapy doublet specifically used for ES–SCLC patients. The applicant also looked for the use of prophylactic cranial irradiation (PCI), a type of radiation therapy used for ES–SCLC patients to address the frequent occurrence of multiple brain metastases associated with SCLC. Based on this assessment of hospital charge-level data, the applicant for IMFINZI® stated that over 60 percent of ES–SCLC patients map to MS–DRGs 180 (Respiratory Neoplasms with MCC), 181 (Respiratory Neoplasms with CC), and 164 (Major Chest Procedures with CC). We agreed with the applicant that patients receiving IMFINZI® would map to the same DRGs as patients receiving standard therapy for ES–SCLC.
With regard to the third criterion, whether IMFINZI® and TECENTRIQ® will be used to treat the same or similar disease in the same or similar patient population when compared to existing therapies, the applicant for IMFINZI® stated that IMFINZI®, in combination with standard chemotherapy, represents a new treatment option for patients with extensive stage small cell lung cancer, demonstrating statistically and clinically significant improved overall survival as compared to standard chemotherapy (Hazard ratio [HR] 0.73; 95 percent CI 0.59–0.91; p=0.0047).
We invited public comments on whether IMFINZI® or TECENTRIQ® is substantially similar to an existing technology and whether they meet the newness criterion.
In the proposed rule we stated that both IMFINZI® and TECENTRIQ® seem to be intended for similar patient populations and would involve the treatment of the same conditions: Patients with locally advanced or metastatic urothelial carcinoma and patients with SCLC. We stated that we were interested in information on how these two technologies may differ from each other with respect to the substantial similarity criteria and newness criterion, to inform our analysis of whether IMFINZI® and TECENTRIQ® are substantially similar to each other and therefore should be considered as a single application for purposes of new technology add-on payments.
The applicant for TECENTRIQ® (Genentech) commented that TECENTRIQ® is a humanized programmed death-ligand 1 (PD–L1) blocking antibody (which binds to PD–L1 and blocks its interactions with both PD–1 and B7.1 receptors) with multiple oncology indications, including one in combination with carboplatin and etoposide for the first-line treatment of adult patients with ES–SCLC.
The applicant for TECENTRIQ® stated that IMFINZI® is a human PD–L1 blocking antibody
The applicant for IMFINZI® (AstraZeneca) commented that the addition of IMFINZI® to the standard of care—etoposide and platinum-based chemotherapy (either carboplatin or cisplatin)—offers a novel mechanism of action for the first-line treatment of ES–SCLC. Therefore, the applicant stated that IMFINZI® is not substantially similar to the standard of care because it does not have the same or similar mechanism of action. The applicant for IMFINZI® stated that it offers a new, unique treatment option for the specific patient population facing this much more aggressive form of lung cancer, small cell cancer.
The applicant for IMFINZI® asserted that IMFINZI® and TECENTRIQ® are unique molecular entities, with unique active ingredients and should be considered separately for new technology add-on payments. According to the commenter, IMFINZI® is a selective, high-affinity, human IgG1 monoclonal antibody.
The applicant further stated that IMFINZI®'s unique ICD–10 procedure code which has an October 1, 2020 effective date, is distinct from that of TECENTRIQ®, to enable data to be collected specific to each technology for specific uses and patient populations, supporting a conclusion that the technologies should be considered separately for new technology add-on payments. Therefore, the manufacturer for IMFINZI® requested that CMS discretely grant new technology add-on payments for IMFINZI®, stating that current evidence does not support consideration of new technology add-on payments for IMFINZI® jointly with another applicant.
We also believe IMFINZI® and TECENTRIQ® are not substantially similar to any other existing technologies because, as both applicants asserted in their FY 2021 new technology add-on payment applications and in their comments the technologies do not use the same or similar mechanism of action to achieve a therapeutic outcome as any other
We also note that proposals to create, delete, or revise codes under the ICD–10–PCS structure are referred to the ICD–10 Coordination and Maintenance Committee. The decisions of this committee are independent from any decision for new technology add on payments. Therefore, we do not agree with the commenter that the fact that IMFINZI® and TECENTRIQ® have separate codes supports a conclusion that the technologies should be considered separately for new technology add-on payments.
Based on the above, we are making one determination regarding approval for new technology add-on payments that will apply to both applications, and in accordance with our policy, we use the earliest market availability date submitted as the beginning of the newness period for both IMFINZI® and TECENTRIQ®.
We believe our current policy for evaluating new technology payment applications for two technologies that are substantially similar to each other is consistent with the authority and criteria in section 1886(d)(5)(K) of the Act. We note that CMS is authorized by the Act to develop criteria for the purposes of evaluating new technology add-on payment applications. For the purposes of new technology add-on payments, when technologies are substantially similar to each other, we believe it is appropriate to evaluate both technologies as one application for new technology add-on payments under the IPPS, for the reasons we discussed above and consistent with our evaluation of substantially similar technologies in prior rulemaking (82 FR 38120).
With respect to the newness criterion, as previously stated, IMFINZI® received FDA approval on March 27, 2020 and TECENTRIQ® received FDA approval on March 18, 2019. In accordance with our policy, because these technologies are substantially similar to each other, we use the earliest market availability date submitted as the beginning of the newness period for both technologies. Therefore, based on our policy, with regard to both technologies, if the technologies are approved for new technology add-on payments, we believe that the beginning of the newness period would be March 18, 2019.
The applicants submitted separate cost and clinical data, and in the proposed rule, we reviewed and discussed each set of data separately. However, as stated above, for this final rule, we will make one determination regarding new technology add-on payments that will apply to both applications. We believe that this is consistent with our policy statements in the past regarding substantial similarity. Specifically, we have noted that approval of new technology add-on payments would extend to all technologies that are substantially similar (66 FR 46915), and we believe that continuing our current practice of extending new technology add-on payments without a further application from the manufacturer of the competing product, or a specific finding on cost and clinical improvement if we make a finding of substantial similarity among two products is the better policy because we avoid—
• Creating manufacturer-specific codes for substantially similar products;
• Requiring different manufacturers of substantially similar products to submit separate new technology add-on payment applications;
• Having to compare the merits of competing technologies on the basis of substantial clinical improvement; and
• Bestowing an advantage to the first applicant representing a particular new technology to receive approval (70 FR 47351).
If substantially similar technologies are submitted for review in different (and subsequent) years, rather than the same year, we evaluate and make a determination on the first application and apply that same determination to the second application. However, because the technologies have been submitted for review in the same year, and because we believe they are substantially similar to each other, we consider both sets of cost data and clinical data in making a determination, and we do not believe that it is possible to choose one set of data over another set of data in an objective manner.
As we discussed in the proposed rule and as stated above, each applicant submitted separate analyses regarding the cost criterion for each of their products, and both applicants maintained that their product meets the cost criterion. We summarize each analysis below.
With respect to the cost criterion, the applicant for IMFINZI® conducted the following analysis to demonstrate that IMFINZI® meets the cost criterion. To identify cases that may be eligible for the use of IMFINZI®, the applicant searched the FY 2018 MedPAR LDS file for claims reporting an ICD–10–CM code of category C34 in combination with Z51.11 (Encounter for antineoplastic chemotherapy) or Z51.12 (Encounter for antineoplastic immunotherapy). The applicant also included any cases within MS–DRGs 180, 181, 182 with an ICD–10–CM diagnosis code from category C34 as the applicant suggested hospitals may not always capture the encounter for chemotherapy. Based on the FY 2018 MedPAR LDS file, the applicant identified a total of 24,193 cases. Of the MS–DRGs with more than 11 cases, the applicant found 23,933 cases which were mapped to 12 unique MS–DRGs. The applicant excluded MS–DRGs with case volume less than 11 total cases.
Using these 23,933 cases, the applicant for IMFINZI® then calculated the unstandardized average charges per case for each MS–DRG. The applicant determined that it did not need to remove any charges as IMFINZI® is not expected to offset historical charges already included within the MS–DRGs. The applicant asserted that ES–SCLC patients will receive their initial dose of IMFINZI® in the inpatient setting. The applicant for IMFINZI® then standardized the charges and inflated the charges by 1.11100 or 11.10 percent, the same inflation factor used by CMS to update the outlier threshold in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42629). The applicant then added the charges for IMFINZI® by converting the costs to a charge by dividing the cost by the national average cost-to-charge ratio of 0.189 for drugs from the FY 2020 IPPS/LTCH PPS final rule (84 FR 42179).
Based on the FY 2020 IPPS/LTCH PPS final rule correction notice data file thresholds, the average case-weighted threshold amount for IMFINZI® was $53,209. In the applicant's analysis, the final inflated average case-weighted standardized charge per case was $111,093. Because the final inflated average case-weighted standardized charge per case exceeds the average case-weighted threshold amount, the applicant for IMFINZI® maintained that the technology meets the cost criterion.
To identify cases that may be eligible for TECENTRIQ®, the applicant searched the FY 2018 MedPAR LDS file for claims reporting an ICD–10–CM code from category C34 and considered only cases where the diagnosis codes were in the primary or admitting position to differentiate ES–SCLC from limited-stage SCLC. Cases classified with one or more of 48 surgical lung procedure codes were not considered to differentiate ES–SCLC from NSCLC. This resulted in 33,404 cases, which the applicant for TECENTRIQ® indicated constitute what it defines as an ES–
Using these 33,404 cases, the applicant for TECENTRIQ® then calculated the unstandardized average charges per case for each MS–DRG. The applicant determined that it did not need to remove any charges because TECENTRIQ® is administered as a combination therapy with carboplatin and etoposide to treat ES–SCLC.
The applicant for TECENTRIQ® then standardized the charges and inflated the charges by 1.11100 or 11.10 percent, the same inflation factor used by CMS to update the outlier threshold in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42629). The applicant then added the estimated cost of an ES–SCLC TECENTRIQ® administration to the MedPAR cases. The applicant then added the charges for TECENTRIQ® by converting the costs to a charge by dividing the cost by what the applicant described as a conservative cost-to-charge ratio of 0.5.
Based on the FY 2020 IPPS/LTCH PPS final rule correction notice data file thresholds, the average case-weighted threshold amount for TECENTRIQ® was $65,738. In the applicant's analysis, the final inflated average case-weighted standardized charge per case for TECENTRIQ® was $88,561. Because the final inflated average case-weighted standardized charge per case exceeds the average case-weighted threshold amount, the applicant maintained that the technology meets the cost criterion.
The applicant for TECENTRIQ® also provided a sensitivity analysis using this same methodology but considered only the MS–DRGs representing 1 percent of case volume, producing a list of 10 MS–DRGs that cumulatively represent 88.31 percent of case volume, or 29,500 cases. Based on the FY 2020 IPPS/LTCH PPS final rule correction notice data file thresholds, the average case weighted threshold amount was $56,987. In the applicant's analysis, the final inflated average case-weighted standardized charge per case for TECENTRIQ® was $88,404. Because the final inflated average case-weighted standardized charge per case exceeds the average case-weighted threshold amount, the applicant maintained that the technology meets the cost criterion.
The ICD–10–CM diagnosis codes and MS–DRGs in the cost analysis for IMFINZI® differ from those used in the cost analysis for TECENTRIQ®. Specifically, as noted previously, the applicant for TECENTRIQ® searched for claims with ICD–10–CM diagnosis codes from category C34 while the applicant for IMFINZI® searched for ICD–10–CM diagnosis codes from category C34 in combination with Z51.11 or Z51.12. As noted in the proposed rule, we were concerned as to why the diagnosis codes would differ between the cost analysis for IMFINZI® and for TECENTRIQ® as one analysis may lend more accuracy to the calculation depending on which is more reflective of the applicable patient population.
We invited public comment on whether IMFINZI® or TECENTRIQ® meet the cost criterion.
1. Genentech (CCR of 0.5): This was noted by CMS in the FY 2016 IPPS Final Rule, with reference to the successful application for NTAP of BLINCYTO.
2. AstraZeneca (CCR of 0.189): This figure was calculated by CMS, specifically for drugs, from FY 2017 cost report data.
The applicant for IMFINZI® also commented that both applicants utilized the “C34 Malignant neoplasm of bronchus and lung” ICD–10–CM code series (85 FR 32633).
Although the same primary diagnosis code was used, each applicant further refined the patient population using different subsequent methods. The applicant for IMFINZI® stated that the case-weighted threshold amount published in the proposed rule, using their methodology, is $65,738. Although this threshold presented in the proposed rule and the inflated case-weighted standardized charges from analyses AstraZeneca performed were calculated using different methodologies, the applicant stated that comparing them suggests that IMFINZI® would meet the cost criterion if this analysis was performed with IMFINZI® charges.
With respect to the substantial clinical improvement criterion, the applicant for IMFINZI® asserted that IMFINZI® represents a substantial clinical improvement over existing technologies because it offers a treatment option for a patient population unresponsive to currently available treatments. The applicant for IMFINZI® also stated that it represents a substantial clinical improvement because the technology reduces mortality, decreases disease progression, and improves quality of life.
The CASPIAN clinical trial for IMFINZI® was a randomized, open-label, phase 3 trial at 209 sites across 23 countries. Eligible patients were adults with untreated ES–SCLC, with World Health Organization (WHO) performance status 0 or 1 and measurable disease as per Response Evaluation Criteria in Solid Tumors (RECIST). Patients were randomly assigned (in a 1:1:1 ratio) to durvalumab plus platinum-etoposide; durvalumab plus tremelimumab plus platinum–etoposide; or platinum-etoposide alone. All drugs were administered intravenously. Platinum-etoposide consisted of etoposide 80–100 mg/m2 on days 1–3 of each cycle with investigator's choice of either carboplatin area under the curve 5–6 mg/mL per min or cisplatin 75–80 mg/m2 (administered on day 1 of each cycle). Patients received up to four cycles of platinum-etoposide plus durvalumab 1500 mg with or without tremelimumab 75 mg every 3 weeks followed by maintenance durvalumab 1500 mg every 4 weeks in the immunotherapy groups and up to 6 cycles of platinum-etoposide every 3 weeks plus prophylactic cranial irradiation (investigator's discretion) in the platinum-etoposide group. The primary endpoint was overall survival in the intention-to-treat population. The applicant for IMFINZI® stated that the median OS was 13.0 months (95 percent CI, 11.5–14.8) for patients treated with IMFINZI® plus chemotherapy vs. 10.3 months (95 percent CI, 9.3–11.2) for
The applicant for IMFINZI® further stated that other key secondary endpoints demonstrated consistent and durable improvement for IMFINZI® plus chemotherapy, including a higher progression-free survival (PFS) rate at 12 months (17.5 percent vs. 4.7 percent), a 10 percent increase in confirmed objective response rate (ORR) (67.9 percent vs. 57.6 percent), and improved duration of response at 12 months (22.7 percent vs. 6.3 percent). The median progression-free Survival was 5.1 months with IMFINZI® versus 5.4 months for the control arm, which was not significantly different.
The applicant for IMFINZI® stated that in combination with etoposide and platinum-based chemotherapy, IMFINZI® provided a significant improvement in survival and notable changes in patient reported outcomes. According to the applicant, patients receiving IMFINZI® plus etoposide and platinum-based chemotherapy experienced reduced symptom burden over 12 months for pre-specified symptoms of fatigue, appetite loss, cough, dyspnea, and chest pain (based on adjusted mean change from baseline, MMRM). The applicant stated a large difference over 12 months was observed for appetite loss in favor of IMFINZI® plus etoposide and platinum-based chemotherapy compared to standard of care etoposide and platinum-based chemotherapy. The applicant further stated that patients receiving IMFINZI® plus etoposide and platinum-based chemotherapy also experienced longer time to deterioration in a broad range of patient-reported symptoms (dyspnea, appetite loss, chest pain, arm/shoulder pain, other pain, insomnia, constipation, diarrhea), functioning (physical, cognitive, role, emotional, social), and Health Related Quality of Life (HRQoL) indicators, compared to cisplatin (EP).
As stated previously, the applicant asserted that IMFINZI® represents a substantial clinical improvement over existing technologies because it offers a treatment option for a patient population unresponsive to currently available treatments. The applicant explained that the CASPIAN study demonstrated the following endpoints: Patient population baseline characteristics, treatment exposure, overall survival (including pre-specified subgroups), progression-free survival, sites of progression, objective response rate, duration of response, and detailed safety analysis. All results provided comparison of the active IMFINZI® plus SOC chemotherapy arm to the SOC chemotherapy alone arm.
In the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32634), we had concerns that the CASPIAN study is ongoing, and the information is preliminary. Specifically, the three arms in the study had not yet been analyzed at time of application. Additionally, while the data show a median survival benefit of about 3 months with treatment with IMFINZI®, we stated that we did not see any data that demonstrates significant improvement in median progression-free survival. Also, while we recognized that the trials are ongoing and that the analysis of the three study arms is not complete, we stated that we were interested in any updates and additional information concerning adverse events to help us better understand the safety profile of IMFINZI®.
The applicant for TECENTRIQ® asserted that TECENTRIQ® plus standard of care represents a substantial clinical improvement over existing technologies because it offers a treatment option for a patient population unresponsive to, or ineligible for currently available treatments. The applicant also maintained that TECENTRIQ® represents a substantial clinical improvement because the technology demonstrates statistically significant improvement in overall survival, statistically significant improvement in progression-free survival, as well as improved HRQoL (Health-related quality of life, which is an individual's or a group's perceived physical and mental health over time)
According to the applicant, the use of TECENTRIQ® in cases of ES–SCLC was evaluated in IMpower133, a phase III (efficacy) and phase I (safety), double-blind, placebo-controlled, randomized, multicenter study designed to compare the efficacy and safety of TECENTRIQ® vs. placebo in combination with carboplatin and etoposide in patients with ES–SCLC who did not receive prior systemic therapy.
Key inclusion criteria were as follows: Histologically or cytologically confirmed ES–SCLC as defined by the VA Lung Study Group staging system; measurable ES–SCLC according to RECIST version 1.1; ECOG PS of 0–1; no prior systemic treatment for ES–SCLC; and treated asymptomatic CNS metastases. Key exclusion criteria were as follows: History of autoimmune disease and prior treatment with CD137 agonists or immune checkpoint inhibitors.
A total of 403 patients were enrolled. Patients were stratified by gender, ECOG PS (0 or 1), and the presence of brain metastases. Baseline characteristics were comparable across both treatment arms. The following table summarizing baseline patient characteristics indicates that more than 40 percent of the patients in both treatment arms were of Medicare age.
At the time of data cutoff (April 24, 2018), the median follow-up was 13.9 months. The applicant stated that patients treated with TECENTRIQ® + carboplatin + etoposide experienced a significantly longer OS and PFS compared with patients treated with placebo + carboplatin + etoposide in the ITT population. The 1-year OS with TECENTRIQ® + carboplatin + etoposide, compared with the placebo + carboplatin + etoposide rate, was approximately 13 percent higher; the 1-year PFS was approximately 7 percent higher, as shown in the following table that summarizes Landmark Overall Survival and Progression-free Survival Rates (Data Cutoff: April 24, 2018).
The incidence of treatment-related AEs was similar in both treatment arms. The following table provides information about the safety profiles (Data Cutoff: April 24, 2018) (safety population)—IMpower133. The most common treatment-related Grade 3/4 AEs for TECENTRIQ® + carboplatin + etoposide and for placebo + carboplatin + etoposide was neutropenia (22.7 percent vs. 24.5 percent, respectively), anemia (14.1 percent vs. 12.2 percent), and decreased neutrophil count (14.1 percent vs. 16.8 percent). Treatment-related deaths occurred in three patients in the TECENTRIQ® group (due to neutropenia, pneumonia, and unspecified cause) and three patients in the placebo group (due to pneumonia, septic shock, and cardiopulmonary failure).
More patients in the TECENTRIQ® group than in the placebo group experienced immune-related AEs, with rash and hypothyroidism being the most common. The following table summarizes immune-related AEs occurring in ≥5 patients in any treatment arm (data cutoff: April 24, 2018) (safety population).
The median treatment duration of TECENTRIQ® was 4.7 months (range: 0–1), and the median number of TECENTRIQ® doses administered was 7 (range: 1–30). The median dose intensity, total cumulative dose, and median number of chemotherapy doses (four doses of carboplatin, 12 doses of etoposide) were similar in the two treatment groups.
The addition of TECENTRIQ® to carboplatin + etoposide demonstrated a statistically significant improvement in OS and PFS compared with placebo + carboplatin + etoposide for the first-line treatment of ES–SCLC. Overall, the safety profiles of TECENTRIQ® + carboplatin + etoposide and placebo + carboplatin + etoposide were comparable to the safety profiles of each individual agent; no new safety signals were identified with the combinations.
The applicant asserted that TECENTRIQ® plus standard of care therapy represents a substantial clinical improvement over existing technologies because it offers a treatment option for a patient population unresponsive to or ineligible for currently available treatments. The applicant also asserted that TECENTRIQ® represents a significant clinical improvement over existing technologies because the technology produces a statistically significant improvement in overall survival, a statistically significant improvement in progression-free survival, as well as improved HRQoL and reduced symptomatology.
In the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32667), we stated we were concerned that the survival benefit of the addition of TECENTRIQ® was a median duration of only 2 months over standard therapy and the improvement on the median progression-free survival was less than one month. We were also concerned that the short survival and progression-free survival may not be clinically significant. Additionally, we were concerned that the participants did not have a clinically significant improvement in their quality of life given the number of AEs in the TECENTRIQ® treatment arm combined with the number of treatments given in that arm.
We invited public comments on whether IMFINZI® or TECENTRIQ® meet the substantial clinical improvement criterion.
Multiple commenters, including the applicant for TECENTRIQ®, remarked that SCLC is the most aggressive type of lung cancer, accounting for 10–15% of lung cancer cases.
The applicant for IMFINZI® commented that the final analysis of the CASPIAN trial was presented on May 29, 2020 at the 2020 ASCO Annual Meeting.
After consideration of the public comments we received, we agree that both IMFINZI® and TECENTRIQ® represent a substantial clinical improvement over existing technologies because the technologies significantly improve clinical outcomes. These two treatments are the first to show improved overall survival in the treatment of ES–SCLC, an aggressive and deadly disease, in more than 20 years. In summary, we have determined that IMFINZI® and TECENTRIQ® meet all of the criteria for approval of new technology add-on payments. Therefore, we are approving new technology add-on payments for IMFINZI® and TECENTRIQ® for FY 2021. As previously stated, cases involving IMFINZI® that are eligible for new technology add-on payments will be identified by ICD–10–PCS procedure codes XW03336 (Introduction of durvalumab antineoplastic into peripheral vein, percutaneous approach, new technology group 6) or XW04336 (Introduction of durvalumab antineoplastic into central vein, percutaneous approach, new technology group 6). Cases involving TECENTRIQ® that are eligible for new technology add-on payments will be identified by ICD–10–PCS procedure codes XW033D6 (Introduction of atezolizumab antineoplastic into peripheral vein, percutaneous approach, new technology group 6) or XW043D6 (Introduction of atezolizumab antineoplastic into central vein, percutaneous approach, new technology group 6), respectively.
Each of the applicants submitted cost information for its application. The manufacturer of IMFINZI® stated that the cost of its technology is $10,833. The applicant projected that 6,073 cases will involve the use of IMFINZI® in FY 2021. The manufacturer of TECENTRIQ® stated that the cost of its technology is $9,013.75. The applicant projected that 806 cases will involve the use of TECENTRIQ® in FY 2021. Because the technologies are substantially similar to each other, we believe using a single cost for purposes of determining the new technology add-on payment amount is appropriate for IMFINZI® and TECENTRIQ® even though each applicant has its own set of codes. We also believe using a single cost provides predictability regarding the add on payment when using IMFINZI® or TECENTRIQ® for the treatment of patients with ES–SCLC. As such, we believe that the use of a weighted average of the cost of IMFINZI® and TECENTRIQ® based on the projected number of cases involving each technology to determine the maximum new technology add-on payment would be most appropriate. To compute the weighted cost average, we summed the total number of projected cases for each of the applicants, which equaled 6,879 cases (6,073 plus 806). We then divided the number of projected cases for each of the applicants by the total number of cases, which resulted in the following case-weighted percentages: 86 Percent for IMFINZI® and 14 percent for TECENTRIQ®. We then multiplied the cost per case for the manufacturer specific drug by the case-weighted percentage (0.86 * $10,833 = $9,316.38 for IMFINZI® and 0.14 * $9,013.75 = $1,261.93 for TECENTRIQ®). This resulted in a case-weighted average cost of $10,578.53 for the technology. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the device or 65 percent of the costs in excess of the MS–DRG payment for the case. As a result, the maximum new technology add-on payment for a case involving IMFINZI® or TECENTRIQ® is $6,875.90 for FY 2021.
Alexion, Inc, submitted an application for new technology add-on payments for Soliris® (eculizumab) for FY 2021. Soliris® is approved for the treatment of neuromyelitis optica spectrum disorder (NMOSD) in adult patients who are anti-aquaporin-4 (AQP4) antibody positive.
According to the applicant, NMOSD is a rare and severe condition that attacks the central nervous system without warning. The applicant explained that NMOSD attacks, also referred to as relapses, can cause progressive and irreversible damage to
According to the applicant, in patients with AQP4 antibody-positive NMOSD, the body's own immune system can turn against itself to produce auto-antibodies against AQP4, a protein on certain cells in the eyes, brain and spinal cord that are critical for the survival of nerve cells. The applicant explained that the binding of these anti-AQP4 auto-antibodies activates the complement cascade, another part of the immune system.
According to the applicant, complement activation by anti-AQP4 auto-antibodies is one of the primary causes of NMOSD. The applicant explained that formation of membrane attack complex (MAC) is the end product of the activated complement system which is directly responsible for the damage to astrocytes leading to astrocytopathy (astrocyte death) and ensuing neurologic damage associated with NMOSD and relapses. According to the applicant, the primary goal of NMOSD treatment is to prevent these relapses, which over time lead to irreversible neurologic damage.
According to the applicant, Soliris® is a first-in-class complement inhibitor that works by selectively inhibiting the complement system, a central part of the immune system involved in inflammatory processes, pathogen elimination, activation of the adaptive immune response, and maintenance of homeostasis. The applicant explained that the complement system distinguishes between healthy host cells, cell debris, apoptotic cells, and external pathogens. The applicant further explained that the complement system triggers a modulated immune response, and functions through a combination of effector proteins, receptors, and regulators. The applicant asserted that when the complement system detects a threat, an initial protease is activated. This protease (either alone or in a complex) then cleaves its target, which in turn becomes active and starts to cleave the next target in the chain, and so on, leading to a cascade.
Per the applicant, initial activation of the complement system occurs via three different pathways, which all ultimately lead to the formation of the membrane attack complex (MAC) and release of the anaphylatoxins: (1) The classical pathway is activated by antibody-antigen complexes; (2) The alternative pathway is activated at a constant low level via “tick-over” (spontaneous hydrolysis) of Complement component 3 (C3), a protein of the immune system; (3) The lectin pathway is activated by carbohydrates frequently found on the surface of microbes. According to the applicant, all pathways of complement activation result in the formation of C3 convertase (“proximal complement”), and converge at the cleavage of C5 leading to the generation of C5a and C5b by the C5 convertase enzyme complexes (“Terminal complement”). The applicant explained that C3 is the most abundant complement protein in plasma, occurring at a concentration of 1.2 mg/mL and C3 cleavage products bridge the innate and the adaptive immune systems. The applicant also explained that C3a acts as an anaphylatoxin and is a mediator of inflammatory processes and C3b opsonizes the surface of recognized pathogens and facilitates phagocytosis and binds C3 convertase to form C5 convertase. The applicant also explained that C5 convertase cleaves C5 into C5a and C5b; C5a is chemotactic agent and anaphylatoxin, causing leukocyte activation, endothelial cell activation, and proinflammatory and prothrombotic effects.
According to the applicant, imbalance between complement activation and regulation leads to host tissue damage, and congenital deficiencies in the complement system can lead to an increased susceptibility to infection. The applicant explained that the complement system is also associated with the pathogenesis of non-infectious diseases such as chronic inflammation, autoimmune diseases, thrombotic microangiopathy, transplant rejection reactions, ischemic, neurodegenerative age-associated diseases, and cancer. According to the applicant, the complement system is also recognized as important in the antibody-mediated autoimmune disease AQP4 antibody-positive NMOSD. The applicant stated that Soliris® is the first and only FDA approved treatment for adult patients with NMOSD who are AQP4 antibody-positive that is proven to reduce the risk of relapse.
The incidence of NMOSD in the United States is 0.7/100,000 while the prevalence is 3.9/100,000 population.
According to the applicant, Soliris® is administered via an IV infusion by a healthcare professional. The applicant explained that for adult patients with neuromyelitis optica spectrum disorder, Soliris® therapy consists of 900 mg weekly for the first 4 weeks, followed by 1200 mg for the fifth dose 1 week later, then 1200 mg every 2 weeks thereafter. According to the applicant, Soliris® should be administered at the recommended dosage regimen time points, or within 2 days of these time points. The applicant also explained that for adult and pediatric patients with NMOSD, supplemental dosing of Soliris® is required in the setting of concomitant plasmapheresis or plasma exchange, or fresh frozen plasma infusion (PE/PI).
The applicant explained that Soliris® has a boxed warning for risk of serious meningococcal infections. According to the applicant, life-threatening and fatal meningococcal infections have rarely occurred in patients treated with Soliris® and can be mitigated with proper vaccination. The applicant explained that by blocking the terminal complement system, Soliris® increases the risk of meningococcal and encapsulated bacterial infection. According to the applicant, all the patients in a pivotal trial received meningococcal vaccination, and no cases of meningococcal infection were reported. The applicant also noted that Soliris® is available only through a restricted program under a Risk Evaluation and Mitigation Strategy (REMS) and under the Soliris® REMS, prescribers must enroll in the program.
With respect to the newness criterion, FDA approved Soliris® for the indication of treatment of NMOSD in adult patients who are AQP4 antibody positive on June 27, 2019. Soliris® was first approved by FDA on March 19, 2007 for the treatment of patients with paroxysmal nocturnal hemoglobinuria (PNH) to reduce hemolysis, followed by
According to the applicant, patients with NMOSD are currently identified by ICD–10–CM diagnosis code: G36.0 Neuromyelitis optica (Devic's syndrome). The applicant submitted a request for approval for a unique ICD–10–PCS procedure code for the administration of Soliris® beginning in FY 2021 and was granted approval for the following ICD–10–PCS procedure codes effective October 1, 2020: XW033C6 (Introduction of eculizumab into peripheral vein, percutaneous approach, new technology group 6) and XW043C6 (Introduction of eculizumab into central vein, percutaneous approach, new technology group 6).
As stated previously, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and, therefore, would not be considered “new” for purposes of new technology add-on payments.
With regard to the first criterion, whether a product uses the same or similar mechanism of action to achieve a therapeutic outcome, according to the applicant, Soliris® is the only treatment for NMOSD that works by specifically inhibiting the complement cascade as described previously. According to the applicant, Soliris® is the only FDA approved treatment for NMOSD, although several off-label products are used to treat relapse prevention in NMOSD. As mentioned previously, the applicant explained that the formation of the membrane attack complex (MAC) is the end product of the activated complement system which is directly responsible for the damage to astrocytes leading to astrocytopathy (astrocyte death) and the ensuing neurologic damage associated with NMOSD and relapses.
With respect to the second criterion, whether a product is assigned to the same or a different MS–DRG, the applicant stated that cases involving the administration of Soliris® will likely be assigned to the same MS–DRGs as other therapies that are currently used but not indicated to treat NMOSD. These therapies that are used off-label include axiothiprine, rituximab, low-dose steroids (prednisone), mycophenolate mofetil, methotrexate, mitoxantrone, cyclophosphamide, tacrolimus, tocilizumab, cyclosporin A, and plasma exchange. As stated previously, the applicant asserted that Soliris® is the first approved treatment for NMOSD in adult patients who are AQP4 antibody positive.
With respect to the third criterion, whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population, the applicant maintained that although Soliris® will be treating the same disease and patient population as currently available therapies, it will improve the treatment of NMOSD as there were previously no FDA labeled treatments. As stated previously, the applicant asserted that Soliris® is the first approved treatment for NMOSD in adult patients who are AQP4 antibody positive.
In summary, the applicant asserted that Soliris® meets the newness criterion because it is the only FDA approved treatment for NMOSD that works by specifically inhibiting the complement cascade. We invited public comments on whether Soliris® is substantially similar to other technologies and whether Soliris® meets the newness criterion.
Based on these comments and on information submitted by the applicant as part of its FY 2021 new technology add-on payment application for Soliris®, as discussed in the proposed rule (85 FR 32653) and previously summarized, we believe that Soliris® has a unique mechanism of action in the treatment of patients with AQP4 antibody-positive NMOSD. Therefore, we believe Soliris® is not substantially similar to existing treatment options and does meet the newness criterion. We consider the beginning of the newness period to commence when Soliris® was approved by FDA for the indication of treatment of NMOSD, on June 27, 2019.
With regard to the cost criterion, the applicant conducted the following analysis to demonstrate that the technology meets the cost criterion. The applicant searched claims in the FY 2018 MedPAR final rule dataset reporting an ICD–10–CM diagnosis code of G36.0.
This search identified 1,151 cases primarily spanning 14 MS–DRGs. According to the applicant, cases representing patients who may be eligible for treatment with Soliris® for NMOSD would most likely map to MS–DRGs 058, 059 and 060 (Multiple Sclerosis and Cerebellar Ataxia with MCC, with CC and without CC/MCC, respectively)—the family of MS–DRGs for multiple sclerosis & cerebellar ataxia. According to the applicant, these three MS–DRGs were three of the top four MS–DRGs by volume to which cases reporting a diagnosis code G36.0 were assigned, and together these MS–DRGs accounted for about 32 percent of the 1,151 originally identified cases reporting a diagnosis code G36.0. Consequently, the applicant limited its analysis to the 376 cases that grouped to these three MS–DRGs (058, 059 and 060).
The applicant performed its cost analysis based on the 376 claims assigned to MS–DRGs 058, 059 and 060. The applicant first removed charges for other technologies. According to the applicant, Soliris® would replace other drug therapies, such as azathioprine, methotrexate, and rituximab, among others. Because it is generally not possible to differentiate between different drugs on inpatient claims, the applicant removed all charges in the drug cost center. The applicant also removed all charges from the blood cost center, because Soliris® will replace plasma exchange procedures. Lastly, the applicant removed an additional $12,000 of cost for the plasma exchange procedural costs, based on an internal analysis of the average cost of plasma exchange. To convert these costs to charges, the applicant used the “other services” national average cost-to-charge ratio (0.346). According to the applicant, this was likely an overestimate of the charges that would be replaced by using Soliris®.
After removing charges for the prior technology to be replaced, the applicant standardized the charges. The applicant
Based on the aforementioned analysis, the applicant computed a final inflated average case-weighted standardized charge per case of $72,940, as compared to a calculated threshold value of $44,420. Because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount, the applicant asserted that the technology meets the cost criterion.
We note that, in the proposed rule, we inadvertently omitted the charges for Soliris® in the applicant's cost analysis. After accounting for these charges, the applicant computed a final inflated average case-weighted standardized charge per case of $172,867, which exceeds the calculated threshold value of $44,420. However, as previously noted, the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount even without the addition of charges for Soliris®. We invited public comments on whether Soliris® meets the cost criterion.
We did not receive any public comments on whether Soliris® meets the cost criterion. Based on the information submitted by the applicant as part of its FY 2021 new technology add-on payment application for Soliris®, as discussed in the proposed rule (85 FR 32652 through 32655) and previously summarized, the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount. Therefore, Soliris® meets the cost criterion.
With respect to the substantial clinical improvement criterion, the applicant asserted that Soliris® represents a substantial clinical improvement over existing technologies because it significantly improves clinical outcomes relative to services or technologies previously available, as demonstrated by the applicant's clinical data and patient outcomes, such as the prevention of relapses in patients with NMOSD.
The applicant provided a randomized, controlled trial in support of its claims of reduction of first-adjudicated on-trial relapse with Soliris® (PREVENT).
The applicant also submitted a poster presentation of post hoc efficacy analyses in pre-specified subgroups from the PREVENT study.
As stated previously, the applicant asserted that Soliris® represents a substantial clinical improvement over existing technologies because it reduces relapses in patients with NMOSD. The applicant explained that the PREVENT study demonstrated several endpoints. The applicant explained that Soliris® reduced first adjudicated on-trial relapse with eculizumab in comparison to placebo with a 94 percent relative risk reduction (Hazard Ratio, 0.006; 95% CI, 0.02–0.20). The applicant also explained that 97.9 percent of Soliris® patients were relapse free at 48 weeks, compared to 63.2 percent for the placebo group. The applicant further noted that in a subgroup of patients utilizing monotherapy (patients on eculizumab or placebo only, without concomitant immunosuppressant agents), 100 percent of Soliris® patients were relapse free at 48 weeks compared to 60.6 percent for placebo. The applicant also explained that in the PREVENT subgroup analysis presented as a poster, the treatment effect was observed regardless of whether it was used as a monotherapy or with concomitant ISTs (corticosteroids alone, azathioprine, mycophenolate mofetil); previous IST use (including rituximab); geographical region; age; sex; and race.
The applicant also explained that the Soliris® U.S. Prescribing Information contains the following information on resource utilization in the applicant's phase III trials (corticosteroid use, plasma exchange treatment, and hospitalizations): Compared to placebo-treated patients, the PREVENT study showed that Soliris®-treated patients had reduced annualized rates of (1) hospitalizations (0.04 for Soliris® versus 0.31 for placebo), (2) of corticosteroid administration to treat acute relapses
After reviewing the information submitted by the applicant as part of its FY 2021 new technology add-on payment application for Soliris, we stated in the proposed rule that we are concerned that the applicant provided only one study in support of its assertions of substantial clinical improvement, which is the PREVENT trial, with additional supporting documents all based on the same trial. We noted that the study compared Soliris to placebo but that there was no comparison of Soliris to currently available treatments to gauge real world efficacy, nor was there information about how these current treatments work and why they are ineffective. Furthermore, in the PREVENT trial, the applicant did not provide the dosage amounts for the patients on continuing medication in addition to placebo or Soliris. We stated that it is not clear to us if the patients receiving Soliris had higher dosages of continuing medications than those in the placebo group. We stated that we would be interested in more information about the dosage amounts in the treatment and control groups in the PREVENT trial. We invited public comment on whether Soliris® technology meets the substantial clinical improvement criterion.
With respect to the concern that the applicant provided only one study in support of its assertions of substantial clinical improvement, the PREVENT trial, the applicant responded that although evidence from two or more well-controlled studies is a common benchmark for demonstrating efficacy, regulatory agencies (including FDA) have acknowledged that a single adequate and well-controlled study can, in some circumstances, constitute sufficient basis for a demonstration of clinical efficacy. According to the applicant, reliance on single studies is typically limited to situations in which the trial has demonstrated a clinically meaningful effect on mortality or irreversible morbidity, and confirmation of the result with a second trial would be practically or ethically difficult to carry out. The applicant noted in this context that clinical trials for NMOSD in particular present challenges due to the rarity of the disease, ethical concerns regarding placebo-controlled designs, and a lack of validated outcome measures or biomarkers.
According to the applicant, the PREVENT study was an adequately designed and well-controlled trial based on general FDA guidance on rare disease clinical trials and on specific recommendations made by the Center for Drug Evaluation and Research. The applicant reiterated that the PREVENT study was a large, multicenter study, involved a double-blind randomized design, and enrolled patients who demonstrated a large unmet medical need (≥2 relapses in previous 12 months, or ≥3 relapses in previous 24 months with a least one relapse in the previous 12 months). The applicant also pointed out that many of these patients were on corticosteroids and immunosuppressive therapies (ISTs), which are used off-label in patients with NMOSD. Finally, the applicant repeated several of the core findings from the PREVENT trial, with regard to the comparative effectiveness of Soliris.
With respect to the concern that the PREVENT trial compared Soliris to placebo, but that there was no comparison of Soliris to currently available treatments to gauge real world efficacy, the applicant responded that at the start of the PREVENT trial, there were no other FDA-approved therapies for managing NMOSD. The applicant further asserted that even today, the other off-label immunosuppressant therapies (ISTs) used in the treatment of NMOSD (including corticosteroids, mycophenolate mofetil, azathioprine, tacrolimus, and rituximab) are employed primarily based on empiric evidence, but there is no uniform consensus on appropriate standard of care. Given this, in order to evaluate the efficacy of Soliris in NMOSD, a randomized, placebo-controlled trial was necessary, according to the applicant.
The applicant also noted that the PREVENT trial included comparisons involving several of the available IST treatments, when used with Soliris, to use of the same IST treatments with placebo. The PREVENT trial included an eculizumab arm and a placebo arm, and patients in both arms could continue to receive ISTs (including corticosteroids, azathioprine, and/or mycophenolate mofetil) at stable dosages throughout the study. According to the applicant, the PREVENT trial demonstrated statistically persuasive findings showing the effectiveness of Soliris in preventing NMOSD relapses, including among the subset of study patients who also received maintenance treatment with ISTs.
With respect to the concern that the applicant did not provide information about how the alternative IST treatments for NMOSD work, and why these are ineffective, the applicant asserted that it cannot explain how these current, off-label treatments work, but the available data, which are primarily from case reports and small prospective or retrospective studies, suggest that these alternatives are not effective.
According to the applicant, current treatment goals for NMOSD rely on long-term stabilization of disease course by preventing relapses and relapse-associated symptoms. The available efficacy and safety data for the use of non-FDA-approved therapies in patients with NMOSD is primarily from case reports and small prospective or retrospective studies. In addition, despite increasingly common use of rituximab off-label as a preferred therapy in NMOSD, experience in patients with NMOSD is mostly derived from retrospective analyses. According to the applicant, approximately one-third of patients enrolled in PREVENT had previously received rituximab, but not within 3 months before enrolling in PREVENT.
The applicant then asserted that available data show that current IST treatments are not effective in the long-term control of NMOSD. The applicant noted data from a study showing that the five-year prognosis of patients with AQP4-IgG seropositive NMOSD is:
• 55% relapse within one year of onset;
• 22% required canes, crutches, or braces to walk (95% CI 15%–29%);
• 8% restricted to bed, chair, or wheelchair (95% CI 3%–13%);
• 41% legally blind in one or both eyes (95% CI 33%–50%); and
• 9% legally blind in both eyes (95% CI 4%–14%)
The applicant concluded that in the PREVENT trial, the hazard ratio based on a stratified Cox proportional hazards model for relapse was 0.06 (95% CI, 0.02 to 0.20) indicating that Soliris-treated patients experienced a 94% relative relapse risk reduction (p <0.0001) compared to patients on placebo. The time to the first adjudicated on-trial relapse was significantly longer in eculizumab-
With regard to the concern that it was not clear if the patients in the PREVENT study who received Soliris had higher dosages of continuing IST medications than those in the placebo group, the applicant provided additional information on the dosage of those medications. The applicant acknowledged that the inclusion of patients receiving concomitant ISTs in PREVENT raised the possibility that the treatment effect ascribed to Soliris might have resulted from one of the other background therapies instead. However, the applicant asserted that several approaches were taken in PREVENT to mitigate the potentially confounding influence of concomitant ISTs. In particular, background IST dosages were not permitted to change during the trial, to ensure that increased IST dosages did not confound efficacy evaluations. Also, the total daily corticosteroid dose should not have exceeded 20 mg/day of prednisone or equivalent, to ensure that no significant imbalance between groups in regards to corticosteroid use could exist.
The applicant also provided additional data showing that the average doses of concomitant ISTs (Azathioprine; Corticosteroids; Mycophenolate Mofetil) in patients randomized to the eculizumab and placebo groups in PREVENT were similar, thereby arguing against any imbalance between treatment groups that may have influenced the efficacy results.
In addition, several other commenters wrote letters of support for the Soliris® new technology add-on payment application, in which they asserted that Soliris® had been shown effective in the PREVENT trial, and therefore that Soliris® meets the substantial clinical improvement criterion. A few of the commenters cited their own clinical experience in working with NMOSD patients, and either described the potential value of Soliris® based on their own experience, or based on the unique mechanism of action of Soliris®.
After consideration of the public comments we received, we have determined that Soliris® meets all of the criteria for approval for new technology add-on payments. Therefore, we are approving new technology add-on payments for Soliris® for FY 2021. Cases involving the use of Soliris® that are eligible for new technology add-on payments will be identified by ICD–10–PCS procedure codes XW033C6 and XW043C6.
In its application, the applicant stated that Soliris® is available in a 30ml package with a strength of 10mg/1ml. According to the applicant, the WAC per package of Soliris® is $6,523. The applicant stated that the typical patient will receive a 900mg dose each week the patient is in the hospital, which is equivalent to three packages for a cost of $19,569 per week. Based on the cases in the applicant's sample, the applicant calculated that the average cost per hospital visit per patient for Soliris® is $28,416.69, which is approximately 1.45 doses per hospital stay. However, according to FDA labeling, all packages of Soliris® are single-dose. Therefore, we have determined that cases involving Soliris® would incur an average cost of $32,615, which is the equivalent of 5 packages (900mg per dose × 1.45 doses per hospital stay = 1,305mg per hospital stay/300mg per package = 4.35 vials). Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the costs of the new medical service or technology, or 65 percent of the amount by which the costs of the case exceed the MS–DRG payment. As a result, the maximum new technology add-on payment for a case involving the use of Soliris® is $21,199.75 for FY 2021.
Stryker, Inc., submitted an application for new technology add-on payments for the SpineJack® Expansion Kit (hereinafter referred to as the SpineJack® system) for FY 2021. The applicant described the SpineJack® 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 explained that the SpineJack® system is designed to be implanted into a collapsed vertebral body (VB) via a percutaneous transpedicular approach under fluoroscopic guidance. According to the applicant, once in place, the intravertebral implants are expanded to mechanically restore VB height and maintain the restoration. The applicant explained that the implants remain within the VB and, together with the delivered bone cement, stabilize the restoration, provide pain relief and improve patient mobility. According to the applicant, the SpineJack® system further reduces the risk of future adjacent level fractures (ALFs).
The applicant explained that the SpineJack® system is available in three sizes (4.2, 5.0 and 5.8 mm), and implant size selection is based upon the internal cortical diameter of the pedicle. According to the SpineJack® 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.
The applicant explained that using a bilateral transpedicular approach, the SpineJack® implants are inserted into the fractured VB. 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.
The applicant further explained that once the desired expansion has been
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,
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 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® 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.
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® implant attempts to mechanically restore VB height, but it has not demonstrated superiority to BKP for this clinical outcome.
With respect to the newness criterion, the SpineJack® Expansion Kit received FDA 510(k) clearance on August 30, 2018, based on a determination of substantial equivalence to a legally marketed predicate device. We note, except for this paragraph summarizing FDA clearance documentation and market availability, we refer to the SpineJack® Expansion Kit in this final rule as the SpineJack® system. The applicant explained that although the SpineJack® 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 11, 2018. As we discussed previously, the SpineJack® 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. In the FY 2021 IPPS/LTCH PPS proposed rule, we noted that the applicant submitted a request for approval for a unique ICD–10–PCS procedure code for the implantation of the SpineJack® Expansion Kit beginning in FY 2021. The applicant was granted approval for
As discussed previously, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and therefore would not be considered “new” for purposes of new technology add-on payments.
With regard to the first criterion, whether a product uses the same or similar mechanism of action to achieve a therapeutic outcome, according to the applicant, there are several factors that highlight the different mechanism of action in treating osteoporotic VCFs with the SpineJack® system compared to other BKP implants to reduce the incidence of ALFs and improve midline VB height restoration. According to the applicant, these differences include implant construction, mechanism of action, bilateral implant load support and >500 Newtons (N) of lift pressure.
The applicant described the SpineJack® 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).
According to the applicant, the SpineJack® system implant exerts lifting pressure on the fracture through a mechanism that may be likened to the action of a scissor car jack. The applicant explained that following the insertion of the implant into the vertebral body (VB), it is progressively expanded though actuation of an implant tube that pulls the two ends of the implant towards each other and the longitudinal compression on the implant causes it to open in a craniocaudal direction. According to the applicant, the force generated by the bilateral the SpineJack® system implants varies according to implant size, ranging from 500–1,000 Newtons for fracture reduction and superior endplate lift. In addition, the applicant explained that the SpineJack® system implant provides symmetric, broad load support under the fractured endplate and spinal column which differentiates the mechanism of action from BKP.
The applicant stated that the SpineJack® system implant is uniquely constructed from a titanium alloy, which the applicant claims 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® 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 asserted that this feature significantly reduces the risk of vertebral endplate breakage while it further allows functional recovery of the injured disc.
According to the applicant, the expansion of the SpineJack® system implants creates a preferential direction of flow for the bone cement; 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 asserted that the interdigitation of bone cement creates a broad supporting ring under the endplate, which is essential to confer stability to the VB.
The applicant explained that the SpineJack® system 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.
According to the applicant, the Kiva® 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® 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® system is different from the SpineJack® system. The applicant explained that during the procedure that involves implanting the Kiva® 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 of height of 15 mm. The applicant stated that the lifting direction of the Kiva® system 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® system had an average of 2.6 coils deployed.
The applicant summarized the differences and similarities of the SpineJack® system, BKP, and PEEK coiled implant as follows: (1) With respect to construction, the SpineJack® system is made of Titanium-6-Aluminum-4-Vanadium compared to
With respect to the second criterion, whether a product is assigned to the same or a different MS–DRG, the applicant did not specify whether it believed cases involving the SpineJack® system would be assigned to the same MS–DRG as existing technology. However, we note that the MS–DRGs the applicant included in its cost analysis were the same MS–DRGs to which cases involving BKP procedures are typically assigned.
With respect to the third criterion, whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population, the applicant did not specifically address whether the technology meets this criterion. However, the applicant generally summarized the disease state that the technology treats as osteoporotic VCFs, and described other treatment options for osteoporotic VCFs as including VP, BKP and the PEEK coiled implant.
In summary, the applicant asserted that the SpineJack® system is not substantially similar to any existing technology because it utilizes a different mechanism of action, when compared to existing technologies, to achieve a therapeutic outcome.
We invited public comments on whether the SpineJack® system is substantially similar to other currently available technologies and whether the SpineJack® system meets the newness criterion.
In response to CMS' concern that the applicant did not specify whether it believed cases involving the SpineJack® system would be assigned to the same MS–DRGs as existing technology, the applicant provided additional clarification, and acknowledged that the SpineJack® system would be assigned to the same MS–DRGs as existing technology for vertebral augmentation.
In response to CMS' concern that the applicant did not specifically address whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population, the applicant stated that the SpineJack® system is used in the reduction of osteoporotic VCFs, and does target the same or similar type of disease and the same or similar patient population as targeted by VP, BKP and other mechanical vertebral augmentation systems.
Two commenters asserted that the applicant's description of the mechanism of action of the SpineJack® system relative to other implant devices (including BKP and the Kiva® system) contained important inaccuracies, including with regard to the claims that the SpineJack® system acts uniquely to achieve craniocaudal expansion, bilateral load support, and lift pressure >500 Newtons. The commenters stated that BKP does offer craniocaudal expansion while creating a void for safer cement fill. Furthermore, with respect to bilateral load support, according to the commenters, BKP has been offered since 1998 as a bilateral procedure option to maximize lift potential and reduce stress exerted on endplates. The commenters went on to explain that BKP provides bilateral symmetric load support to fractured endplates by providing a larger surface area when restoring height. Finally, the commenters asserted that several of the commenter's claims of superiority for the SpineJack® system were misleading, and furthermore that the newest generation of BKP implants is capable of inflating to 700 psi and generating a lift force of 1200 Newtons.
Another commenter made a different substantial similarity argument, with regard to the SpineJack® system and the Kiva® system. The commenter asserted that both the Kiva® system and SpineJack® systems use a similar mechanism of action (mechanical lift) to achieve a therapeutic outcome (reducing osteoporotic VCFs). The commenter noted that although the way the implant provides mechanical expansion within the vertebral body is different between the Kiva® and SpineJack® systems, both processes still qualify as mechanical expansion. The commenter described several other functional similarities in regard to the effect achieved by the Kiva® and SpineJack® systems, and further pointed out that the Kiva® system served as the predicate device for the SpineJack® system, with regard to the FDA 510(k) clearance process for the SpineJack® system. On this basis, the commenter asserted that the Kiva® and the SpineJack® system are substantially similar technologies.
One commenter expressed their general belief that the SpineJack® system meets the new technology add-on payment newness criterion because it utilizes a distinct mechanism of action, especially in comparison to the mechanisms of action utilized by the Kiva® system and balloon kyphopasty.
After consideration of the public comments we received and information submitted by the applicant as part of its FY 2021 new technology add-on payment application for the SpineJack® system, as discussed in the proposed rule (85 FR 32656) and previously in this final rule, we believe that the SpineJack® system has a unique mechanism of action in the treatment of patients with osteoporotic VCFs. Therefore, we believe that the SpineJack® system is not substantially similar to existing treatment options and meets the newness criterion. We consider the beginning of the newness period to commence following the approval of the SpineJack® system by the FDA, on the date when it became commercially available on the U.S. market, which was October 11, 2018.
With regard to the cost criterion, the applicant conducted the following analysis to demonstrate that the technology meets the cost criterion. The applicant searched the FY 2018 MedPAR file for inpatient hospital claims that reported the following ICD–10–PCS procedure codes: 0PS43ZZ (Reposition thoracic vertebra, percutaneous approach) in combination with 0PU43JZ (Supplement thoracic vertebra with synthetic substitute, percutaneous approach) and 0QS03ZZ (Reposition lumbar vertebra, percutaneous approach) in combination with 0QU03JZ (Supplement lumbar vertebra with synthetic substitute, percutaneous approach). According to the applicant, the results included cases involving BKP procedures. This resulted in 15,352 cases spanning approximately 130 MS–DRGs, with approximately 77 percent of those cases (n=11,841) mapping to the following top 6 MS–DRGs:
The applicant performed two separate analyses with regard to the cost criterion, one based on 100 percent of the claims reporting the specified ICD–10–PCS procedure codes, and the second based on the 77 percent of claims mapping to the top six MS–DRGs.
The applicant used the following methodology for both analyses. The applicant first removed the charges for the prior technology being replaced by the SpineJack® system. The applicant explained that it estimated charges associated with the prior technology as 50 percent of the charges associated with the category Medical Surgical Supply Charge Amount (which included revenue centers 027x). The applicant stated that use of the SpineJack® system would replace some but not all of the device charges included in these claims, as some currently used medical and surgical supplies and devices would still be required for patients during their hospital stay, even after substituting the SpineJack® system for BKP and other surgical interventions. The applicant stated that it was unable to determine a more specific percentage for the appropriate amount of prior medical and surgical supply charges to remove from the relevant patient claims, but asserted that removing 50 percent of the charges was a conservative approach for calculation purposes. The applicant then standardized the charges and inflated the charges from FY 2018 to FY 2020. The applicant reported using an inflation factor of 11.1 percent, as published in the FY 2020 IPPS final rule (84 FR 42629).
The applicant then calculated and added the charges for the SpineJack® system technology by taking the estimated per patient cost of the device, and converting it to a charge by dividing the costs by the national average CCR (cost-to-charge ratio) of 0.299 for implantable devices from the FY 2020 IPPS/LTCH PPS final rule (84 FR 42179).
We stated in the proposed rule that in the analysis based on 100 percent of claims, the applicant computed a final inflated average case-weighted standardized charge per case of $108,760, as compared to an average case-weighted threshold amount of $77,395. In the analysis based on 77 percent of claims from only the top six MS–DRGs, the applicant computed a final inflated average case-weighted standardized charge per case of $92,904, as compared to an average case-weighted threshold amount of $72,273.
Because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount under both analyses described previously, the applicant asserted that the technology meets the cost criterion. We invited public comments on whether the SpineJack® system meets the cost criterion.
After consideration of the public comments we received and based on the information included in the applicant's new technology add-on payment application, we believe that the SpineJack® system meets the cost criterion.
With regard to the substantial clinical improvement criterion, the applicant asserted that the treatment of osteoporotic vertebral compression fracture (VCF) patients with the SpineJack® 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 asserted are clinically significant adverse events associated with osteoporotic VCF. The applicant also asserted that treatment with the SpineJack® 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 submitted eight studies to support that its technology represents a substantial clinical improvement over existing technologies.
The applicant explained that the SpineJack® 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® system 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® versus Kyphoplasty in Osteoporotic Patients) study. The applicant cited the SAKOS study
The SAKOS study is a prospective, international, randomized, non-inferiority study comparing a titanium implantable vertebral augmentation device (TIVAD), the SpineJack® 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 the SpineJack® system 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 month, due to osteoporosis, (3) fracture(s) that showed loss of height in the anterior, middle, or posterior third of the VB ≥15% but ≤40%, 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% mm at 2 weeks after initiation of fracture care. Eleven of the originally recruited patients were subsequently excluded from surgery (9 randomized to the SpineJack® system 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 (the SpineJack® 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
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 the SpineJack® system and BKP respectively (p=0.0016). The additional composite endpoint analyzed in observed cases resulted in a higher responder rate for the SpineJack® system compared to BKP at both 6 months (88.1% vs. 60.9%; p<0.0001) and 12 months (79.7% vs. 59.3%; p<0.0001). Midline VB height restoration, tested for superiority using a
Also, according to the SAKOS study, decrease in pain intensity versus baseline was more pronounced in the SpineJack® system 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% in the SpineJack® system group and ≥80% in the BKP group, with a statistically significant difference in favor of SpineJack® at 1 month post-procedure (93.8% vs 81.4%; 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® system 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% for TIVAD, 41.0% 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® system group (27.3% vs. 12.9%; 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® system group (21.9% vs. 7.4%) (a p-value was not reported for this result). The most common AEs reported over the study period were back pain (11.8 percent with the SpineJack® system, 9.6 percent with BKP), new lumbar vertebral fractures (11.8 percent with the SpineJack® system, 12.3 percent with BKP), and new thoracic vertebral fractures (7.4 percent with the SpineJack® system, 21.9 percent with BKP). The most frequent SAEs were lumbar vertebral fractures (8.8 percent with the SpineJack® system; 6.8 percent with BKP) and thoracic vertebral fractures (5.9 percent with the SpineJack® system, 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® system group and 3.3 ±2.4 days for the BKP group (p=0.926, Wilcoxon test).
The applicant also submitted seven 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 asserted that the SpineJack® 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.
The applicant also asserted superiority with respect to mid-vertebral body height restoration with the SpineJack® 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.
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 asserted 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.
The applicant also provided two prospective studies, a retrospective study, and two cadaveric studies in
The applicant asserted that Arabmotlagh M., et al., also supported superiority with regard to VB height restoration. Arabmotlagh M., et al. reported a single-arm observational case series of the SpineJack® system. 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.
The applicant provided a Lin et al., retrospective study of 75 patients that compared radiologic and clinical outcomes of kyphoplasty with the SpineJack® system to vertebroplasty (VP) in treating osteoporotic vertebral compression fractures to support its assertions regarding superiority with regard to midline VB height restoration.
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.
The applicant asserted 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® system group compared to BKP; (2) height maintenance was dependent on the cement volume used; and (3) the group with the SpineJack® system without cement nevertheless showed better results in height maintenance, yet the statistical significance could not be demonstrated.
The applicant asserted that Kruger A., et al. (2015) showed superiority on VB height restoration, because the height restoration was significantly better in the SpineJack® system 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.
The applicant also asserted that use of the SpineJack® 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
The applicant cited the SAKOS trial for statistically significant greater pain relief achieved at 1 month and 6 months after surgery with the SpineJack® 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® system group only; (2) the decrease in pain intensity versus baseline was more pronounced in the SpineJack® 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® system group and ≥80 percent in the BKP group, with a statistically significant difference in favor of the SpineJack® system at 1 month post-procedure (93.8% vs 81.5%; 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® 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 agent medications in the SpineJack® system implant-treated group as compared to those in the BKP-treated group (SJ 7.4% vs. BKP 21.9%, p=0.015). According to the applicant, central analgesic agents included medications such as non-steroidal anti-inflammatory drugs (NSTATEDS), 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® system for the treatment of vertebral compression fractures of traumatic origin (no comparison procedure).
The study reported a significant improvement in back pain at 48 hours after the SpineJack® system 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 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%) (p<0.001) at 48 hours post-surgery (n=22), and −5.7 (SD=2.3) mean change (90.3% 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.
The applicant also cited a retrospective case series, Renaud C., et al., for statistically significant pain relief after surgery with the SpineJack® 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® system devices (no comparison procedure).
After reviewing the information submitted by the applicant as part of its FY 2021 new technology add-on payment application for the SpineJack® system, we noted that the results of the SAKOS trial did 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, we noted that there appeared to be a lack of data comparing the SpineJack® system to other existing technology, such as the PEEK coiled implant (the Kiva® system), particularly since the PEEK coiled system was considered the predicate device for the SpineJack® system FDA 510(k) clearance. Furthermore, we noted that there appeared to be a lack of data comparing the SpineJack® system to conservative medical therapy, although there was an active study posted on
Additionally, we noted that two 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)) did not support vertebral augmentation procedures due to lack of evidence compared to conservative medical management.
With respect to the FY 2021 IPPS/LTCH PPS proposed rule concern that recent systematic reviews of the management of VCF for Cochrane and ASBMR did not support vertebral augmentation procedures due to lack of evidence compared to conservative medical management, the applicant responded that the latest clinical evidence and a policy statement from the International Society for the Advancement of Spine Surgery (ISASS) do provide robust support for the use of vertebral augmentation (VA) over non-surgical management (NSM) in the treatment of osteoporotic VCFs.
According to the applicant, a recent systematic review and meta-analysis by Beall et al. (2018)
Relatedly, the applicant pointed to a policy statement released by the ISASS in 2018, the medical society concluded that, based upon the body of clinical evidence available for the international spine community, it could “confidently advocate that there is strong support for vertebral augmentation in the treatment of symptomatic VCFs.”
The applicant also pointed to recent Local Coverage Determinations on percutaneous vertebral augmentation (PVA) for osteoporotic VCF, published by the seven regional Medicare Administrative Contractors (MACs). According to the applicant, the LCD for Noridian in particular stated that the preponderance of evidence (including empirical studies) favors consideration of PVA in select osteoporotic VCF patients.
Finally, the applicant asserted that the SAKOS trial for the SpineJack® system was specifically designed to address the ASBMR recommendations for more rigorous study of VCF treatments, through larger study sample sizes, inclusion of a placebo control, and more data on serious adverse events.
With respect to the FY 2021 IPPS/LTCH PPS proposed rule concern that the results of the SAKOS trial have not been corroborated in any other randomized controlled trial, and regarding the lack of data comparing the SpineJack® system to technologies other than BKP (like the Kiva® system PEEK coiled implant), the applicant responded that multiple randomized trials are often not conducted to corroborate level one evidence that has been published in a peer-reviewed journal, such as the SAKOS trial data for the SpineJack® system.
The applicant also stated that at least 16 supporting journal articles had been cited in its new technology add-on payment application, highlighting the significant clinical benefit of the SpineJack® system for osteoporotic VCFs.
With regard to the Kiva® system, the applicant stated that the Kiva® system was found to be non-inferior to BKP, but not superior to BKP, in the Kiva® system's own randomized clinical trial study. According to the applicant, because the Kiva® system was not found superior to BKP, has not been widely adopted in the United States, and because the SpineJack® system was found superior to BKP on some outcomes in the SAKOS trial, the applicant concluded that the Kiva® system was not an appropriate clinical comparator for study.
With respect to the FY 2021 IPPS/LTCH PPS proposed rule concern that there is a lack of data comparing the SpineJack® system to conservative medical therapy (or non-surgical management, NSM), the applicant asserted that substantial clinical evidence may be found throughout the published medical literature on improved outcomes with BKP compared to NSM when treating patients with osteoporotic VCFs. According to the applicant, examples of publications that highlight the benefits of BKP treatment include those from the FREE (Fracture Reduction Evaluation) trial, which describe rapid pain reduction and clinical improvements in function and quality of life, as well as radiologic improvements in VB height and kyphotic angulation, among BKP-treated patients vs. NSM-treated patients.
The applicant then cited to several additional studies showing mortality and survival benefits associated with BKP and VP procedures in the treatment of VCF, as compared to NSM. According to the applicant, based upon the body of evidence available, the use of NSM as a comparator treatment to the SpineJack® system for a new clinical study would not be in the best interest of osteoporotic VCF patients. This is primarily due to the increased risk of morbidity and mortality that has been reported in this patient population, particularly among the elderly.
With regard to the active study noted by CMS listed on
One commenter who is a manufacturer of BKP implants made several criticisms of the evidence put forward by the applicant, with regard to whether the SpineJack® system meets the substantial clinical improvement criterion. The commenter emphasized that although the applicant cited the SAKOS study as the basis for concluding that the SpineJack® system meets the substantial clinical improvement criterion, the SAKOS study compared the SpineJack® system to older BKP technology (KyphX), rather than to the most current BKP technology available at the time of the study (Xpander II and Express II). According to the commenter, these second-generation balloons have been available since 2014, generate lift force in excess of 1200 Newtons, and are the only BKP products indicated for the cement resistance technique, whereby one bone tamp is left in place during cement injection and curing to maximize height restoration in a collapsed vertebral body. The commenter suggested that if the SAKOS study had compared the SpineJack® system to these second-generation BKP implants, then the SpineJack® system might not have demonstrated superior performance on secondary outcome measures.
The commenter also offered several additional criticisms of the SAKOS study. The commenter pointed out that the SAKOS study design did not involve an even distribution of the spine levels treated across study arms, and that it is possible that a difference in the levels treated could have contributed to the reduction of ALFs in the SpineJack® system group. The commenter asserted that the vertebral levels T11–L1 are commonly known for higher number of fractures, and that these spinal segments had 14 more levels treated with BKP than with the SpineJack® system in the SAKOS study. According to the commenter, further analysis would be needed to determine if the location of fractures had an effect on the occurrence of ALFs between the two study arms in SAKOS. The commenter also pointed out that it was unclear whether there was any difference in the two treatment groups' bone density metrics, as this was not disclosed in the SAKOS study.
The commenter went on to emphasize that the clinical comparison in the SAKOS study demonstrated the SpineJack® system was non-inferior to BKP at the time of the primary endpoint (12 months); however, there was no significant difference between groups in pain intensity visual analog scale (VAS) score at the final time point, and no difference in Oswestry Disability Index (ODI) or the EQ–5D health status questionnaire at any time point during the study. The commenter acknowledged that SAKOS demonstrated superiority for the SpineJack® system for mid-vertebral height restoration, but emphasized that measures of anterior height, posterior height, and cobb angle showed no difference across the study arms, within the secondary endpoints. The commenter also observed that the SAKOS study showed a similar number of adverse events between study arms, with the SpineJack® system population seeing a higher percentage of serious adverse events.
Finally, the commenter disputed the applicant's assertion that vertebral augmentation treatment with vertebroplasty may alleviate pain, but cannot restore vertebral body height or correct spinal deformity. The commenter likewise disputed the applicant's assertion that BKP attempts to restore vertebral body height, but the temporary correction obtained cannot be sustained over the long-term (85 FR 32656). In countering the applicant's assertions, the commenter referenced three published articles with empirical evidence regarding the impact of BKP on kyphotic angle and VB height restoration.
Another commenter provided a detailed technical criticism of several aspects of the SAKOS trial, and asserted that the SpineJack® system does not meet the substantial clinical improvement criterion. This commenter also stated that the BKP arm of the SAKOS study used an older generation of balloon implants with less ability to deliver lift force and to improve VB height. The commenter asserted that in order to claim superiority for the SpineJack® system, the SAKOS trial should have used the newer generation balloon implants, and that the failure to do so calls into question the SAKOS findings of improved height restoration and reduced ALFs for the SpineJack® system.
The commenter also noted that the SAKOS study reported an exceedingly high 40% rate of disc space extravasation in the balloon kyphoplasty arm. The commenter disputed that this high rate of disc space extravasation is typical based on the literature on BKP, and the commenter cited to two BKP trials which found much lower rates of disc space extravasation.
The commenter offered several additional criticisms with regard to the SAKOS study, including that fractures in the T11–L1 junctional zone were not evenly distributed across study arms, and might have mediated the observed difference in the occurrence of ALFs. The commenter also raised questions about whether the degree of osteoporosis was held consistent across the SAKOS study arms, and whether the inclusion criteria for SAKOS (requiring an initial period of at least 6 weeks of conservative medical therapy) might make the study findings less applicable to the American Medicare population generally. The commenter challenged the applicant's assertion that BKP does not sustain VB height recovery over the long term, and the commenter provided several citations to empirical studies stating the contrary.
The commenter further noted that the applicant only cited one study to support the statement that “research indicates that the restoration of middle VB height may be as important as Cobb angle correction in the prevention of ALFs,” and the commenter asserted that the cited study does not actually support that statement.
The commenter concluded that the current medical standard for prevention of ALFs remains the Cobb angle and anterior VB height measurements. Finally, the commenter also challenged the applicant's assertion 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,” based on results from a single cadaveric study.
Several commenters agreed that the SpineJack® system provides pain reduction based on their clinical experiences. Several commenters also agreed that patients are either pain-free or nearly pain-free based on their clinical experiences. One commenter agreed that the SpineJack® system would theoretically decrease pain based on the study provided. Several commenters believed that decreased pain enhances activities of daily living (ADLs) and overall quality of life for older patients, which may further reduce long term care resource consumption. Several commenters also expressed their belief that the pain reduction the SpineJack® system provides causes patients to require less opioid prescriptions for pain. The commenters cited both the inability of the older adult population to tolerate opioids, the abuse or dependency potential for patients, and potential for misuse by persons other than the prescribed as benefits of a reduction in opioid prescriptions written and dispensed.
Many commenters agreed that they have seen evidence of increased VB height restoration in their clinical experience, and many commenters believed based on their clinical experiences that the SpineJack® system is superior to other product options for these fractures. Commenters cited improved posture, sagittal alignment, improved pulmonary function, and/or better disc health. Several commenters also noted that the SpineJack® system is especially useful in certain subsets of patients, with commenters citing various subgroups including older patients, patients who have already experienced previous compression fractures, who have complex fractures, who have fractures under 3 months old, who have older fractures, who have greater than 25% vertebral body height loss, and/or who have mild to moderate retropulsion of the posterior endplate. Several commenters further noted that in their clinical experience the SpineJack® system requires less cement for stabilization, leading to less risk of cement leakage.
Many commenters believed that the SpineJack® system will reduce ALFs based on their clinical experience, or on review of the SAKOS study. A few commenters believed that the SpineJack® system allows patients to have increased posture correction and locomotion, and that, combined with the reduced ALFs, will lead to a higher quality of life in the future. Many commenters asserted that the SpineJack® system is their preferred treatment option generally.
One commenter believed that the literature regarding vertebral augmentation techniques is inconsistent because of multiple guidelines from various societies that are inconsistent with each other. The commenter believed this disagreement leads to variation in the methodology of research papers to evaluate this technique. The commenter asserted that as a result, the large Cochrane and ASBMR reviews are conglomerations of heterogeneous data which will invariably show no statistical difference.
A few commenters believed that conservative medical management as an option for patients with VCFs is no longer an accepted standard of care. One commenter stated the ASBMR view is inconsistent with multiple Medicare Administrative Contractor local coverage determinations, which indicate that earlier intervention in some patients is supported by the literature.
A few commenters believed that the SAKOS study was well designed despite the lack of a control arm, and supported its claims, including with regard to ALFs, VB height, and superior pain relief. One commenter believed that BKP was the correct comparator for the SAKOS study as the Kiva® system was unable to demonstrate improvement over BKP in a separate study.
After consideration of the public comments received, we believe that commenters have addressed our concerns regarding whether the SpineJack® system meets the substantial clinical improvement criterion and that the SpineJack® system represents a substantial clinical improvement over existing technologies based on the data received from commenters. The data provided from the commenters with clinical experience with vertebral augmentation procedures and the SpineJack® system which included improved pain, VB height restoration and ALF outcomes for patients with osteoporotic VCFs when compared with existing treatments demonstrates substantial clinical improvement.
After consideration of the public comments we received, we have determined that the SpineJack® system meets all of the criteria for approval for new technology add-on payments. Therefore, we are approving new technology add-on payments for the SpineJack® system for FY 2021. Cases involving the use of the SpineJack® system that are eligible for new technology add-on payments will be identified by ICD–10–PCS procedure codes XNU0356 (Supplement lumbar vertebra with mechanically expandable (paired) synthetic substitute, percutaneous approach, new technology group 6) and XNU4356 (Supplement thoracic vertebra with mechanically expandable (paired) synthetic substitute, percutaneous approach, new technology group 6).
In its application, the applicant estimated that the average cost of the SpineJack® system is $5,622.64 per patient. Under § 412.88(a)(2), we limit
Becton Dickinson & Company (BD) submitted an application for new technology add-on payments for the WavelinQ
Hemodialysis, a form of treatment for kidney failure patients, is a procedure that removes wastes, salts, and fluid from a patient's blood when the kidneys can no longer perform these functions. To receive dialysis, patients require a vascular access, such as an arteriovenous (AV) fistula, to connect to the dialysis machine.
The applicant asserted that Endovascular AV fistula creation with the WavelinQ
The applicant asserted that the following ICD–10–CM diagnosis codes are applicable to the WavelinQ
As stated previously, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and, therefore, would not be considered “new” for purposes of new technology add-on payments.
With regard to the first criterion, whether a product uses the same or a similar mechanism of action to achieve a therapeutic outcome, the applicant asserted that the WavelinQ
The applicant indicated the Ellipsys® Vascular Access System (Avenu Medical) has recently been granted marketing authorization by the FDA (January 25, 2019). The applicant asserted that while Ellipsys® is also an endovascular method of creating an AV fistula, there are several important points of differentiation between the two devices and their corresponding procedures. According to the applicant, there are different mechanisms of action, procedural processes, and anatomical locations of fistula creation as follows:
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With regard to the second criterion, whether a product is assigned to the same or a different MS–DRG, the applicant asserted that its MS–DRG analysis showed that cases using the WavelinQ
With regard to the third criterion, whether the use of the new technology involves the treatment of the same or similar type of disease and the same or similar patient population when compared to an existing technology, the applicant stated the WavelinQ
As stated above, the WavelinQ
We also noted that as summarized previously, the applicant provided an explanation for why it believes the WavelinQ
The applicant also stated that the predicate device, the WavelinQ
Another commenter agreed that the creation of endovascular AVFs clearly differs in method of action from surgical AVF creation. However, the commenter stated that while WavelinQ
With regard to the cost criterion, the applicant conducted the following analysis to demonstrate that the technology meets the cost criterion. The applicant searched the FY 2018 MedPAR database for claims reporting an ICD–10–CM diagnosis code of N18.4, N18.5, or N18.6 to identify cases that may be eligible for the WavelinQ
The applicant first removed supply charges with a revenue code of 027X and also removed charges for the operating room. Then the applicant standardized the charges. The applicant noted that in order to provide a conservative estimate it did not inflate the charges. The applicant then added charges for the new technology as well as procedure related charges which included operating room charges.
Based on the FY 2020 IPPS/LTCH PPS final rule correction notice data file thresholds, the average case-weighted threshold amount was $83,372. In the
We invited public comments on whether the WavelinQ
With regard to the substantial clinical improvement criterion, the applicant asserted that the WavelinQ
Surgical arteriovenous fistulae are the recommended type of vascular access for hemodialysis.
According to the applicant, in contrast, results of AVFs created using the WavelinQ
The applicant indicated that a second study, the Novel Endovascular Access Trial (NEAT), which was a statistically powered, prospective, single-arm, multi-center study of 60 evaluable patients and 20 roll-ins using the WavelinQ
The applicant stated that additional analyses comparing endoAVF (using the WavelinQ
The applicant also included a third study, the EASE study, which was a single-center, single-arm prospective study of 32 patients that evaluated the
Additionally, the applicant noted that a fourth study, the EndoAVF EU Study (using the WavelinQ
The applicant asserted the FLEX, NEAT, EASE, and EndoAVF EU Study support that the WavelinQ
The applicant also asserted the reduction in interventions with the WavelinQ
The applicant stated the WavelinQ
The applicant explained some of the clinical and patient benefits of the WavelinQ
The applicant asserted the WavelinQ
The applicant asserted the WavelinQ
With regard to the information previously summarized, we stated in the proposed rule that we are concerned that there is no study directly comparing WavelinQ
We invited public comments on whether the WavelinQ
The applicant also addressed a question regarding available randomized, controlled studies comparing the WavelinQ
The applicant stated that the first study was conducted by Yang et al. and was published in the
• Post-creation procedural event rate was 3.43 per patient year and 0.59 per patient-year (p<0.05) for surgical and WavelinQ
• Average first year post-AVF creation costs per patient-year for patients who received a WavelinQ
The second study was conducted by Arnold et al. and was published in the
• In incident patients, post-creation event rates were 7.22 per patient-year and 0.74 per patient-year (p<0.0001) for surgical and WavelinQ
• In prevalent patients, post-creation event rates were 4.10 per patient-year and 0.46 per patient-year (p<0.0001) for surgical and WavelinQ
• Expenditures for post-creation interventions were $16,494 and $13,389 less in incident and prevalent patients with a WavelinQ
The applicant also provided written comments addressing the availability of data from the EU Post-Market Study. The applicant stated that while there are no plans at this time to publish the EU Post-Market Study in a medical journal, the data have been made available to the public via WavelinQ
The applicant also explained the peer-reviewed, published data from controlled clinical studies. The applicant stated that the studies demonstrate that the WavelinQ
The applicant included a
• Outcomes from Inston et al. demonstrated that the WavelinQ
• Procedural success was 96.7% in WavelinQ
• Mean time to cannulation was 130 days (±86) in the WavelinQ
• Primary patency at 6 and 12 months:
• Mean primary patency was significantly better for the WavelinQ
• Secondary patency at 6 and 12 months:
• The ages in both groups in the study were also generally consistent with other published literature: 57 ± 15 in the WavelinQ
The applicant stated that patients that received the WavelinQ
The applicant asserted that Inston et al. also provides an alternative to retrospective propensity-matched analyses (Yang and Arnold, et al.), and is a new, positive contribution to the overall body of evidence in that it is more reflective of the real-world setting. The applicant claimed these data further support the efficacy of endoAVF with WavelinQ
The applicant claimed that in addition to demonstrating significant improvements in efficacy vs. a surgically created fistula, WavelinQ
The applicant also provided a clinical comparison of the WavelinQ
The applicant further stated that the clinical, technological, and procedural differences between WavelinQ
The applicant also commented in response to CMS's concern regarding whether the composition of clinical trial enrollees is generalizable to the Medicare population. The applicant asserted that an analysis of the 2018 USRDS data shows that patients enrolled in the WavelinQ
The applicant noted that according to the 2018 USRDS report, 47.9 percent of all incident hemodialysis patients are under the age of 65 (52,201/108,895) and that 52.6 percent of all prevalent hemodialysis patients are also under the age of 65 (241,037/457,957).
The applicant asserted that before WavelinQ
The applicant stated the Arnold et al. analysis also demonstrated that WavelinQ
The applicant also stated that a propensity score matched analysis was conducted by Yang et al. that compared
The applicant asserted the study by Yang et al.
The applicant also stated that Arnold et al.
The applicant stated in the incident patient population, WavelinQ
The applicant further stated that in the prevalent patient population, WavelinQ
The applicant also stated that a voluntary recall of WavelinQ
We also received another public comment regarding whether WavelinQ
The commenter stated that percutaneous AVF technology represents a significant clinical improvement relative to surgical AVFs, for patients for which this approach is anatomically suitable. The commenter asserted that WavelinQ
We appreciate the comments and additional information regarding whether the WavelinQ
In addition to the comments we received, CMS also reviewed a published study on the real-world usage of the WavelinQ
Thirty-five patients underwent placement of the WavelinQ
The study concluded that the WavelinQ
After consideration of the public comments we received and based on the information stated above, we believe additional data is needed to demonstrate that WavelinQ
Sage Therapeutics submitted an application for new technology add-on payments for ZULRESSO
According to the applicant, PPD is a major depressive episode that occurs following delivery, though onset of symptoms may occur during pregnancy. Per the applicant, mothers with PPD may present with a variety of symptoms, which must be present most of the time for 2 weeks or more in order for PPD to be diagnosed. These depressive symptoms may persist throughout and beyond the first postnatal year if PPD is left untreated. As described by the applicant, these symptoms may include trouble bonding with, and doubt in ability to care for, their baby; thoughts of self-harm or harm to the baby; feelings of worry, anxiety, sadness, moodiness, irritability, and/or restlessness; crying more often or without apparent reason; experiencing anger or rage; sleep disturbances; changes in appetite; difficulty concentrating; and withdrawal from friends and family. According to the applicant, PPD may affect the mother's ability to function with potential considerable risks such as self-harm, and PPD may also be associated with suicidal ideation.
The applicant stated that PPD is one of the most common complications during and after pregnancy, affecting more than 400,000 women in the United States. The applicant noted that women diagnosed with PPD who are disabled may be otherwise eligible for Medicare, and some may be eligible for Medicaid as well. While the studies summarized did not specifically target Medicare patients, the applicant believes that these results can be generalized to Medicare patients diagnosed with PPD.
The applicant stated that the precise cause of PPD is unknown, though there are multiple hypotheses about the mechanism of disease of PPD. The applicant reported that levels of allopregnanolone, the predominant metabolite of progesterone, increase during pregnancy and decrease substantially after childbirth. Per the applicant, preclinical evidence indicated that rapid changes in levels of allopregnanolone confer dramatic behavioral changes and may trigger PPD in some women.
As reported in a study submitted by the applicant, the GABAergic deficit hypothesis of depression states that a deficit of GABAergic transmission in defined neural circuits is causal for depression. According to the study, conversely, an enhancement of GABA transmission, including that triggered by selective serotonin reuptake inhibitors or ketamine, has antidepressant effects. The study reported that ZULRESSO
The applicant stated that prior to FDA approval of ZULRESSO
• Selective serotonin reuptake inhibitors (SSRIs), such as sertraline, fluoxetine, and paroxetine, which selectively block the reuptake of serotonin;
• Serotonin and norepinephrine reuptake inhibitors (SNRIs) such as venlafaxine, duloxetine, and milnacipran, which selectively block the reuptake of serotonin and norepinephrine;
• Monoamine oxidase inhibitors (MAOIs) such as phenelzine, which cause an accumulation of amine neurotransmitters and are not commonly used, owing to the adverse reactions with concomitant medications and various food groups; and
• Tricyclic antidepressants (TCAs), like nortriptyline, which are antimuscarinic drugs that block the reuptake of both serotonin and norepinephrine and have variable sedative properties.
The applicant indicated that non-pharmacological treatments, such as psychotherapies, including cognitive behavioral therapy, psychosocial community-based intervention, and dynamic therapy have also been used to treat PPD.
Based on market research conducted by the applicant, the applicant asserted that current treatment options for patients who have been diagnosed with PPD present potential challenges for patients such as: Long wait times for an appointment and difficulties scheduling follow-up appointments with providers; insurance coverage challenges; delays or interruptions in treatment; changes in medications or doses (which may or may not be effective): And the lengths of the treatment plan being longer than expected.
With respect to the newness criterion, FDA granted ZULRESSO
As discussed previously, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and would not be considered “new” for purposes of new technology add-on payments.
With regard to the first criterion, whether a product uses the same or a similar mechanism of action to achieve a therapeutic outcome, according to the applicant, ZULRESSO
With respect to the second criterion, whether a product is assigned to the same or a different MS–DRG, the applicant stated that the antidepressants and non-pharmacological treatments historically used to treat PPD are traditionally used in the outpatient setting; however, patients with more severe symptoms of PPD who are hospitalized would likely have the same diagnosis (F53.0—Postpartum depression) and be assigned to the same MS–DRG as ZULRESSO
With respect to the third criterion, whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population, according to the applicant, the use of ZULRESSO
As summarized previously, the applicant maintains that ZULRESSO
With regard to the cost criterion, the applicant used the FY 2018 MedPAR Hospital Limited Data Set (LDS) to determine the MS–DRGs to which cases representing potential patient hospitalizations that may be eligible for treatment involving ZULRESSO
The applicant did not remove charges for the prior technology or the technology being replaced because the historical treatment regimens, such as oral anti-depressants, do not need to be stopped during treatment with ZULRESSO
As noted previously, the 76 cases reporting ICD–10–CM diagnosis code F53.0 span 26 different MS–DRGs, with very few observations in most of these MS–DRGs. We noted in the proposed rule that a sub-analysis of the top 2 MS–DRGs—which represent 49 percent of the cases—would still exceed the threshold. We also noted that a sub-analysis assigning 100 percent of the cases to the highest paying of these 26 MS–DRGs would also still exceed the threshold.
We stated in the proposed rule that we are concerned with the limited number of cases in the sample the applicant analyzed. However, we acknowledged the difficulty in obtaining cost data for a condition that has low prevalence in the Medicare population. We invited public comments on whether ZULRESSO
With regard to substantial clinical improvement, the applicant asserted that, because there is no other treatment option specifically approved by FDA to treat PPD, ZULRESSO
The first study submitted (202A) was a Phase II, multicenter, randomized, double-blind, parallel-group, placebo-controlled clinical trial with 30-day follow-up in women diagnosed with severe PPD. Patients with severe PPD (n=21) were randomized to receive a single, continuous intravenous infusion of ZULRESSO
The second and third studies submitted (202B and 202C) were Phase III, multicenter, randomized, double-blind, parallel-group, placebo-controlled clinical trials with 30-day follow-up conducted at 30 clinical research centers and specialized psychiatric units in the United States. The studies included women between the ages of 18–45 years, 6 months postpartum or less at screening, with PPD and a qualifying score on the HAM–D. In both studies, patients were randomly assigned to receive a single, continuous 60-hour intravenous infusion of ZULRESSO
The applicant provided data from the clinical studies cited previously to support that ZULRESSO
The applicant cited data from the Phase III multicenter study of patients with severe PPD (202B) that at hour 60, and sustained at day 30, the LS mean reduction in HAM–D total score was significantly greater for the ZULRESSO
The applicant cited data from the Phase III multicenter study of patients with moderate PPD (202C) that at the end of the 60 hour infusion, the LS mean reduction in HAM–D total score was significantly greater in the ZULRESSO
The applicant cited pooled data from the ZULRESSO
The applicant provided data from the clinical studies cited previously to support that ZULRESSO
The applicant cited data from the Phase III study of patients with severe PPD (202B) that patients' functioning scores, as measured by CGI–I, improved at hour 60, and sustained at day 30. The proportion of patients who achieved a CGI–I response (score of “1—very much improved,” or “2—much improved”) at 60 hours was significantly higher in both ZULRESSO
The applicant cited data from the Phase III study of patients with moderate PPD (202C) that the proportion of patients who achieved a CGI–I response was significantly higher for the BRX90 group compared with the placebo group at hour 60. These significant increases in CGI–I response occurred as early as 36 hours and were sustained at day 7.
The applicant provided data from the clinical studies cited previously to support that ZULRESSO
The applicant cited data from the Phase III study of patients with severe PPD (202B) that ZULRESSO
The applicant cited data from the Phase III study of patients with moderate PPD (202C) that ZULRESSO
The applicant cited data from the Phase II study (202A) cited previously that ZULRESSO
We stated in the proposed rule that after reviewing the information submitted by the applicant as part of its FY 2021 new technology add-on payment application for ZULRESSO
With respect to the concern that the patients in the clinical trials were followed up for only 30 days, and the durability of the effects of ZULRESSO
With respect to the concern that the small sample sizes of the trials and the demographic characteristics of the patients recruited for these studies may not have included or sufficiently represented populations that may be at high-risk to develop PPD, the applicant stated that the sample sizes were developed in conjunction with FDA based on FDA guidelines for designing trials with sufficient statistical power to detect the anticipated treatment effect and safety of drugs being developed to treat major depressive disorders. The applicant also stated that in the Phase III studies, ZULRESSO
With respect to the concern whether study participants had time-limited PPD that might have resolved with the passage of time, the applicant stated that untreated PPD may not resolve with time. The applicant referenced studies of major depressive disorders that, per the applicant, show that duration of untreated depression correlates with worse outcomes. The applicant also referenced studies that, per the applicant, suggest that symptoms that may have begun as PPD may persist throughout and beyond the first postnatal year if left untreated.
With respect to the concern whether the outcomes chosen for these studies translate into clinically significant observable improvements in maternal functioning and child interaction, the applicant explained that they selected change in baseline HAM–D scale as the primary endpoint because it is validated, reliable, and accepted by FDA as a primary efficacy endpoint in a patient population with depression, and they selected the CGI–I scale because is accepted by FDA as a secondary endpoint to measure other domains of symptom improvement. The applicant acknowledged that there is no specific data related to ZULRESSO
With respect to the concern that these studies compare the effects of ZULRESSO
With respect to the concern whether the results of the studies would be generalizable to the Medicare population, the applicant believes that these results can be generalized to the patient population that qualifies for Medicare due to disability. The applicant stated that two of the first patients that were treated with ZULRESSO
With respect to the concern whether the adverse events associated with ZULRESSO
We also received other public comments urging CMS to approve the application for new technology add-on payment for ZULRESSO
We remain concerned that all of the studies submitted by the applicant used placebo as control and did not compare the use of ZULRESSO
With regard to the superiority of ZULRESSO
We also remain concerned over the durability of the effects of ZULRESSO
We also remain concerned as to whether study participants had time-limited PPD that might have resolved with the passage of time and whether the outcomes chosen for these studies translate into clinically significant observable improvements in maternal functioning and child interaction.
After consideration of all the information from the applicant, as well as the public comments we received, we are unable to determine that ZULRESSO
As discussed previously, for applications received for new technology add-on payments for FY 2021 and subsequent fiscal years, if a medical device is part of FDA's Breakthrough Devices Program or a product is designated by FDA as a Qualified Infectious Disease Product (QIDP), and received FDA marketing authorization, it will be considered new and not substantially similar to an existing technology for purposes of the new technology add-on payment under the IPPS, and will not need to meet the requirement that it represent an advance that substantially improves, relative to technologies previously available, the diagnosis or treatment of Medicare beneficiaries. These technologies must still meet the cost criterion.
We received 10 applications for new technology add-on payments for FY 2021 under this alternative new technology add-on payment pathway. One applicant withdrew its application prior to the issuance of the proposed rule. Of the remaining nine applications, three of the technologies received a Breakthrough Device designation from FDA and six have been designated as a QIDP by FDA. In accordance with the regulations under § 412.87(e), applicants for new technology add-on payments must have FDA approval or clearance by July 1 of the year prior to the beginning of the fiscal year for which the application is being considered. While we do not typically address in the final rule those applications for which the technology has not received FDA approval for the relevant indication by the July 1 deadline, we are summarizing and responding to comments we received regarding whether the applicant for the NanoKnife System® received the required FDA marketing authorization for this product by July 1. A discussion of these remaining nine applications is presented in this final rule.
Typically, in the annual proposed rule, we provide a summary of each application and describe any concerns we may have regarding whether the technology meets a specific new technology add-on payment criterion. As we discussed in the FY 2020 IPPS/LTCH PPS final rule, we believe it is appropriate to facilitate access to these transformative new technologies and antimicrobials as part of the Administration's commitment to addressing barriers to healthcare innovation and ensuring Medicare beneficiaries have access to critical and life-saving new cures and technologies that improve beneficiary health outcomes. To that end, to provide additional transparency and predictability with respect to these technologies, in the FY 2021 IPPS/LTCH PPS proposed rule we proposed to approve or disapprove each of these nine applications based on whether the technology met the cost criterion. In this section of this final rule, we discuss whether or not each technology will be eligible for the new technology add-on payment for FY 2021. We refer readers to section II.H.8. of the preamble of the FY 2020 IPPS/LTCH PPS final rule (84 FR 42292 through 42297) for a complete discussion of the alternative new technology add-on payment pathways for these technologies.
CVRx submitted an application for the
The BAROSTIM NEO® System received FDA approval on August 16, 2019 and is a Breakthrough Device designated by FDA. Additionally, according to the applicant, the device was available on the market immediately upon FDA approval. Currently, the following ICD–10–PCS procedure codes can be used to uniquely identify the BAROSTIM NEO® System: 0JH60MZ (Insertion of stimulator generator into chest subcutaneous tissue and fascia, open approach) in combination with 03HK0MZ (Insertion of stimulator lead into right internal carotid artery, open approach) or 03HL0MZ (Insertion of stimulator lead into left internal carotid artery, open approach).
With regard to the cost criterion, the applicant used the FY 2018 MedPAR Limited Data Set (LDS) to assess the MS–DRGs to which potential cases representing hospitalized patients who may be eligible for treatment involving the BAROSTIM NEO® System would mapped. The applicant searched for cases with the following combination of existing ICD–10–PCS codes: 0JH60MZ in combination with 03HK0MZ or 03HL0MZ. The applicant determined its search using these procedure codes mapped to MS–DRGs 252, 253, and 254 (Other Vascular Procedures with MCC, with CC, and without CC/MCC, respectively), resulting in 71,431 total claims across these three MS–DRGs.
The applicant then removed charges for the prior technology since the BAROSTIM NEO® System will replace all of the current device charges included in the claims. The applicant explained that it removed all charges associated with the service category Medical/Surgical Supply Charge Amount, which include revenue centers 027x.
The applicant then standardized the charges and inflated the charges by applying the FY 2020 IPPS/LTCH PPS final rule outlier charge inflation factor of 1.11100 (84 FR 42629). The applicant then added the charges for the new technology by converting the cost of the device to charges by dividing the costs by the national average cost-to-charge ratio of 0.299 for implantable devices from the FY2020 IPPS Final Rule (84 FR 42179).
Based on the previous information, the applicant calculated a final average case-weighted standardized charge per case of $194,393 and an average case-weighted threshold of $85,559. Because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount, the applicant asserted that the technology meets the cost criterion.
According to the applicant, since the BAROSTIM NEO® System is used in heart failure patients, the applicant submitted an additional analysis to demonstrate that the technology meets the cost criterion. The applicant revised its first analysis by assessing MS–DRG 291 (Heart Failure and Shock with MCC), 292 (Heart Failure and Shock with CC), and 293 (Heart Failure and Shock without CC/MCC), 242 (Permanent Cardiac Pacemaker Implant with MCC), 243 (Permanent Cardiac Pacemaker Implant with CC), 244 (Permanent Cardiac Pacemaker Implant without CC/MCC), 222 (Cardiac Defibrillator Implant with Cardiac Catheterization with AMI/HF/Shock with MCC), 223 (Cardiac Defibrillator Implant with Cardiac Catheterization with AMI/HF/Shock without MCC), 224 (Cardiac Defibrillator Implant with Cardiac Catheterization without AMI/HF/Shock with MCC), 225 (Cardiac Defibrillator Implant with Cardiac Catheterization without AMI/HF/Shock without MCC), 226 (Cardiac Defibrillator Implant without Cardiac Catheterization with MCC) and 227 (Cardiac Defibrillator Implant without Cardiac Catheterization without MCC) using the same aforementioned ICD–10–PCS codes. The applicant used the same methodology, as previously indicated and calculated a final inflated average case-weighted standardized charge per case of $161,332 and an average case-weighted threshold amount of $55,697. Because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount, the applicant asserted that the technology meets the cost criterion.
In the proposed rule, we stated that we agree with the applicant that the BAROSTIM NEO® System meets the cost criterion and therefore proposed to approve the BAROSTIM NEO® System for new technology add-on payments for FY 2021. As previously noted, there is a combination of ICD–10–PCS procedure codes that can uniquely identify cases involving the BAROSTIM NEO® System.
Based on information from the applicant at the time of the proposed rule, the cost of the BAROSTIM NEO® System is $35,000. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS–DRG payment for the case. As a result, we proposed that the maximum new technology add-on payment for a case involving the use of the BAROSTIM NEO® System would be $22,750 for FY 2021(that is 65 percent of the average cost of the technology).
We invited public comments on whether the BAROSTIM NEO® System meets the cost criterion and our proposal to approve new technology add-on payments for the BAROSTIM NEO® System for FY 2021.
Based on the information provided in the application for new technology add-on payments, and after consideration of the public comments we received, we believe the BAROSTIM NEO® System meets the cost criterion. The BAROSTIM NEO® System received marketing authorization from the FDA on August 16, 2019 for the indication covered by its Breakthrough Device designation.
Therefore, we are finalizing our proposal to approve new technology add-on payments for BAROSTIM NEO® System for FY 2021, and we consider the beginning of the newness period to commence on August 16, 2019 which is when the technology received FDA marketing authorization for the indication covered by its Breakthrough Device designation. Under § 412.88(a)(2)(ii)(A), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS–DRG payment for the case. As a result, we are finalizing a maximum new technology add-on payment of $22,750 for a case involving the use of the BAROSTIM NEO® System for FY 2021 (that is 65 percent of the average cost of the technology). Cases involving the use of
Angiodynamics submitted an application for new technology add-on payments for the NanoKnife® System for FY 2021. The applicant is seeking new technology-add on payments for the use of the NanoKnife® System with six outputs for the treatment of Stage III pancreatic cancer. We noted in the proposed rule that FDA has not yet granted market approval of the NanoKnife® System for use in the treatment of pancreatic cancer. We also noted that the NanoKnife® System has been previously approved by FDA for the use for surgical ablation of soft tissue. Per the applicant, the Nanoknife® System is a medical device consisting of a dedicated generator and specialized electrode probes currently used for inpatient hospital ablation procedures for surgical treatment of soft tissue ablation procedures. The NanoKnife® System is considered a FDA class II device when indicated for soft tissue ablation.
The applicant stated that the NanoKnife® System delivers a series of high voltage direct current electrical pulses between at least two electrode probes placed within a target area of tissue. The electrical pulses produce an electric field which induces electroporation on cells within the target area. The number of electrodes used is dependent on the size and shape of the tumor, and the individual patient's clinical needs.
According to the applicant, electroporation is a technique in which an electrical field is applied to cells in order to increase the permeability of the cell membranes through the formation of nanoscale defects in the lipid bilayer. The result is creation of nanopores in the cell membrane and disruption of intracellular homeostasis, ultimately causing cell death. The applicant stated that after delivering a sufficient number of high voltage pulses, the cells surrounded by the electrodes will be irreversibly damaged. This mechanism, which causes permanent cell damage, is referred to as Irreversible Electroporation (IRE). Per the applicant, benefits of IRE over other ablation methods include: (1) Localized ablation of targeted tissue; (2) lack of damaging heat-sink effect often seen with traditional thermal ablation techniques; and (3) preservation of critical anatomic structures in the vicinity of the ablation. Furthermore, according to the applicant, in studies to date, the NanoKnife® System has been shown to be safe and effective in patients presenting with unresectable tumors, who, given current treatment standards, have few viable treatment options.
The NanoKnife® System with six outputs for the treatment of Stage III pancreatic cancer received FDA Breakthrough Device designation on January 18, 2018 and approval of an FDA investigational device exemption (IDE G180278) on March 28, 2019. We noted in the proposed rule, as discussed previously, that although the NanoKnife® System received FDA Breakthrough Device designation for treatment of pancreatic cancer, FDA has not yet market approved or cleared the NanoKnife® System for use in the treatment of pancreatic cancer. The NanoKnife® System is currently being used for the treatment of Stage III pancreatic cancer in the DIRECT clinical trial in which the first patient was enrolled on May 13, 2019. Completion of the clinical trial is not expected until approximately December 2023.
The applicant noted that earlier iterations of the NanoKnife® System indicated for the surgical ablation of soft tissue were available on the market after FDA clearances in 2008 and 2015. According to the applicant, NanoKnife 3.0®, the most recent iteration of the NanoKnife® System device consisting of improvements and advancements as compared to prior versions of the device, was cleared by FDA on June 19, 2019 for the surgical ablation of soft tissue and per the applicant became commercially available on the U.S. market in June 2019. Consistent with prior versions of the device, NanoKnife 3.0® is labeled for soft tissue ablation. We note that since the earlier versions of the NanoKnife® System have been available commercially on the U.S. market following FDA clearances in 2008 and 2015, these versions are not considered new. As noted previously, under the first criterion, a specific medical service or technology will be considered “new” for purposes of new medical service or technology add-on payments until such time as Medicare data are available to fully reflect the cost of the technology in the MS–DRG weights through recalibration. Therefore, the indication associated with the device during that timeframe, soft tissue ablation, would not be relevant for purposes of the new technology add-on payment application for FY 2021. Only the use of the NanoKnife® System with six outputs for the treatment of Stage III pancreatic cancer, for which the applicant submitted its application for new technology-add on payments for FY 2021, and the FDA Breakthrough Device designation it received for that use, are relevant for purposes of the new technology add-on payment application for FY 2021.
According to the applicant, ICD–10– PCS procedure codes 0F5G0ZF (Destruction of pancreas using irreversible electroporation, open approach), 0F5G3ZF (Destruction of pancreas using irreversible electroporation, percutaneous approach), and 0F5G4ZF (Destruction of pancreas using irreversible electroporation, percutaneous endoscopic approach) may be used to distinctly identify cases involving the NanoKnife® System because the NanoKnife® System is currently the only device used for irreversible electroporation in the United States.
The applicant conducted the following analysis to demonstrate that the technology meets the cost criterion. The applicant used the FY 2018 MedPAR Limited Data Set (LDS) to identify the MS–DRGs to which potential cases representing hospitalized patients who may be eligible for treatment involving the NanoKnife® System would be mapped. The applicant searched for cases reporting the following predecessor ICD–10–PCS codes: 0F5G0ZZ (Destruction of pancreas, open approach), 0F5G3ZZ (Destruction of pancreas, percutaneous approach) and 0F5G4ZZ (Destruction of pancreas, percutaneous endoscopic approach). According to the applicant, this resulted in 40 cases mapped to MS–DRGs 405, 406, and 407 (Pancreas, Liver and Shunt Procedures with MCC, with CC, and without CC/MCC, respectively). The applicant noted that cases eligible for use of the NanoKnife® System would likely map to MS–DRGs 628, 629, or 630 (Other Endocrine, Nutritional and Metabolic O.R. procedures with MCC, with CC, and without CC/MCC, respectively) as well but none of the 40 cases mapped to these MS–DRGs. However, the applicant stated that had there been cases assigned to MS–DRGs 628, 629, or 630, these would have been selected as well. The applicant also noted that cases where the open approach Whipple procedure (ICD–10– PCS code 0FBG0ZZ (Excision of pancreas, open approach)) was coded were removed, as according to the applicant it is unlikely this procedure would be performed in conjunction with IRE because the Whipple procedure is an extensive surgical
The applicant examined associated charges per MS–DRG. According to the applicant, since the 40 cases mapped to MS–DRGs 405, 406 and 407 could include charges for various technologies for destruction of pancreatic tumors, and in order to exclude charges for prior technology, the applicant removed all charges billed to the medical supplies cost center for MS–DRGs 405, 406 and 407, as this cost center could include charges associated with use of various predecessor technologies for destruction of pancreatic tumors. The applicant noted it did not remove charges related to the predecessor technology as it believes that remaining charges associated with the cases would stay the same. According to the applicant, related charges consist of operating room, routine, intensive care, drug, radiology and Computed Tomography charges. The applicant then standardized the charges for each case and inflated each case's charges by applying the FY 2020 IPPS/LTCH PPS final rule outlier charge inflation factor of 1.11100 (84 FR 42629). The applicant then added the charges for the Nanoknife® System by dividing the costs of the device and required ancillary supplies per patient by the national average cost-to-charge ratio of 0.299 for implantable devices from the FY 2020 IPPS Final Rule (84 FR 42179). The applicant calculated a final inflated average case-weighted standardized charge per case of $175,836 and an average case-weighted threshold amount of $102,842. Because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount, the applicant maintained that the technology met the cost criterion.
In the proposed rule, we agreed with the applicant that it meets the cost criterion. We also stated that, as noted previously, subject to our proposed conditional approval process for technologies for which an application is submitted under the alternative pathway for certain antimicrobial products, applicants for new technology add-on payments must have FDA approval or clearance by July 1 of the year prior to the beginning of the fiscal year for which the application is being considered. As also summarized previously, the applicant is seeking new technology-add on payments for the use of the NanoKnife® System with six outputs for the treatment of Stage III pancreatic cancer, and it is only that use, and the FDA Breakthrough Device designation it received for that use, that are relevant for purposes of the new technology add-on payment application for FY 2021. Therefore, subject to the NanoKnife® System receiving FDA clearance or approval for use in the treatment of Stage III pancreatic cancer by July 1, 2020, we proposed to approve the NanoKnife® System for new technology add-on payments for FY 2021.
Based on preliminary information from the applicant at the time of the proposed rule, the cost of the NanoKnife® System is $11,086. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS–DRG payment for the case. As a result, we proposed that the maximum new technology add-on payment for a case involving the use of the NanoKnife® System would be $7,205.90 for FY 2021.
We invited public comments on whether the NanoKnife® System meets the cost criterion and our proposal to approve new technology add-on payments for the NanoKnife® System for FY 2021, subject to the NanoKnife® System receiving FDA clearance or approval for use in the treatment of Stage III pancreatic cancer by July 1, 2020.
We also received two comments from the applicant. (The applicant and its consultant submitted individual comments. We consider these comments to be from the applicant and on behalf of the applicant). The applicant stated, the new technology add on payment regulation applicable to medical devices that are part of FDA's Breakthrough Devices Program, 42 CFR 412.87(c)(1), has no explicit limit to the type of marketing authorization and no mandate that the marketing authorization indication be the same as Breakthrough Device Designation indication. According to the applicant, the NanoKnife® System has sufficient FDA market authorization under the broad regulatory provision in that it has a 510(k) clearance for surgical ablation of soft tissue. The applicant also stated that the NanoKnife® System has FDA Breakthrough Designation for treatment of pancreatic cancer. According to the commenter, based on the 510(k) clearance and FDA Breakthrough Designation, the NanoKnife® System should be approved for new technology add-on payment for FY 2021. Furthermore, the applicant conveyed that an FDA approved indication should reflect both regulatory and medical factors, explaining that medical authorities confirm that pancreatic cancer tissue is a form of soft tissue.
The applicant commented that even if CMS were to reject the 510(k) clearance indication, FDA has approved the NanoKnife® System's investigational device exemption (IDE) for treatment of pancreatic cancer and that in the absence of an explicit regulatory definition that limits marketing authorization to only 510(k) clearances or pre-market approvals (PMA), CMS should allow an IDE indication to satisfy the marketing authorization standard. According to the applicant, an approved IDE is an FDA authorization to; (1) advertise, promote and use the device for the indication under the clinical trial and (2) notify patients, physicians and hospitals of the availability of the device for the particular indication under the clinical trial.
According to the applicant, FDA approval of an IDE signals that the device is safe enough and offers enough potential for effectiveness to be available under the controls of the IDE. Furthermore, the applicant stated that even if limited to the clinical trial, an IDE is clearly marketing authorization and that the regulation does not exclude an IDE as market authorization. According to the applicant, if CMS
According to the applicant, in addition to the NanoKnife® System's 510(k) clearance and IDE, CMS has approved a number of Medicare reimbursement policies recognizing the NanoKnife® System's use for treatment of pancreatic cancer through the following:
• Approval of national Medicare coverage for treatment of pancreatic cancer under the IDE;
• Approval of ICD–10–PCS codes for treatment of the pancreas: 0F5G0ZF Destruction of pancreas using irreversible electroporation, open approach; and
• Assignment of the ICD–10–PCS codes into pancreas MS DRGs: MS DRG 405 Pancreas, liver and shunt procedures w mcc.
According to the applicant, these CMS coverage, coding and payment approvals recognizing the NanoKnife® System for pancreatic cancer, together with the 510(k) clearance and IDE indications certainly fulfill the marketing authorization new technology requirement.
Finally, the applicant asserted that there would be an inconsistency if CMS approved of national coverage under the clinical trial, allowing reimbursement for the device and the routine costs of patient care, but denied new technology add-on payment during this clinical trial. According to the applicant, the current new technology add-on payment regulation should be applied to harmonize CMS coverage, coding and payment, along with FDA policies to ensure Medicare patient access to life-saving breakthrough devices and is fully in line with the statutory authority for Breakthrough Devices under the 21st Century Cures Act. Public Law 114–255, Section 3051.
Regarding the applicant's comment that based on the 510(k) clearance for soft tissue ablation and FDA Breakthrough Device designation for treatment of Stage III pancreatic cancer, the NanoKnife® System should be approved for new technology add-on payment for FY 2021 under the alternative pathway for certain transformative devices, we disagree. As discussed in response to comments in section II.G.8, we believe the applicant is asking CMS to evaluate this technology inconsistent with longstanding policy and to start the newness period prior to the time a product receives marketing authorization. As discussed in the proposed rule and elsewhere in this final rule, in the September 7, 2001 final rule that established the new technology add-on payment regulations (66 FR 46915), we indicated that an existing technology can receive new technology add on payments for a new use or indication. As we stated in the proposed rule, while we recognize that a technology can have multiple indications, each indication has its own newness period and must meet the new technology add on payment criteria. The applicable criteria will depend on whether the technology is eligible for an alternative new technology add-on payment pathway. However, each indication for the technology is evaluated separately from any other indication, including with respect to the start of the newness period, to determine whether the technology is eligible for new technology add-on payments when used for that indication. CMS did not modify this longstanding policy for evaluating whether a technology with multiple indications has received the required marketing authorization when it adopted the alternative pathway for certain transformative new devices in FY 2020.
Regarding the applicant's comment that the 510(k) clearance indication for soft tissue covers the Breakthrough Device designation indication for treatment of Stage III pancreatic cancer and that the medical facts reinforce a straightforward application of “marketing authorization” to recognize the overlapping the NanoKnife® System indications should result in the approval of the NanoKnife® System for FY 2021 under the alternative pathway for certain transformative devices, we also disagree. First, as previously discussed, each indication for the technology is evaluated separately from any other indication, including with respect to the start of the newness period, to determine whether the technology is eligible for new technology add-on payments when used for that indication. Also as explained previously, and in the FY 2005 IPPS final rule (69 FR 49002), the intent of section 1886(d)(5)(K) of the Act and regulations under § 412.87(b)(2) is to pay for new medical services and technologies for the first 2 to 3 years that a product comes on the market, during the period when the costs of the new technology are not yet fully reflected in the DRG weights. Therefore, as discussed in the proposed rule, since the earlier versions of the NanoKnife® System, indicated for soft tissue ablation, have been available commercially on the U.S. market following FDA clearances in 2008 and 2015 and are not considered new, the 510(k) clearance indication for soft tissue ablation would not be relevant for purposes of the new technology add-on payment application for FY 2021. Also as discussed in the proposed rule, only the indication with six outputs for the treatment of Stage III pancreatic cancer is relevant for purposes of the new technology add-on payment application for FY 2021 under the alternative pathway for certain transformative devices. We refer readers to our response to comments in section II.G.8 of the preamble of this final rule for further discussion of these existing policies.
Regarding the suggestion that an IDE can qualify as marketing authorization and that the IDE determination can match the Breakthrough Designation indication for new technology add-on payment eligibility, we disagree. It is our understanding that an IDE allows the investigational device to be used in a clinical study in order to collect safety and effectiveness data prior to the device receiving FDA marketing authorization (that is, received PMA approval, 510(k) clearance, or the granting of De Novo classification request). Therefore, we do not believe that an IDE qualifies as marketing authorization.
For these same reasons, we disagree that any separate policies relating to coverage, coding and payment, combined with the 510(k) clearance for the separate indication of soft tissue ablation and IDE indication for treatment of Stage III pancreatic cancer, should allow for the approval of new technology add-on payments for the NanoKnife® System for FY 2021 when used for treatment of Stage III pancreatic cancer. Regarding the comments about national coverage determinations, payment and coding, we note that the new technology add-on payment policy is separate and distinct from the specific processes for coverage, coding, and payment. As discussed previously, those with further questions about Medicare's coverage, coding, and payment processes, or those who want further guidance about how they can navigate these processes, can contact The Council on Technology and Innovation (CTI) at
Therefore, for the reasons stated in the proposed rule and in this final rule, because the NanoKnife® System did not receive FDA clearance or approval by July 1, 2020 for use in the treatment of
Impulse Dynamics submitted an application for The Optimizer® System (QFV). The Optimizer® System is intended for the treatment of chronic heart failure in patients with advanced symptoms that have normal QRS duration and are not indicated for cardiac resynchronization therapy.
Per the applicant, the Optimizer System consists of three components. First, the Optimizer Rechargeable Implantable Pulse Generator (IPG) is designed for subcutaneous implant and delivers cardiac contractility modulation to the heart via two standard pacing leads attached to the right ventricular septum. Second, the Optimizer Mini Charger recharges the Optimizer IPG. Finally, the Omni II Programmer with Omni SMART Software gives a qualified healthcare professional the ability to program the Optimizer IPG over a large range of clinical settings.
The applicant explained that the Optimizer IPG is implanted in the right pre-pectoral region, similar to cardiac rhythm management devices. According to the applicant, the procedure is performed in a cardiac catheterization laboratory under fluoroscopic guidance with the patient under light sedation. The applicant stated that since three intracardiac leads are used, subclavian venous access is preferred over access via the axillary or cephalic vein. The applicant stated that the Optimizer IPG is connected to the heart via two standard implantable pacing leads that are each placed into the right ventricular septum.
With respect to the newness criterion, the applicant indicated that FDA granted Breakthrough Device designation for the Optimizer System on March 21, 2019. The applicant received FDA premarket approval for the two-lead Optimizer System, which included placement of the two leads in the right ventricular septum, on October 23, 2019. The device was available in the market immediately following FDA approval.
The applicant asserted that the current ICD–10–PCS codes 0JH60AZ (Insertion of contractility modulation device into chest subcutaneous tissue and fascia, open approach), 0JH63AZ (Insertion of contractility modulation device into chest subcutaneous tissue and fascia, percutaneous approach), 0JH80AZ (Insertion of contractility modulation device into abdomen subcutaneous tissue and fascia, open approach) and 0JH83AZ (Insertion of contractility modulation device into abdomen subcutaneous tissue and fascia, percutaneous approach) identify the Optimizer System.
With regard to the cost criterion, the applicant conducted an analysis using the FY 2018 MedPAR Limited Data Set (LDS) to demonstrate that the Optimizer System meets the cost criterion.
The applicant first searched the FY 2018 MedPAR data for cases reporting the procedure codes listed in this section to identify potential cases representing hospitalized patients who may be eligible for treatment using the Optimizer® System. The applicant limited its search to MS–DRG 245 (AICD Generator Procedures), which it asserts is the typical MS–DRG assignment for implanting a contractility modulation device. The applicant identified 2,049 cases that met the criterion of having at least one of the following relevant ICD–10–PCS procedure codes:
The applicant determined an average unstandardized charge per case of $180,319. The applicant then removed all charges for prior technology by removing charges associated with the service categories Prosthetic/Orthotic (revenue center 0274), Pacemakers (revenue center 0275) and other implantables (revenue center 0278), as the applicant believed the Optimizer® System will typically not be implanted concomitantly with other devices during the hospital admission. The applicant then standardized the charges and applied the FY 2020 IPPS/LTCH PPS final rule outlier charge inflation factor of 1.11100 (84 FR 42629) to update the charges from FY 2018 to FY 2020.
The applicant added the charges for the new technology by dividing its cost per patient by the national average cost-to-charge ratio of 0.299 for implantable devices from the FY2020 IPPS Final Rule (84 FR 42179).
The applicant calculated a final inflated average case-weighted standardized charge per case of $190,167, which it stated exceeded the average case-weighted threshold amount of $148,002 by $42,165.
The applicant also conducted a subsequent analysis that only included patients with a diagnosis of heart failure. The applicant once again limited its search to MS–DRG 245 and refined its sample by including only cases with one of the ICD–10–PCS
In the proposed rule, we stated that we agree with the applicant that the technology meets the cost criterion and therefore proposed to approve the Optimizer® System for new technology add-on payments for FY 2021. As previously noted, the applicant asserted that ICD–10–PCS codes 0JH60AZ, 0JH63AZ, 0JH80AZ and 0JH83AZ identify the Optimizer® System.
Based on preliminary information from the applicant at the time of the proposed rule, the cost of the Optimizer® System is $23,000. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS–DRG payment for the case. As a result, we proposed that the maximum new technology add-on payment for a case involving the use of the Optimizer® System would be $14,950 for FY 2021.
We invited public comments on whether the Optimizer® System meets the cost criterion and our proposal to approve new technology add-on payments for the Optimizer® System for FY 2021.
Based on the information provided in the applicant's new technology add-on payment application and after consideration of the public comments we received, we believe that Optimizer® System meets the cost criterion. The Optimizer® System received marketing authorization from the FDA on October 23, 2019 for the indication covered by its Breakthrough Device designation.
Therefore, we are finalizing our proposal to approve new technology add-on payments for Optimizer® System for FY 2021, and we consider the newness period to commence on October 23, 2019 when the technology received FDA marketing authorization for the indication covered by its Breakthrough Device designation. Under § 412.88(a)(2)(ii)(A), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS–DRG payment for the case. As a result, we are finalizing a maximum new technology add-on payment of $14,950 for a case involving the use of the Optimizer® System for FY 2021(that is 65 percent of the average cost of the technology). Cases involving the use of Optimizer® System that are eligible for new technology add-on payments will be identified by ICD–10–PCS codes 0JH60AZ, 0JH63AZ, 0JH80AZ or 0JH83AZ.
Shionogi & Co. Ltd (Company) submitted an application for Cefiderocol (Fetroja), a β-lactam antibiotic indicated for the treatment of complicated urinary tract infections (cUTI), including pyelonephritis, caused by the following susceptible Gram-negative (GN) pathogens:
The applicant describes Cefiderocol as an injectable siderophore cephalosporin. The applicant asserts that the principal antibacterial/bactericidal activity of Cefiderocol occurs with inhibiting GN bacterial cell wall synthesis by binding to penicillin-binding proteins. The applicant contends that Cefiderocol is unique in that it can enter the bacterial periplasmic space (in addition to the typical entry point via porin channels) as a result of its siderophore-like property, has enhanced stability to β-lactamases, and has activity limited to GN aerobic bacteria only.
Per the applicant, cUTIs are the second leading cause of hospitalization in the elderly and have substantial morbidity and worse outcomes if the causative pathogens are carbapenem-resistant (CR). According to the applicant, bloodstream infection (BSI) is often associated with cUTI, known as urosepsis, with an associated mortality rate of 9 to 31 percent. The applicant asserts that patients who develop cUTI due to a CR pathogen are at greater risk for prolonged hospital stays and progression to a BSI or urosepsis. The applicant stated that CR is a growing problem in the US and around the world, with increasing infections due to strains that are resistant to most or all currently available antibiotics. The applicant further states that, compared to susceptible pathogens, CR pathogens cause prolonged hospital and intensive care unit (ICU) stays, worse discharge status, and greater mortality.
Cefiderocol is designated as a QIDP and received FDA approval on November 19, 2019. However, according to the applicant, Cefiderocol was not commercially available until February 24, 2020 due to the finalization of the materials associated with the commercial launch of a drug, which could not be completed until the final label with FDA was determined. The applicant submitted a request for approval of unique ICD 10 PCS procedure codes for the administration of Cefiderocol beginning in FY 2021 and was granted approval for the following procedure codes effective October 1, 2020: XW03366 or XW04366.
With regard to the cost criterion, the applicant conducted two analyses based on 100% and 75% of identified claims. For both scenarios, the applicant used the FY 2018 MedPAR Limited Data Set (LDS) to assess the MS–DRGs to which potential cases representing hospitalized patients who may be eligible for Cefiderocol treatment would be mapped. The applicant identified eligible cases by searching the FY 2018 MedPAR for cases reporting one of the following ICD–10–CM codes:
Under the first scenario of 100 percent of cases, the applicant identified 1,461,784 cases mapping to 656 MS–DRGs. Under the second scenario of 75 percent of cases, the applicant identified 1,097,594 cases mapping to 53 MS–DRGs. The applicant standardized the charges after calculating the average case-weighted unstandardized charge per case for both scenarios and removing 50 percent of charges associated with the drug revenue centers 025x, 026x, and 063x under both scenarios. (Per the applicant, Cefiderocol is expected to replace some of the drugs that would otherwise be utilized to treat these patients. The applicant stated that it believes 50 percent of these total charges to be a conservative estimate as other drugs will still be required for these patients during their hospital stay.) The applicant then applied an inflation factor of 11.1 percent, which was the two-year outlier charge inflation factor used in the FY 2020 IPPS/LTCH PPS final rule, to update the charges from FY 2018 to FY 2020. The applicant then added charges for Cefiderocol by dividing the total average hospital cost of Cefiderocol by the national average cost-to-charge ratio (0.189) for drugs published in the FY 2020 IPPS/LTCH PPS final rule.
The applicant calculated a final inflated average case-weighted standardized charge per case of $116,131 for the first scenario and $106,037 for the second scenario and an average case-weighted threshold amount of $55,885 for the first scenario and $50,887 for the second scenario.
In the proposed rule we stated that we agree with the applicant that Cefiderocol meets the cost criterion and therefore proposed to approve Cefiderocol for new technology add-on payments for FY 2021. As previously noted, the applicant has received unique ICD–10–PCS procedure codes to identify cases involving the administration of Cefiderocol.
In its application, the applicant stated that the cost of Cefiderocol is $10,559.81. Under 412.88(a)(2), we limit new technology add-on payments for QIDPs to the lesser of 75 percent of the costs of the new medical service or technology, or 75 percent of the amount by which the costs of the case exceed the MS–DRG payment. As a result, we proposed that the maximum new technology add-on payment for a case involving the administration of Cefiderocol would be $7,919.86 for FY 2021 (that is 75 percent of the average cost of the technology).
We invited public comments on whether Cefiderocol meets the cost criterion and our proposal to approve new technology add-on payments for Cefiderocol for FY 2021.
Based on the information provided in the applicant's new technology add-on payment application and after consideration of the public comments we received, we believe that Cefiderocol meets the cost criterion. As previously discussed, Cefiderocol received FDA approval on November 19, 2019 for use in the treatment of (cUTI) but was not commercially available until February 24, 2020. Therefore, we are finalizing our proposal to approve new technology add-on payments for Cefiderocol for FY 2021, and we consider the beginning of the newness period to commence when the technology became commercially available on February 24, 2020. Under § 412.88(a)(2)(ii)(B), we limit new technology add-on payments for QIDPs to the lesser of 75 percent of the average cost of the technology, or 75 percent of the amount by which the costs of the case exceed the standard MS–DRG payment. As a result, we are finalizing a maximum new technology add-on payment of $7,919.86 for a case involving the use of Cefiderocol for FY 2021(that is 75 percent of the average cost of the technology). Cases involving the use of Cefiderocol that are eligible for new technology add-on payments will be identified by ICD–10–PCS procedure codes XW03366 or XW04366.
CONTEPO
On April 30, 2019, Nabriva received a Complete Response Letter (CRL) from FDA for the NDA seeking marketing approval of CONTEPO (fosfomycin) for injection. The applicant stated that the CRL from FDA requests that Nabriva address issues related to facility inspections and manufacturing deficiencies at one of Nabriva's contract manufacturers prior to FDA approving the NDA. Nabriva had resubmitted its NDA to FDA with FDA setting a Prescription Drug User Fee Act (PDUFA) goal date of June 19, 2020 for the completion of its review of the NDA.
The applicant applied for and received a unique ICD–10–PCS procedure code to identify cases involving the administration of CONTEPO
With regard to the cost criterion, the applicant used the FY 2018 MedPAR Limited Data Set (LDS) to assess the MS–DRGs to which potential cases representing hospitalized patients who may be eligible for treatment involving CONTEPO
The applicant examined associated charges per MS–DRG and removed charges for potential antibiotics that may be replaced by the use of CONTEPO
The applicant then standardized the charges for each case and inflated each case's charges by applying the FY 2020 IPPS/LTCH PPS final rule outlier charge inflation factor of 1.11100 (84 FR 42629). The applicant then added the charges for the new technology by calculating the per-day cost per patient. The applicant noted that the duration of therapy of up to 14 days (patients that had a cUTI with concurrent bacteremia) is consistent with the prospective prescribing information, and that it used this 14-day duration of therapy to calculate total inpatient cost. The applicant then converted these costs to charges by dividing the costs per patient by the national average cost-to charge ratio of 0.189 for drugs from the FY 2020 IPPS/LTCH PPS final rule (84 FR 42179). The applicant calculated a final inflated average case-weighted standardized charge per case of $75,533 and a case weighted threshold of
As summarized, the applicant used a 14-day duration of therapy to calculate total inpatient cost for purposes of its cost analysis. However, the applicant noted that the average number of days a patient would be administered CONTEPO
Because of the large number of cases included in this cost analysis, the applicant supplemented the analysis as described previously with additional sensitivity analyses. In these analyses, the previous cost analysis was repeated using only the top 75 percent of cases, the top 20 MS–DRGs, and the top 10 MS–DRGs. In these three additional sensitivity analyses, the final inflated average case-weighted standardized charge per case for CONTEPO
In the proposed rule, we stated that we believe that CONTEPO
As discussed previously, we stated in the proposed rule that without further information from the applicant regarding the average number of days CONTEPO
We invited public comments on whether CONTEPO
As discussed later in this section of this rule, we are finalizing our proposal to provide for conditional approval for a technology for which an application is submitted under the alternative pathway for certain antimicrobial products at § 412.87(d) that does not receive FDA marketing authorization by the July 1 deadline specified in § 412.87(e)(2), provided that the technology receives FDA marketing authorization by July 1 of the particular fiscal year for which the applicant applied for new technology add-on payments. We refer the reader to the later discussion in this section of this rule for complete details regarding this final policy. Therefore, because CONTEPO
After consideration of the comments received, we are also finalizing our proposal to use a 12.5 day duration of therapy to estimate the average cost of the technology. Under § 412.88(a)(2)(ii)(B), we limit new
Paratek Pharmaceuticals submitted an application for new technology add-on payments for NUZYRA® (omadacycline) for Injection for FY 2021. According to the applicant, NUZYRA® for Injection is a tetracycline class antibacterial indicated for the treatment of adult patients with the following infections caused by susceptible microorganisms:
• Community-acquired bacterial pneumonia (CABP) caused by the following susceptible microorganisms: Streptococcus pneumoniae, Staphylococcus aureus (methicillin-susceptible isolates), Haemophilus influenzae, Haemophilus parainfluenzae, Klebsiella pneumoniae, Legionella pneumophila, Mycoplasma pneumoniae, and Chlamydophila pneumoniae.
• Acute bacterial skin and skin structure infections (ABSSSI) caused by the following susceptible microorganisms: Staphylococcus aureus (methicillin susceptible and resistant isolates), Staphylococcus lugdunensis, Streptococcus pyogenes, Streptococcus anginosus grp. (includes S. anginosus, S. intermedius, and S. constellatus), Enterococcus faecalis, Enterobacter cloacae, and Klebsiella pneumoniae.
The applicant explained that NUZYRA® for Injection is supplied as a lyophilized powder in a single-dose colorless glass vial, with each vial containing 100 mg of NUZYRA® (equivalent to 131 mg omadacycline tosylate). 100-mg single dose vials are packaged in cartons of 10. The NDC number is 71715–001–02. Additionally, the applicant noted that while an oral formulation of NUZYRA® is available, NUZYRA® can also be administered through intravenous infusion. Providers may determine which method of administration is clinically appropriate for each patient. Adult patients with CABP must receive their initial loading dose of NUZYRA® via intravenous infusion. The applicant specified that NUZYRA® for Injection should not be administered with any solution containing multivalent cations, for example, calcium and magnesium, through the same intravenous line. Co-infusion with other medications has not been studied. The applicant conveyed that for treatment of adults with CABP, the recommended dosage regimen of NUZYRA® for Injection is as follows (Use NUZYRA for injection administered by intravenous infusion for the loading dose in CABP patients):
For treatment of adults with ABSSSI, the recommended dosage regimen of NUZYRA® for injection is as follows (Use NUZYRA® for injection administered by intravenous infusion or NUZYRA® tablets orally administered for the loading dose in ABSSSI patients):
Finally, the applicant indicated that no dose adjustment is warranted in patients with renal or hepatic impairment.
According to the applicant, NUZYRA® for Injection was submitted for FDA approval under a New Drug Application (identified as NDA 209817). After Fast Track and Priority Review consideration, NUZYRA® for Injection received FDA approval on October 2, 2018. According to information provided by the applicant, NUZYRA® for Injection was designated as a QIDP and granted priority review. According to the applicant, NUZYRA® for Injection became commercially available in February 2019. The applicant explained that the delay in commercial availability was due to an effort to prepare the distribution and supply channel (pharmacies and wholesalers) and to prepare for a full promotional launch.
The applicant submitted a request for approval of unique ICD–10–PCS procedure codes for the administration of NUZYRA® for Injection beginning in FY 2021 and was granted approval for the following ICD–10–PCS procedure codes effective October 1, 2020: XW033B6 (Introduction of omadacycline anti-infective into peripheral vein, percutaneous approach, new technology group 6) or XW043B6 (Introduction of omadacycline anti-infective into peripheral vein, percutaneous approach, new technology group 6).
With regard to the cost criterion, the applicant used the FY 2018 MedPAR Limited Data Set (LDS) to identify potential cases that may be eligible for treatment involving NUZYRA® for Injection. To ensure appropriate discharges were used from the dataset, the following edits were made:
• Claims paid by a Managed Care Organization were removed.
• Duplicated records with the same beneficiary ID, provider, admission data, and discharge date were removed.
• Interim claims were combined into discharge records.
• Discharges with covered charges of zero dollars and discharges with zero covered days were removed.
• Discharges from IPPS hospitals, as determined by the FY 2020 IPPS Impact File and discharges with discharge dates from October 1, 2017 to September 30, 2018 were included.
• Statistical outliers with standard charges that were outside of the range of +/−3 standard deviations from the geometric mean standardized charge by MS–DRG were removed.
After these edits were made, the applicant selected discharges that had a primary or secondary diagnosis for ABSSSI or CABP, using a wide list of ICD–10–PCS codes, which resulted in a total of 1,745,649 discharges. Using these 1,745,649 discharges, 37 MS–DRGs were selected based on one of the following criteria:
• MS–DRGs with the highest volume of discharges with a primary or secondary diagnosis for ABSSSI or CABP (which represent 70 percent of all discharges with ABSSSI or CABP).
• MS–DRGs with at least two-thirds of discharges with a primary or secondary diagnosis of ABSSSI or CABP.
Using this method, the applicant identified 1,226,429 total cases which mapped to the following 37 unique MS–DRGs:
Next, using the cases mapping to these selected MS–DRGs, the applicant removed pharmacy charges for other drugs and standardized the charges. Then, the applicant inflated the standardized charges from FY 2018 to FY 2020 using a 2-year charge inflation factor of 11.1 percent, based on the FY 2020 IPPS/LTCH PPS final rule (84 FR 42629).
The applicant estimated the cost of NUZYRA® for Injection based on an average inpatient stay of 5 days in the clinical trial.
In the proposed rule we stated that we agreed with the applicant that it meets the cost criterion and therefore proposed to approve NUZYRA® for Injection for new technology add-on payments for FY 2021. As previously noted, the applicant has received unique ICD–10–PCS procedure codes to identify cases involving the administration of NUZYRA® for Injection.
Based on preliminary information from the applicant at the time of the proposed rule, the cost of NUZYRA® for Injection is $2,070. Under § 412.88(a)(2), we limit new technology add-on payments for QIDPs to 75 percent of the costs of the new medical service or technology, or 75 percent of the amount by which the costs of the case exceed the MS–DRG payment. As a result, we proposed that the maximum new technology add-on payment for a case involving the use of NUZYRA® for Injection would be $1,552.50 for FY 2021 (that is 75 percent of the average cost of the technology).
We invited public comments on whether NUZYRA® for Injection meets the cost criterion and our proposal to approve new technology add-on payments for NUZYRA® for Injection for FY 2021.
Based on the information included in the applicant's new technology add-on payment application and after consideration of the public comments we received, we believe that NUZYRA® for Injection meets the cost criterion. As previously discussed, NUZRYRA for Injenction received FDA approval on October 2, 2018, but was not commercially available until February 1, 2019. Therefore, we are finalizing our proposal to approve new technology add-on payments for NUZRYA for Injection for FY 2021, and we consider the beginning of the newness period to commence when the technology became commercially available on February 1, 2019. Under § 412.88(a)(2)(ii)(B), we limit new technology add-on payments for QIDPs to the lesser of 75 percent of the average cost of the technology, or 75 percent of the amount by which the costs of the case exceed the standard MS–DRG payment. Therefore, we are finalizing a maximum new technology add-on payment of $1,552.50 for a case involving the use of NUZYRA® for Injection for FY 2021(that is 75 percent of the average cost of the technology). Cases involving the use of NUZYRA® for Injection that are eligible for new technology add-on payments will be identified by ICD–10–PCS procedure codes XW033B6 or XW043B6.
Merck submitted an application for new technology add-on payments for RECARBRIO
The applicant explained that the recommended dose of RECARBRIO
According to information provided by the applicant, RECARBRIO
To demonstrate that the technology meets the cost criterion, the applicant searched the FY 2018 MedPAR Limited Data Set (LDS) for cases reporting ICD–10–CM diagnosis codes for either cUTI or cIAI with ICD–10–PCS codes XW033U5 (Introduction of imipenem-cilastatin-relebactam anti-infective into peripheral vein, percutaneous approach, new technology group 5 or XW043U5 (Introduction of imipenem-cilastatin-relebactam anti-infective into central vein, percutaneous approach, new technology group 5) to identify the MS–DRGs to which potential cases representing hospitalized patients who may be eligible for treatment involving RECARBRIO
The applicant also calculated an average case-weighted standardized charge per case for cUTI and cIAI separately using the same methodology previously described and determined final inflated average case-weighted standardized charges per case of $70,765 for cUTI and $109,403 for cIAI and average case-weighted thresholds of $50,210 for cUTI and $67,531 for cIAI. Because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount in each scenario, the applicant maintained that the technology met the cost criterion.
We agreed with the applicant that it meets the cost criterion and therefore proposed to approve RECARBRIO
Based on preliminary information from the applicant at the time of the proposed rule, the cost of RECARBRIO
We invited public comments on whether RECARBRIO
Based on the information in the applicant's new technology add-on payment application and after consideration of the public comments we received, we believe that RECARBRIO
Nabriva Therapeutics submitted an application for XENLETA, a pleuromutilin antibacterial agent representing the first intravenous (IV) and oral treatment option from a novel class of antibiotics for community-acquired bacterial pneumonia (CABP). XENLETA is indicated for the treatment of adults with CABP caused by the following susceptible microorganisms:
Per the applicant, pleuromutilins inhibit bacterial protein synthesis by binding to the A- and P-sites of the peptidyl transferase center (PTC) in the large ribosomal subunit of the bacterial ribosome. The applicant asserts that this unique binding site in the highly conserved core of the ribosomal PTC is specific to pleuromutilins, and it confers a lack of cross-resistance with other classes, as well as a low propensity for developing bacterial resistance.
The applicant noted that there are two methods of administering XENLETA. As a tablet containing 600 mg of XENLETA, it is administered orally every 12 hours for a duration of 5 days. As an injection, XENLETA contains 150 mg of the drug and is administered every 12 hours by IV infusion over 60 minutes for a duration of 5 to 7 days, with the option to switch to XENLETA tablets administered every 12 hours to complete the treatment course.
With respect to the newness criterion, the applicant indicated that XENLETA was approved by FDA under the QIDP designation, and granted fasttrack- designation. XENLETA received FDA approval on August 19, 2019 for a new drug application indicated for the oral and IV formulations of XENLETA for the treatment of CABP in adults. The applicant indicated that XENLETA was commercially available on the U.S. market on September 10, 2019 and the slight delay from approval to availability was due to the shipment of drug to the distribution channels.
The applicant's submitted a request for approval of a unique ICD–10–PCS procedure code to identify the administration of XENLETA and was granted approval for the following procedure codes effective October 1, 2020: XW03366 (Introduction of lefamulin anti-infective into peripheral vein, percutaneous approach, new technology group 6), XW04366 (Introduction of lefamulin anti-infective into central vein, percutaneous approach, new technology group 6) or XW0DX66 (Introduction of efamulin anti-infective into mouth and pharynx, external approach, new technology group 6).
With respect to the cost criterion, the applicant presented three scenarios varying in the assumptions regarding the form of XENLETA used to treat the patient and the duration of treatment. For the first analysis, the applicant assumed that a patient population with CABP received 7 days of IV treatment with XENLETA. For the second analysis, the applicant assumed the patient population received 3.2 days of IV treatment with XENLETA before switching to oral XENLETA for 3.8 days. For the third analysis, the applicant assumed the patient population received oral XENLETA for 5 days. The applicant explained that patients receiving XENLETA in the inpatient hospital setting would receive it through IV treatment. However, some patients may be switched to oral form during care, which was observed for some patients in clinical trial. While the applicant does not expect many patients to be treated with only oral XENLETA in the inpatient setting, they conducted a sensitivity analysis based on 5 days of treatment with oral XENLETA, as oral treatment is possible in hospital.
Across all three analyses, the applicant first searched the FY 2018 MedPAR Final Rule Limited Data Set for potential cases representing patients diagnosed with CABP and eligible for treatment with XENLETA. The applicant limited the cohort to cases that had an indication on the claim that the pneumonia was present on admission. The applicant searched for claims that had one of the following ICD–10–CM diagnosis codes as a principal or secondary diagnosis:
The applicant identified 1,225,713 cases from the FY 2018 MedPAR LDS file spanning 357 MS–DRGs. The applicant then excluded cases that mapped to MS–DRGs with a volume of 10 cases or fewer, resulting in a total of 1,225,561 cases spanning 319 unique MS–DRGs. The applicant considered these cases to be the primary cohort of the cost analysis. The applicant noted that the most common MS–DRGs in the cohort are 871, 193, 194, 291, and 190, which account for 61 percent of cases. The applicant presented the following table of the top 20 MS–DRGs in the primary cohort with more than 10 cases:
For all three scenarios, the applicant calculated an average case-weighted unstandardized charge per case of $73,911. The applicant then removed charges for the prior technology being replaced, which included the average charge associated with the cost of antibiotics that are the current standard of care. The applicant varied assumptions by scenario to reflect appropriate substitute treatments for the different forms of XENLETA, as noted previously. For each scenario, the applicant calculated the cost of therapy for each standard of care drug using dosing information, the duration of treatment, and wholesale acquisition costs and converted them to charges using the national pharmacy cost-to-charge ratio published in the FY 2020 IPPS final rule (84 FR 42179). After adjusting for prior technology, the applicant standardized the charges and applied an inflation factor of 11.1 percent, which is the 2-year inflation factor used by CMS to calculate outlier threshold charges in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42629), to update the charges from FY 2018 to FY 2020. The applicant added charges for the new technology, which it again calculated using the national pharmacy cost-to-charge ratio.
For all three scenarios, the applicant conducted a sensitivity analysis testing alternative assumptions regarding the charges associated with prior technology that could be replaced by XENLETA. The applicant acknowledged that it is possible for some patients with CABP to receive more than one antibiotic. The applicant examined the cost criterion for each scenario after doubling the charges associated with prior technology to account for multiple antibiotics. Furthermore, the applicant tested alterative assumptions regarding the MS–DRGs that cases representing patients eligible for treatment with XENLETA mapped. Specifically, the applicant examined the cost criterion for the top 10 MS–DRGs, the top 20 MS–DRGs, and the top MS–DRGs that accounted for 75 percent of cases.
Across all three scenarios and the sensitivity analyses testing alternative assumptions, the applicant determined that the final inflated average standardized charge per case exceeded the case-weighted threshold, with the difference ranging from $4,547 to $17,907. The following table summarizes the results of the applicant's cost analyses. The applicant maintained that XENLETA meets the cost criterion.
In the proposed rule, we stated that we agreed with the applicant that XENLETA meets the cost criterion and therefore proposed to approve XENLETA for new technology add-on payments for FY 2021. As previously noted, the applicant has received unique ICD–10–PCS procedure codes to identify cases involving the administration of XENLETA.
In its application, the applicant stated that XENLETA is commercially available in two dosage forms (Intravenous and Oral). According to the applicant, the pricing for each dosage form is $102.50 per single use vial of XENLETA and $137.50 for one tablet of XENLETA. The recommended dosage per the applicant is 150 mg every 12 hours by intravenous (IV) infusion for 5 to 7 days or one 600 mg tablet every 12 hours for 5 days. The applicant estimates that the cost per patient of XENLETA is $1,701 based on the combination of IV and oral usage in two of the applicants' clinical trials. Under § 412.88(a)(2), we limit new technology add-on payments for QIDPs to 75 percent of the costs of the new medical service or technology, or 75 percent of the amount by which the costs of the case exceed the MS–DRG payment. As a result, we proposed that the maximum new technology add-on payment for a case involving the use of XENLETA would be $1,275.75 for FY 2021 (that is 75 percent of the average cost of the technology).
We invited public comments on whether XENLETA meets the cost criterion and our proposal to approve new technology add-on payments for XENLETA for FY 2021.
Based on the information in the applicant's new technology add-on payment application and after consideration of the public comments, we believe that XENLETA meets the cost criterion. As previously discussed, XENLETA received FDA approval for use in the treatment of community-acquired bacterial pneumonia (CABP) in adults on August 19, 2019 but was not commercially available until September 10, 2019. Therefore, we are finalizing our proposal to approve new technology add-on payments for XENLETA for FY 2021, and we consider the beginning of the newness period to commence on September 10, 2019, which is the date that XENLETA became commercially available. Under § 412.88(a)(2)(ii)(B), we limit new technology add-on payments for QIDPs to the lesser of 75 percent of the average cost of the technology, or 75 percent of the amount by which the costs of the case exceeds the standard MS–DRG payment. As a result, we are finalizing as proposed a maximum new technology add-on payment for a case involving the use of XENLETA of $1,275.75 for FY 2021 (that is 75 percent of the average cost of the technology). Cases involving the use of XENLETA that are eligible for new technology add-on payments will be identified by ICD–10–PCS procedure codes: XW03366, XW04366 or XW0DX66.
Merck submitted an application for new technology add-on payments for ZERBAXA® for FY 2021. ZERBAXA® (ceftolozane and tazobactam) is a combination of ceftolozane, a cephalosporin antibacterial; and tazobactam, a β-lactamase inhibitor (BLI), indicated in patients 18 years or older for the treatment of the following infections caused by designated susceptible microorganisms:
• Complicated Intra-abdominal Infections (cIAI), used in combination with metronidazole;
• Complicated Urinary Tract Infections (cUTI), Including Pyelonephriti;
• Hospital-acquired Bacterial Pneumonia and Ventilator-associated Bacterial Pneumonia (HABP/VABP).
According to the applicant, FDA initially approved ZERBAXA® on December 19, 2014 for the treatment of complicated intra-abdominal infections (cIAI) and for complicated urinary tract infections (cUTI) under a New Drug Application (NDA). ZERBAXA® was then approved on June 3, 2019 for the indication of hospital-acquired bacterial pneumonia and ventilator-associated bacterial pneumonia (HABP/VABP), also under a NDA. The applicant noted that ZERBAXA® was designated as a Quality Infectious Disease Product (QIDP) as well as provided Fast Track and Priority Review consideration by FDA. The applicant also indicated that ZERBAXA® was commercially available on the U.S. market upon FDA approval. We believe only the indication approved in 2019 for treatment of hospital-acquired bacterial pneumonia and ventilator-associated bacterial pneumonia (HABP/VABP) is eligible for new technology add on payments for FY 2021 because the first indication was approved in 2014 and is therefore beyond the 3-year newness period.
The applicant submitted a request for approval for a unique ICD–10–PCS procedure code to identify the administration of ZERBAXA® and was granted approval for FY 2021 for the following procedure codes effective October 1, 2020: XW03396 or XW04396.
According to the applicant, to reduce the development of drug-resistant bacteria and maintain the effectiveness of ZERBAXA® and other antibacterial drugs, ZERBAXA® should be used only to treat or prevent infections that are proven or strongly suspected to be caused by susceptible bacteria. According to the applicant, when culture and susceptibility information are available, they should be considered in selecting or modifying antibacterial therapy. In the absence of such data, local epidemiology and susceptibility patterns may contribute to the empiric selection of therapy.
The applicant explained that the recommended dosage of ZERBAXA® for injection when used for HABP/VABP is 3 g (ceftolozane 2 g and tazobactam 1 g) administered every 8 hours by intravenous infusion over 1 hour in patients 18 years or older and with a creatinine clearance (CrCl) greater than 50 mL/min. The duration of therapy should be guided by the severity and site of infection and the patient's clinical and bacteriological progress. Dose adjustment is required for patients with CrCl 50 mL/min or less. All doses of ZERBAXA® are administered over 1 hour. For patients with changing renal function, CrCl is monitored at least daily and dosage of ZERBAXA® adjusted accordingly.
With regard to the cost criterion, the applicant used the FY 2018 MedPAR Limited Data Set (LDS) to identify the MS–DRGs to which potential cases representing hospitalized patients who may be eligible for treatment involving ZERBAXA® would be mapped. According to the applicant, ZERBAXA® is indicated for the treatment of hospitalized patients who have been diagnosed with cUTI, cIAI, VABP, or HABP conditions. The applicant conducted multiple analyses based on ICD–10–CM diagnosis codes for various scenarios involving patients diagnosed with cUTI, cIAI, VABP, or HABP. The applicant stated that cases representing patients who may be eligible to receive treatment through the administration of ZERBAXA® are identified with ICD–10–PCS codes 3E03329 (Introduction of other anti-infective into peripheral vein, percutaneous approach) or 3E04329 (Introduction of other antiinfective—into central vein, percutaneous approach). For the purposes of analyzing the cost criterion for this technology for new technology add-on payment for FY 2021, we are only discussing the applicant's cost analysis related to the HABP and VABP
As stated in the proposed rule, we agree with the applicant that ZERBAXA® meets the cost criterion and therefore proposed to approve ZERBAXA® for new technology add-on payments for FY 2021. As previously noted, the applicant has received unique ICD–10–PCS procedure codes to identify cases involving the administration of ZERBAXA®.
Based on preliminary information from the applicant at the time of the proposed rule, the cost of ZERBAXA® is $2,449.31. Under § 412.88(a)(2), we limit new technology add-on payments for QIDPs to 75 percent of the costs of the new medical service or technology, or 75 percent of the amount by which the costs of the case exceed the MS–DRG payment. As a result, we proposed that the maximum new technology add-on payment for a case involving the use of ZERBAXA® would be $1,836.98 for FY 2021 (that is 75 percent of the average cost of the technology).
We invited public comments on whether ZERBAXA® meets the cost criterion and our proposal to approve new technology add-on payments for ZERBAXA® for FY 2021.
Based on the information in the applicant's new technology add-on payment application and after consideration of the public comments, we believe that ZERBAXA® meets the cost criterion. As previously discussed, ZERBAXA® received FDA approval on June 3, 2019 for the indication of HABP/VABP and was commercially available on the U.S. market upon FDA approval. Therefore, we are finalizing our proposal to approve new technology add-on payments for ZERBAXA® for FY 2021, and we consider the beginning of the newness period to commence when the technology received FDA approval on June 3, 2019. Under § 412.88(a)(2)(ii)(B), we limit new technology add-on payments for QIDPs to the lesser of 75 percent of the average cost of the technology, or 75 percent of the amount by which the costs of the case exceed the standard MS–DRG payment. As a result, we are finalizing as proposed a maximum new technology add-on payment for a case involving the use of ZERBAXA® of $1,836.98 for FY 2021 (that is 75 percent of the average cost of the technology). Cases involving the use of ZERBAXA® that are eligible for new technology add-on payments will be identified by ICD–10–PCS procedure codes XW03396 or XW04396.
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42297 through 42300, and 42612), we finalized an increase in the new technology add-on payment percentage. Specifically, for a new technology other than a medical product designated by FDA as a QIDP, beginning with discharges on or after October 1, 2019, if the costs of a discharge involving a new technology (determined by applying CCRs as described in § 412.84(h)) exceed the full DRG payment (including payments for IME and DSH, but excluding outlier payments), Medicare will make an add-on payment equal to the lesser of: (1) 65 percent of the costs of the new medical service or technology; or (2) 65 percent of the amount by which the costs of the case exceed the standard DRG payment. We also finalized a separate increase in the new technology add-on payment percentage to 75 percent for a new technology that is a medical product designated by FDA as a QIDP. Under this finalized policy, unless the discharge qualifies for an outlier payment, the additional Medicare payment will be limited to the full MS–DRG payment plus 65 percent (or 75 percent for a medical product designated by FDA as a QIDP) of the estimated costs of the new technology or medical service. We also finalized revisions to paragraphs (a)(2) and (b) under § 412.88 to reflect these changes to the calculation of the new technology add-on payment amount beginning in FY 2020, including the finalized percentage for a medical product designated by FDA as a QIDP. Specifically, the new technology add-on payment percentage of 65 percent for a new technology other than a medical product designated by FDA as a QIDP is
As described previously, 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 § 412.87(c), to be eligible for approval under this alternative pathway, the device must be part of 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 § 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 § 412.87(c). For example, consider a device that received FDA marketing authorization in 2019 for use in the heart. The same device is then designated by FDA as part of the Breakthrough Devices Program for use in the liver in 2020, but has not yet received marketing authorization for indicated use in the liver. Some of the public have asserted that in such a scenario, the original marketing authorization for use in the heart could be used with FDA's Breakthrough Device indication for use in the liver to qualify under the alternative pathway for certain transformative new devices and receive new technology add-on payments for use in the liver in FY 2021. Because of this potential confusion, we clarified in the proposed rule that, consistent with our existing policies for determining newness where a product has more than one indication, 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.
Section 1886(d)(5)(K)(ii)(II) of the Act provides for the collection of data with respect to the costs of a new medical service or technology described in subclause (I) for a period of not less than 2 years and not more than 3 years beginning on the date on which an inpatient hospital code is issued with respect to the service or technology. As explained in the FY 2005 IPPS final rule (69 FR 49002), the intent of section 1886(d)(5)(K) of the Act and regulations under § 412.87(b)(2) is to pay for new medical services and technologies for the first 2 to 3 years that a product comes on the market, during the period when the costs of the new technology are not yet fully reflected in the DRG weights. Generally, we use FDA approval (that is, marketing authorization) as the indicator of the time when a technology begins to become available on the market and data reflecting the costs of the technology begin to become available for recalibration of the DRGs. In some specific circumstances, we have recognized a date later than FDA approval as the appropriate starting point for the 2-year to 3-year period. The costs of the new medical service or technology, once paid for by Medicare for this 2-year to 3-year period, are accounted for in the MedPAR data that are used to recalibrate the DRG weights on an annual basis. Therefore, we limit the add-on payment window for those technologies that have passed this 2-to 3-year timeframe. In the September 7, 2001 final rule that established the new technology add-on payment regulations (66 FR 46915), we also indicated that an existing technology can receive new technology add on payments for a new use or indication. While we recognize that a technology can have multiple indications, each indication has its own newness period and must meet the new technology add on payment criteria. The applicable criteria will depend on whether the technology is eligible for an alternative new technology add-on payment pathway. However, each indication for the technology is evaluated separately from any other indication, including with respect to the start of the newness period, to determine whether the technology is eligible for new technology add-on payments when used for that indication.
Based on this policy, using the previous example, the newness period for the heart indication began in 2019 when the technology received marketing authorization from FDA for that indication, while the newness period for the liver indication would begin when the device receives marketing authorization specifically indicated for the liver. These are two distinct newness periods. Consistent with this policy, the newness period that began with the original marketing authorization for indicated use in the heart cannot be combined with FDA's Breakthrough Device indication for use in the liver for purposes of the marketing authorization required for approval under the alternative pathway to receive new technology add-on payments in FY 2021.
In the FY 2021 IPPS/LTCH PPS proposed rule, we stated that to address this potential confusion, we are clarifying our policy that a new medical device under this alternative pathway must receive marketing authorization for the indication covered by the Breakthrough Devices Program designation and making a conforming change to the regulations at § 412.87(c)(1). Specifically, with regard to the eligibility criteria for approval under the alternative pathway for certain transformative new devices, we proposed to amend the regulations in § 412.87(c)(1) to state that “A new medical device is part of FDA's Breakthrough Devices Program and has received marketing authorization for the indication covered by the Breakthrough Device designation.” We also proposed to make similar amendments to the regulations at § 412.87(d) for the alternative pathway for certain antimicrobial products, as discussed in section II.G.9.b. of this preamble of this final rule.
One commenter requested clarification if a device that received FDA Breakthrough designation and was approved for marketing under the Humanitarian Device Exemption (HDE) pathway for a HUD (Section 520(m) of the Federal Food, Drug, and Cosmetic Act (FD&C Act)), would still be eligible for the alternative new technology add-on payment pathway based on the FDA Breakthrough designation.
Furthermore, two commenters (including the applicant for the Nanoknife, which did not meet the deadline of July 1 for FDA approval or clearance, as discussed previously) did not support this policy clarification. According to these commenters, if the proposed conforming changes are finalized, an otherwise broad eligibility standard would become limited. These commenters stated that the requirement that a new medical device must have received FDA marketing authorization sets a broad standard and the current regulation has no explicit limit to the type of marketing authorization and no mandate that the FDA marketing authorization indication be the same as the indication covered by the Breakthrough Device designation.
According to the same two commenters, the policy clarification also constitutes a new regulatory provision that will limit new technology add-on payment eligibility to only those devices where the marketing authorization indication matched exactly the Breakthrough Device indication. The commenters stated that although it was described as a technical clarification, the denial of access to new-technology add-on payment for Medicare beneficiaries makes the proposed amendment a significant regulatory change. According to the commenters, consistent with the Administrative Procedure Act, the proposed new regulatory language must first go through a full notice and comment period prior to finalizing any new changes. Then, according to the commenters, the earliest the new regulation could be applied is in the next regulatory cycle, beginning with applications submitted for new technology add-on payments for FY 2022. Finally, they asserted that with what they described as CMS' application of the proposal retroactively, applicants for new technology add-on payment for FY 2021 had no prior notice in either the regulations or CMS' new technology add-on payment application, which caused the denial of new technology add-on payment to applicants and Medicare beneficiaries.
The same two commenters also suggested that CMS should align eligibility for new technology add-on payment with FDA's IDE determination which supports hospitals providing innovative care early in product development. According to the commenters, CMS should include in the regulation at § 412.87(c)(1) that an IDE can qualify as marketing authorization and that the IDE determination can match the Breakthrough Designation indication for new technology add-on payment eligibility criteria. According to the commenters, waiting until traditional PMA or 510(k) marketing authorization will delay the availability of new technology add-on payment for years which can have a serious adverse impact on patients.
We disagree with the commenters that asserted this technical clarification is instead a significant change in our new technology add-on payment policy and that the associated conforming revisions are a significant regulatory change. This technical clarification, and the proposed conforming change to the regulations, are consistent with CMS's longstanding policy to require marketing authorization for the specific indication for which the applicant is seeking the new technology add-on payment. As discussed in the proposed rule and previously in this final rule, in the September 7, 2001 final rule that established the new technology add-on payment regulations (66 FR 46915), we indicated that an existing technology can receive new technology add-on payments for a new use or indication. As we also discussed in the proposed rule, while we recognize that a technology can have multiple indications, each indication has its own newness period and must meet the new technology add-on payment criteria. This is consistent with how we have evaluated prior applications for the new technology add-on payment, as discussed in prior rulemaking (InFUSE
For these reasons, we disagree with the commenters that our clarification and proposed conforming amendment are a change to the existing eligibility standards for new technology add-on payments. However, even if this were to be considered a change in policy rather than a clarification, CMS would not be applying the proposal retroactively, as asserted by the commenters, because the policy would apply only prospectively to future payments beginning with the start of the next fiscal year, after finalization of the policy through notice and comment rulemaking.
Regarding the request for clarification on whether a device that received FDA Breakthrough Device designation and was approved for marketing under the HDE pathway for a HUD (Section 520(m) of the FD&C Act), would still be eligible for the alternative new
Regarding the suggestion that CMS should include in the regulation at § 412.87(c)(1) that an IDE can qualify as marketing authorization and that the IDE determination can match the Breakthrough Designation indication for new technology add-on payment eligibility criteria, we disagree. As discussed previously, it is our understanding that an IDE allows the investigational device to be used in a clinical study in order to collect safety and effectiveness data prior to the device receiving FDA marketing authorization (that is, received PMA approval, 510(k) clearance, or the granting of De Novo classification request). Therefore, we do not believe it would be appropriate to update the regulations to reflect that an IDE qualifies as marketing authorization.
After consideration of the comments received and for the reasons discussed, we are finalizing our proposed conforming change to the regulations at § 412.87(c)(1) to reflect our policy that a new medical device under this alternative pathway must receive marketing authorization for the indication covered by the Breakthrough Devices Program designation. Specifically, with regard to the eligibility criteria for approval under the alternative pathway for certain transformative new devices, we are finalizing our proposal to amend the regulations in § 412.87(c)(1) to state that “A new medical device is part of FDA's Breakthrough Devices Program and has received marketing authorization for the indication covered by the Breakthrough Device designation.” We note that we are also finalizing our proposal to make similar amendments to the regulations at § 412.87(d) for the alternative pathway for certain antimicrobial products, as discussed in section II.G.9.b. of this preamble of this final rule.
In the FY 2020 IPPS/LTCH PPS final rule, after consideration of public comments, we finalized changes to the new technology add-on payment policy related to certain antimicrobial products. These changes were finalized in recognition of the significant concerns related to antimicrobial resistance and its serious impact on Medicare beneficiaries and public health overall, and consistent with the Administration's commitment to address issues related to antimicrobial resistance, in order to help secure access to antibiotics, and improve health outcomes for Medicare beneficiaries in a manner that is as expeditious as possible. Firstly, as described earlier in this section, we finalized an alternative new technology add-on payment pathway for a product that is designated by FDA as a QIDP. Under this alternative pathway, at existing § 412.87(d), for applications received for new technology add-on payments for FY 2021 and subsequent fiscal years, if a technology receives FDA's QIDP designation and received FDA marketing authorization, it will be considered new and not substantially similar to an existing technology for purposes of new technology add-on payments and will not need to meet the requirement that it represent an advance that substantially improves, relative to technologies previously available, the diagnosis or treatment of Medicare beneficiaries. Under this pathway, a medical product that has received FDA marketing authorization and is designated by FDA as a QIDP will need to meet the cost criterion under § 412.87(b)(3), as reflected in § 412.87(d)(3) (84 FR 42292 through 42297).
In addition, beginning with FY 2020, we adopted a general increase in the maximum new technology add-on payment amount from 50 percent to 65 percent; however, we adopted a higher increase to 75 percent for a product that is designated by FDA as a QIDP. Therefore, under existing § 412.88(a)(2)(ii)(B), for a new technology that is a medical product designated by FDA as a QIDP, the new technology add-on payment is equal to the lesser of: (1) 75 percent of the costs of the new medical service or technology; or (2) 75 percent of the amount by which the costs of the case exceed the standard DRG payment (84 FR 42297 through 42300).
We stated that we believe Medicare beneficiaries may be disproportionately impacted by antimicrobial resistance, due in large part to the elderly's unique vulnerability to drug-resistant infections (for example, due to age-related and/or disease-related immunosuppression and greater pathogen exposure via catheter use). As such, antimicrobial resistance results in a substantial number of additional hospital days for Medicare beneficiaries, resulting in significant unnecessary health care expenditures. In November 2019, the CDC released its updated “Antibiotic Resistance Threats in the United States” (AR Threats Report)
As described previously, in the FY 2020 IPPS/LTCH PPS final rule, we finalized an alternative pathway for new technology add-on payments for certain antimicrobial products. Under the existing regulations at § 412.87(d), to be eligible for approval under this alternative pathway, the antimicrobial product must be designated by FDA as a QIDP and have received FDA marketing authorization. Under this alternative pathway, such a QIDP will be considered new and not substantially similar to an existing technology for purposes of new technology add-on payments and will not need to meet the requirement that it represent an advance that substantially improves, relative to technologies previously available, the diagnosis or treatment of Medicare beneficiaries.
FDA also has the Limited Population Pathway for Antibacterial and Antifungal Drugs (LPAD pathway), which encourages the development of safe and effective drug products that address unmet needs of patients with serious bacterial and fungal infections.
We proposed to revise § 412.87(d)(1) to reflect this proposal, by adding drugs approved under FDA's LPAD pathway to the current alternative new technology add-on payment pathway for QIDPs at proposed new § 412.87(d)(1)(ii), beginning with discharges occurring on or after October 1, 2021. We also proposed to revise the title of existing § 412.87(d) to refer more broadly to “certain antimicrobial products” rather than specifying in this title the particular FDA programs for antimicrobial products (that is, QIDPs and LPADs) that are the subject of this alternative new technology add-on payment pathway.
As we noted in the proposed rule, FDA may approve a drug under the LPAD pathway if it meets certain statutory standards for approval, as applicable, including that FDA receives a written request from the sponsor to approve the drug as a limited population drug. Sponsors seeking approval of a drug under the LPAD pathway are not precluded from seeking designation or approval under any other applicable provision for which the drug otherwise qualifies (for example, fast track designation, breakthrough therapy designation, regenerative medicine advanced therapy designation, accelerated approval, priority review designation). A sponsor who seeks approval of a drug under the LPAD pathway may also seek designation, as applicable, for other programs, including QIDP or orphan drug designation. Although FDA may provide advice on potential eligibility, FDA intends to make the determination of whether a drug meets the criteria for the LPAD pathway at the time of the drug's approval. (For additional information, see
We stated in the proposed rule that as such, an applicant that has not received FDA approval and which has requested approval under the LPAD pathway may not know with certainty at the time it applies for new technology add-on payments under the proposed expanded alternative pathway for certain antimicrobial products whether it will qualify for approval under that pathway. As noted previously in section II.G.1.d. of the preamble of this final rule, CMS will review the application based on the information provided by the applicant under the alternative pathway specified by the applicant. If the applicant drug ultimately does not receive approval under the LPAD pathway (but receives FDA approval otherwise) and is not designated as a QIDP, the technology would not be eligible for the alternative pathway for certain antimicrobial products and the applicant would need to re-apply for new technology add-on payments under the traditional pathway at § 412.87(b) for the following fiscal year in order to seek approval for new technology add-on payments.
However, other commenters were not supportive of this proposal. MedPAC expressed that it did not support the use of FDA's LPAD for qualification for new technology add-on payment unless the drug in question also meets the current substantial clinical improvement criterion and there is some evidence that the new drug results in improved care for beneficiaries. According to MedPAC, the FDA approval process may or may not include the new device or pharmaceutical's safety or effectiveness with regard to the Medicare population and Medicare should not pay more for technological advances that have not yet been proven to provide better outcomes for beneficiaries. MedPAC also stated that it is concerned that, if this proposal is adopted, the additional payment would also provide an incentive for increased use (including off-label use) of drugs approved under the LPAD pathway. MedPAC explained that the drugs approved under the LPAD pathway are for a limited population, based on a more flexible risk-benefit assessment, and prescribing these products outside of the targeted approved indication could endanger patients unnecessarily. Finally, MedPAC conveyed that if CMS finalizes its proposal to expand the alternative pathway to include products approved under the LPAD pathway,
According to a commenter, current and proposed reforms are insufficient to ensure patients have access to effective antimicrobial treatments and lack significant impact on the AMR crisis. The commenter stated that while the increase in new technology add-on payment for QIDPs from 50 percent to 75 percent in the FY 2020 IPPS/LTCH PPS final rule was appreciated and a step in the right direction, the change has proven to be ineffective in promoting increased use of the new technology add-on payment pathway, thereby limiting the impact of this reform on patient access to novel antimicrobials, the sustainability of the antimicrobial marketplace, and the crisis of AMR generally. This commenter, in addition to a few other commenters, went on to say that the proposal to expand our current alternative new technology add-on payment pathway for QIDPs to include products approved under the LPAD pathway will not effectively broaden or increase the impact of the new technology add-on payment program for antimicrobials, as drugs that qualify for LPAD will likely also have QIDP designation and are therefore already eligible for the alternative new technology add-on payment pathway. Instead, the commenters suggested the expansion of the alternative new technology add-on payment pathway so that it may be applied more broadly to achieve greater overall impact. Specifically, these commenters suggested the expansion include eligible products beyond LPAD and QIDP such as biologics, other non-traditional therapies that treat or prevent infections caused by a qualifying pathogen, as well as drugs that are approved by FDA to treat COVID–19.
Similar to the comments received in response to the FY 2020 IPPS/LTCH PPS proposed rule, commenters requested that CMS extend or develop similar alternative new technology add-on payment pathways for all expedited FDA pathways (for example, Fast Track, Accelerated Approval, Breakthrough Therapy, and Priority Review, including other categories of technologies such as those with a Regenerative Medicine Advanced Therapy (RMAT) designation, devices granted a HDE.
In response to comments that requested that the alternative inpatient new technology add-on payment pathway be extended to, or an alternative pathway similarly be created for, drugs and biologicals (that is, Priority Review, Accelerated Approval, Fast Track, and Breakthrough Therapy, including other categories of technologies such as those with a RMAT designation, devices granted a HDE, we continue to recognize that the goal of facilitating access to new technologies for Medicare beneficiaries could also apply to other special designations for drugs or devices. However, as we discussed in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42295 through 42296), we continue to believe that making this policy applicable to drugs more generally would further increase incentives for innovation but without decreasing cost, a key priority of this Administration. We also continue to believe that, in general, it is prudent to gain experience under the alternative pathway for certain transformative new devices before expanding it to other special designations to allow us to evaluate the benefits of this alternative pathway to facilitate beneficiary access to transformative new medical devices as well as any other considerations that may come to light after implementation of this new pathway. We will continue to consider these issues for future rulemaking, including the suggestions to develop additional criteria to qualify under an alternative pathway for technologies that receive FDA marketing authorization under or are designated for an FDA expedited program for drugs or devices.
In response to the commenter that did not support the use of FDA's LPAD for qualification for new technology add-on payment unless the drug in question also meets the current substantial clinical improvement criterion and unless there is some evidence that the new drug results in improved care for beneficiaries, and expressed concern regarding the potential for additional Medicare program expenditures, as we stated in response to similar concerns in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42295), we believe that with respect to these technologies, even though, as the commenter may assert, there may be less certainty of clinical benefit or data representing the Medicare beneficiary population as compared to the evidence standard for substantial clinical improvement under the current new technology add-on payment policy, the benefits of providing early access to critical and life-saving new cures and technologies that improve beneficiary health outcomes support expanding this alternative pathway. Additionally, while we continue to appreciate the commenter's concern regarding additional Medicare program expenditures, for the previously stated reasons, in order to address the significant ongoing concerns related to the public health crisis represented by antimicrobial resistance, consistent with the Administration's commitment to address issues related to antimicrobial resistance, and to continue to help secure access to antibiotics and improve health outcomes for Medicare beneficiaries in a manner that is as expeditious as possible, we believe it is appropriate to further facilitate beneficiary access to antimicrobial resistant products by expanding this alternative pathway to include products approved through FDA's LPAD pathway.
In response to the comment suggesting that CMS mitigate incentives for off-label use by limiting new technology add-on payment to cases that meet FDA's approved and targeted indications, we note that when CMS approves a new technology add-on payment for any technology, it is based on the applicant's FDA indicated market authorization use, and payment is limited to cases involving the use of technology for the indication for which the new technology add-on payment application was approved.
Finally, in response to the commenters' concern that the proposal will not effectively broaden or increase the impact of the new technology add-on payment program for antimicrobials, as drugs that qualify for LPAD will likely also have QIDP designation and are therefore already eligible for the alternative new technology add-on payment pathway, we disagree. As we discussed in the proposed rule, although FDA may provide advice on potential eligibility, FDA intends to make the determination of whether a drug meets the criteria for the LPAD pathway at the time of the drug's approval. As such, an applicant that has not received FDA approval and which has requested approval under the LPAD pathway may not know with certainty at the time it applies for new technology add-on payments under the proposed expanded alternative pathway for certain antimicrobial products whether it will qualify for approval under that pathway. Although we acknowledge, as we also discussed in the proposed rule, that a sponsor who seeks approval of a drug under the LPAD pathway may also seek designation, as applicable, for other
Regarding the requests to expand the alternative new technology add-on payment pathway to include eligible products beyond LPAD and QIDP such as biologics, other non-traditional therapies that treat or prevent infections caused by a qualifying pathogen, as well as drugs that are approved by FDA to treat COVID–19, while we recognize that the goal of facilitating access to antimicrobial products for Medicare beneficiaries could also apply to other designations, similar to our discussion previously, in general we believe it is prudent to gain experience under this newly expanded alternative pathway for certain antimicrobial products, before further expanding it to other special designations, to allow us to evaluate the benefits of this expansion to facilitate beneficiary access to antimicrobial products as well as any other considerations that may come to light after implementation of this expanded pathway. We will keep these suggestions in mind for consideration in future rulemaking.
After consideration of the comments received and for the reasons explained previously, we are finalizing our proposal to expand our current alternative new technology add-on payment pathway for certain antimicrobial products to include products approved under the LPAD pathway. Under this final policy, for applications received for new technology add-on payments for FY 2022 and subsequent fiscal years, if an antimicrobial drug receives market authorization from FDA under the LPAD pathway it will be considered new and not substantially similar to an existing technology for purposes of the new technology add-on payment under the IPPS, and not need to meet the requirement that it represent an advance that substantially improves, relative to technologies previously available, the diagnosis or treatment of Medicare beneficiaries. Under this final policy, an antimicrobial product that receives market authorization by FDA under the LPAD pathway will need to meet the cost criterion under § 412.87(b)(3).
We received no comments on our proposed amendments to the regulations to reflect this policy. Therefore we are finalizing our proposal to revise § 412.87(d)(1) to reflect this final policy, by adding drugs approved under FDA's LPAD pathway to the current alternative new technology add-on payment pathway for QIDPs at new § 412.87(d)(1)(ii), beginning with discharges occurring on or after October 1, 2021. We are also finalizing our proposal to revise the title of existing § 412.87(d) to refer more broadly to “certain antimicrobial products” rather than specifying in this title the particular FDA programs for antimicrobial products (that is, QIDPs and LPADs) that are the subject of this alternative new technology add-on payment pathway.
We also proposed to increase the maximum new technology add-on payment percentage for a product approved under FDA's LPAD pathway, from 65 percent to 75 percent, consistent with the new technology add-on payment percentage that currently applies for a product that is designated by FDA as a QIDP. As previously noted, an antibacterial or antifungal drug approved under the LPAD pathway is used to treat a serious or life-threatening infection in a limited population of patients with unmet needs, and therefore we stated in the proposed rule that we believe increasing the add-on payment amount for these products would further the goal of helping secure access to antibiotics and improving health outcomes for Medicare beneficiaries to address the continued significant concerns related to antimicrobial resistance as discussed previously. Therefore, we proposed to revise § 412.88(a)(2)(ii)(B) and (b)(2) by adding products approved under FDA's LPAD pathway, beginning with discharges occurring on or after October 1, 2020.
We did not receive any comments on our proposal to increase the maximum new technology add-on payment percentage for products approved under FDA's LPAD pathway. Therefore, we are also finalizing our proposal to increase the maximum new technology add-on payment percentage for a product approved under FDA's LPAD pathway, from 65 percent to 75 percent, consistent with the new technology add-on payment percentage that currently applies for a product that is designated by FDA as a QIDP. Therefore, we are revising § 412.88(a)(2)(ii)(B) and (b)(2) by adding products approved under FDA's LPAD pathway, beginning with discharges occurring on or after October 1, 2020.
In addition to adding drugs approved under FDA's LPAD pathway to the alternative new technology add-on payment pathway for certain antimicrobial products, we stated in the proposed rule that we are clarifying our policy regarding marketing authorization for QIDPs. As discussed previously, we stated that we have received questions from the public regarding the “marketing authorization” required for purposes of approval under the alternative pathway for certain transformative new devices, and are therefore clarifying our policy regarding the marketing authorization requirement under this pathway and proposing conforming amendments to the regulations at § 412.87(c)(1). We refer the reader to the previous discussion in section II.G.8. of this preamble of this final rule for complete details regarding this clarification.
The current regulations at § 412.87(d)(1) regarding the alternative pathway for new technology add-on payments for certain antimicrobial products also require marketing authorization for a QIDP to be eligible for approval under this pathway. Therefore, similar to the clarification regarding the transformative new devices alternative pathway, we stated in the proposed rule that we are clarifying that a new medical product seeking approval for the new technology add-on payment under the alternative pathway for QIDPs must receive marketing authorization for the indication covered by the QIDP designation. We proposed to amend the regulations at § 412.87(d)(1) describing the alternative pathway for QIDPs (which, as amended, would appear at § 412.87(d)(1)(i)) to state that “A new medical product is designated by FDA as a Qualified Infectious Disease Product and has received marketing authorization for the indication covered by the Qualified Infectious Disease Product designation.”
We did not receive comments on our proposal to amend the regulations at § 412.87(d)(1) to clarify that a new medical product seeking approval for the new technology add-on payment under the alternative pathway for QIDPs must receive marketing authorization for the indication covered by the QIDP designation. Therefore, we are finalizing this amendment as proposed.
As noted previously, in the FY 2009 IPPS final rule (73 FR 48562), we
We continue to believe that our policy of requiring FDA approval or clearance by July 1 of the year prior to the beginning of the fiscal year for which the application is being considered appropriately balances the length of time required to fully consider all of the new medical service or technology add-on payment criteria for each application while also providing flexibility to potential new technology add-on payment applicants. As we stated in the proposed rule, at the same time, we also believe the significant ongoing concerns regarding antimicrobial resistance, and the need to help secure access to antibiotics for Medicare beneficiaries in a manner that is as expeditious as possible, may warrant additional flexibility with respect to applications for new technology add-on payments for certain antimicrobial products. Further, we noted that under the new alternative pathway for certain antimicrobial products, upon FDA marketing authorization, such products are considered new and not substantially similar to an existing technology and do not need to demonstrate substantial clinical improvement, resulting in a difference in the amount of information and time required for CMS to complete its evaluation as compared to technologies for which it must fully consider of all of the new medical service or technology add-on payment criteria. For these reasons, and for the reasons stated previously regarding the significant ongoing concerns related to the public health crisis represented by antimicrobial resistance, consistent with the Administration's commitment to address issues related to antimicrobial resistance, and to continue to help secure access to antibiotics and improve health outcomes for Medicare beneficiaries in a manner that is as expeditious as possible, we proposed a process by which a technology that meets the new technology add-on payment criteria under the alternative pathway for products designated as QIDPs or, as proposed and finalized, approved under FDA's LPAD pathway, would receive conditional approval for such payment even if the product has not been granted FDA marketing authorization by July 1 (the existing deadline by which any technology must be granted FDA marketing authorization in order to be eligible for a new technology add-on payment). (We note that for the remainder of this discussion, we refer to the alternative pathway at § 412.87(d), which, as finalized, will also include products approved under the LPAD pathway beginning with applications submitted for new technology add-on payments for FY 2022, as the “alternative pathway for certain antimicrobial products”).
Under our proposal, a technology eligible for the new technology add-on payment alternative pathway for certain antimicrobial products would begin receiving the new technology add-on payment effective for discharges the quarter after FDA marketing authorization is granted. We proposed that the cutoff or deadline for this conditional approval would be FDA marketing authorization by July 1 of the fiscal year for which the applicant is applying for new technology add-on payments. We would consider July 1 to be the cutoff for conditional approval because under this proposal, if the FDA marketing authorization is received on or after July 1, the new technology add-on payment would not be effective for discharges until the beginning of the next quarter on October 1, which would be the start of the next fiscal year. For example, an eligible antimicrobial product is conditionally approved for the new technology add-on payment in the FY 2021 IPPS final rule. However, FDA marketing authorization is not granted until February 1, 2021. The new technology add-on payment for such an antimicrobial product would be made for discharges that use the technology on or after April 1, 2021 (the beginning of the quarter after the FDA marketing authorization was granted). Using the same example, if the eligible antimicrobial product received FDA marketing authorization on or after July 1, 2021, no new technology add-on payments would be made for FY 2021, because the beginning of the next quarter would be October 1, which is the beginning of FY 2022, the next fiscal year. As we discuss further, to be eligible for new technology add-on payments for FY 2022, the applicant would have needed to re-apply for such payments for FY 2022 by the applicable deadline.
In the FY 2009 IPPS final rule (73 FR 48562), we also stated that applications that receive FDA approval of the medical service or technology after July 1 would be able to reapply for the new medical service or technology add-on payment the following year (at which time they would be given full consideration in both the IPPS proposed and final rules). Consistent with this policy, an applicant for an eligible antimicrobial product that does not receive FDA marketing authorization during the conditional approval period described previously would need to evaluate whether it believes it is necessary to re-apply for new technology add-on payments for the following fiscal year. For example, an applicant for an eligible antimicrobial product for FY 2021 that receives conditional approval for FY 2021 (with a conditional approval period of on or after July 1, 2020 and before July 1, 2021) would still need to submit an application for FY 2022 in order to be eligible for new technology add-on payments in FY 2022. The applicant would need to evaluate whether it believes it is necessary to re-apply for new technology add-on payments for the next fiscal year based on when the applicant anticipates receiving FDA marketing authorization. However, we stated that we would encourage eligible antimicrobial product applicants to reapply for new technology add-on payments for the next fiscal year in case they do not receive FDA marketing authorization prior to July 1 of the fiscal year for which they initially applied. We also noted, as discussed previously, although FDA may provide advice on potential eligibility, FDA intends to make the determination of whether a drug meets the criteria for the LPAD pathway at the time of the drug's approval. As such, an applicant may not know with certainty at the time it applies for new technology add on payments under the alternative pathway for certain antimicrobial products whether it qualifies for that pathway. If the applicant drug ultimately does not receive approval under the LPAD pathway (but receives FDA approval otherwise) and is not designated as a QIDP, the applicant would not be eligible for approval under the
We proposed to revise § 412.87(e) to reflect this proposal by adding a new paragraph (3) which would provide for conditional approval for a technology for which an application is submitted under the alternative pathway for certain antimicrobial products at § 412.87(d) that does not receive FDA marketing authorization by the July 1 deadline specified in § 412.87(e)(2), provided that the technology receives FDA marketing authorization by July 1 of the particular fiscal year for which the applicant applied for new technology add-on payments. We also proposed related revisions to the paragraph (e) introductory text and to paragraph (e)(2) to reflect this proposed new policy.
Other commenters indicated the agency should consider establishing a subregulatory process to recognize products that qualify for a new technology add-on payment under the alternative pathway, rather than adopting the process for conditional approval described in the proposed rule. According to these commenters, providing conditional approval through an accelerated subregulatory process will allow alternative pathway products to rapidly receive new technology add-on payment designation after FDA approval and will maximize the new technology add-on payment eligibility period for those products. These commenters also stated that this access will be particularly important to drugs indicated for COVID–19 for which a new technology add-on payment application was most likely not submitted in the current year and that under the conditional approval process described in the proposed rule, could not receive new technology add-on payments until October 1, 2021 at the earliest.
In recommending a faster review process for medical devices that are part of FDA's Breakthrough Devices Program, commenters recommended that at a minimum, CMS should conduct a bi-annual review rather than the current annual review timeline. However, the commenters asserted that it is more appropriate that CMS instead review new technology add-on payment applications for medical devices that are part of FDA's Breakthrough Devices Program on the same quarterly timeline as it reviews traditional pass-through (TPT) applications for Breakthrough Designated technologies. The commenters acknowledged that although there would be increased burden on CMS associated with holding required public meetings and soliciting public comment for a more frequent review cycle, the need for earlier access to medical devices that are part of FDA's Breakthrough Devices Program outweighed considerations of administrative burden.
Similar to the comments received in response to the proposal to expand our current alternative new technology add-on payment pathway for QIDPs to include products approved under the LPAD pathway, many commenters requested expansion of the proposal to include conditional new technology add-on payment approval for products outside of the QIDP definition, but that have received fast track designation, breakthrough therapy designation, RMAT designation, are intended to treat a serious or life-threatening infection caused by a qualifying pathogen as listed in Section 505E(f) of the FD&C Act and include innovative non-antibiotic treatments for serious or life-threatening infections. Another commenter requested expansion of this proposal to generally include novel therapies that address an unmet medical need—a condition whose treatment or diagnosis is not addressed adequately by available therapy. According to this commenter, an unmet medical need includes an immediate need for a defined population (that is, to treat a serious condition with no or limited treatment) or a longer-term need for society (for example, to address the development of resistance to antibacterial drugs).
Finally, other commenters pointed to the justification CMS provided in the FY 2021 IPPS/LTCH PPS proposed rule for why certain antimicrobial products should receive conditional approval for NTAP, specifically the statement that, “such products are considered new and not substantially similar to an existing technology and do not need to demonstrate substantial clinical improvement, resulting in a difference in the amount of information and time required for CMS to complete its evaluation as compared to technologies for which it must fully consider of all of the new medical service or technology add-on payment criteria.” According to the commenters, this justification also applies to medical devices that are part of FDA's Breakthrough Devices Program. The commenters explained that while antimicrobial resistance is a critical need for the Medicare program, many products approved under FDA's Breakthrough Devices Program also fill critical needs for the Medicare population and may reduce administrative burden on CMS. According to the commenters, based on this justification, CMS should expand the proposed policy to provide for conditional new technology add-on payment approval for certain antimicrobial products that do not receive FDA marketing authorization by July 1 but otherwise meet the applicable add-on payment criteria to also include medical devices that are part of FDA's Breakthrough Devices Program that do not receive FDA marketing authorization by July 1 but otherwise meet the applicable add-on payment criteria.
In response to comments that requested expansion of the proposal to include conditional new technology add-on payment approval for products that fall outside of the QIDP definition, including products intended to treat a serious or life-threatening infection caused by a qualifying pathogen as listed in section 505E(f) of the FD&C Act, innovative non-antibiotic treatments for serious or life-threatening infections, novel therapies that address an unmet medical need and products that have received fast track designation, breakthrough therapy designation, or RMAT designation, as we discuss in section II.G.9.a. of this final rule with regard to our proposal to expand our current alternative new technology add-on payment pathway for QIDPs to include products approved
In response to the commenters that suggested expansion of the proposed policy to also include medical devices that are part of FDA's Breakthrough Devices Program that do not receive FDA marketing authorization by July 1 but otherwise meet the applicable add-on payment criteria, we agree that, as noted by the commenter, medical devices that are part of FDA's Breakthrough Device Program are evaluated under the alternative pathway for certain transformative new devices similar to how antimicrobial products are evaluated under the alternative pathway for certain antimicrobials with respect to the newness and substantial clinical improvement criteria. However, as we discussed in the proposed rule and in this final rule, in order to continue to help secure access to antibiotics and improve health outcomes for Medicare beneficiaries in a manner that is as expeditious as possible, we believe that additional flexibility is warranted with respect to the new technology payment applications for antimicrobial products to address the particular ongoing concerns relating to antimicrobial resistance. For these reasons, at this time we are not expanding our proposed process for conditional approval to include medical devices that are part of FDA's Breakthrough Devices Program that do not receive FDA marketing authorization by July 1 but otherwise meet the applicable add-on payment criteria. We may consider this further in the future as we gain more experience with this conditional approval process for a technology for which an application is submitted under the alternative pathway for certain antimicrobial products that does not receive FDA marketing authorization by the July 1 deadline.
After consideration of the comments received and for the reasons stated previously, we are finalizing our policy, as proposed, to establish a process by which a technology that meets the new technology add-on payment criteria under the alternative pathway for products designated as QIDPs or, as finalized in this final rule, approved under FDA's LPAD pathway, would receive conditional approval for such payment even if the product has not been granted FDA marketing authorization by July 1 but otherwise meets the applicable add-on payment criteria. Under this final policy, cases involving eligible antimicrobial products would begin receiving the new technology add-on payment effective for discharges the quarter after the date of FDA marketing authorization provided that the technology receives FDA marketing authorization by July 1 of the particular fiscal year for which the applicant applied for new technology add-on payments.
We received no comments on our proposed amendments to the regulations to reflect this policy. Therefore, we are finalizing our proposal to revise 412.87(e) by adding a new paragraph (3) which provides for conditional approval for a technology for which an application is submitted under the alternative pathway for certain antimicrobial products at § 412.87(d) that does not receive FDA marketing authorization by the July 1 deadline specified in § 412.87(e)(2), provided that the technology receives FDA marketing authorization by July 1 of the particular fiscal year for which the applicant applied for new technology add-on payments. We are also finalizing our proposal to make related revisions to the paragraph (e) introductory text and to paragraph (e)(2) to reflect this new policy.
In addition, we proposed to make technical clarifications to the regulations in paragraph (e)(2) of § 412.87 by replacing the words “FDA approval or clearance” with “FDA marketing authorization” which conforms to the existing regulations in paragraphs (c)(1) and (d)(1) of § 412.87. We believe this more precisely describes the current policy and does not change or modify the policy set forth in existing § 412.87(e)(2). For example, under our current policy, in evaluating whether a technology is eligible for new technology add-on payment for a given fiscal year, we consider whether the technology has received marketing authorization by July 1 (such as Premarket Approval (PMA); 510(k) clearance; the granting of a De Novo classification request; or approval of a New Drug Application (NDA)). Therefore, we believe the term “marketing authorization” would more precisely describe the various types of potential FDA approvals, clearances and classifications that we currently consider under our new technology add-on payment policy.
We received no comments on our proposal to make technical clarifications to the regulations in paragraph (e)(2) of § 412.87 by replacing the words “FDA approval or clearance” with “FDA marketing authorization”. Therefore, we are finalizing as proposed.
Section 1886(d)(3)(E) of the Act requires that, as part of the methodology for determining prospective payments to hospitals, the Secretary adjust the standardized amounts for area differences in hospital wage levels by a factor (established by the Secretary) reflecting the relative hospital wage level in the geographic area of the hospital compared to the national average hospital wage level. We currently define hospital labor market areas based on the delineations of statistical areas established by the Office of Management and Budget (OMB). A discussion of the FY 2021 hospital wage index based on the statistical areas appears under section III.A.2. of the preamble of this final rule.
Section 1886(d)(3)(E) of the Act requires the Secretary to update the wage index annually and to base the update on a survey of wages and wage-related costs of short-term, acute care hospitals. (CMS collects these data on the Medicare cost report, CMS Form 2552–10, Worksheet S–3, Parts II, III, and IV. The OMB control number for approved collection of this information is 0938–0050, which expires on March 31, 2022.) This provision also requires that any updates or adjustments to the wage index be made in a manner that ensures that aggregate payments to hospitals are not affected by the change in the wage index. The adjustment for
As discussed in section III.I. of the preamble of this final rule, we also take into account the geographic reclassification of hospitals in accordance with sections 1886(d)(8)(B) and 1886(d)(10) of the Act when calculating IPPS payment amounts. Under section 1886(d)(8)(D) of the Act, the Secretary is required to adjust the standardized amounts so as to ensure that aggregate payments under the IPPS after implementation of the provisions of sections 1886(d)(8)(B), 1886(d)(8)(C), and 1886(d)(10) of the Act are equal to the aggregate prospective payments that would have been made absent these provisions. The budget neutrality adjustment for FY 2021 is discussed in section II.A.4.b. of the Addendum to this final rule.
Section 1886(d)(3)(E) of the Act also provides for the collection of data every 3 years on the occupational mix of employees for short-term, acute care hospitals participating in the Medicare program, in order to construct an occupational mix adjustment to the wage index. A discussion of the occupational mix adjustment that we proposed to apply to the FY 2021 wage index appears under sections III.E.3. and F. of the preamble of this final rule.
The wage index is calculated and assigned to hospitals on the basis of the labor market area in which the hospital is located. Under section 1886(d)(3)(E) of the Act, beginning with FY 2005, we delineate hospital labor market areas based on OMB-established Core-Based Statistical Areas (CBSAs). The current statistical areas (which were implemented beginning with FY 2015) are based on revised OMB delineations issued on February 28, 2013, in OMB Bulletin No. 13–01. OMB Bulletin No. 13–01 established revised delineations for Metropolitan Statistical Areas, Micropolitan Statistical Areas, and Combined Statistical Areas in the United States and Puerto Rico based on the 2010 Census, and provided guidance on the use of the delineations of these statistical areas using standards published in the June 28, 2010
Generally, OMB issues major revisions to statistical areas every 10 years, based on the results of the decennial census. However, OMB occasionally issues minor updates and revisions to statistical areas in the years between the decennial censuses through OMB Bulletins. On July 15, 2015, OMB issued OMB Bulletin No. 15–01, which provided updates to and superseded OMB Bulletin No. 13–01 that was issued on February 28, 2013. The attachment to OMB Bulletin No. 15–01 provided detailed information on the update to statistical areas since February 28, 2013. The updates provided in OMB Bulletin No. 15–01 were based on the application of the 2010 Standards for Delineating Metropolitan and Micropolitan Statistical Areas to Census Bureau population estimates for July 1, 2012 and July 1, 2013. In the FY 2017 IPPS/LTCH PPS final rule (81 FR 56913), we adopted the updates set forth in OMB Bulletin No. 15–01 effective October 1, 2016, beginning with the FY 2017 wage index. For a complete discussion of the adoption of the updates set forth in OMB Bulletin No. 15–01, we refer readers to the FY 2017 IPPS/LTCH PPS final rule. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38130), we continued to use the OMB delineations that were adopted beginning with FY 2015 to calculate the area wage indexes, with updates as reflected in OMB Bulletin No. 15–01 specified in the FY 2017 IPPS/LTCH PPS final rule.
On August 15, 2017, OMB issued OMB Bulletin No. 17–01, which provided updates to and superseded OMB Bulletin No. 15–01 that was issued on July 15, 2015. The attachments to OMB Bulletin No. 17–01 provided detailed information on the update to 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 and July 1, 2015. In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41362 through 41363), we adopted the updates set forth in OMB Bulletin No. 17–01 effective October 1, 2018, beginning with the FY 2019 wage index. For a complete discussion of the adoption of the updates set forth in OMB Bulletin No. 17–01, we refer readers to the FY 2019 IPPS/LTCH PPS final rule. In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42300 through 42301), we continued to use the OMB delineations that were adopted beginning with FY 2015 (based on the revised delineations issued in OMB Bulletin No. 13–01) to calculate the area wage indexes, with updates as reflected in OMB Bulletin Nos. 15–01 and 17–01.
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 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 reclassification changes (as discussed later in this preamble). CMS was unable to complete an extensive review and verification of the changes made by these bulletins until after the development of the FY 2020 IPPS/LTCH PPS proposed rule. 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
As noted previously and in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32967), 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 proposed rule (85 FR 32697) that we believe that using the revised delineations based on OMB Bulletin No. 18–04 will increase the integrity of the IPPS wage index system by creating a more accurate representation of geographic variations in wage levels. Therefore, 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. We proposed to use these revised delineations to calculate area wage indexes in a manner that is generally consistent with the CBSA-based methodologies. Because of the previously described material changes, we also proposed a wage index transition applicable to hospitals that experience a significant decrease in their FY 2021 wage index compared to their final FY 2020 wage index. This transition is discussed in more detail in this section of this rule.
Several commenters opposed CMS's proposed implementation of the revised OMB delineations. Several commenters argued the CMS is not bound to adopt the revised delineations, and urged CMS to delay adoption of the revised delineations until the completion of the 2020 decennial census. Several comments specifically cited the lack of advance notice and the significant negative financial impacts to hospitals in several counties in the New York-Newark-Jersey City MSA resulting from the adoption of the revised delineations. These commenters cited past examples where CMS exercised discretion in modifying or delaying the implementation of OMB definitions and delineations in order to review and verify the impacts and ramifications. For instance, the revised delineations posted in February of 2012 (OMB Bulletin No: 13–01) were not adopted by CMS until FY 2015. One commenter presented the following considerations they consider compelling reasons for CMS to alter or postpone the adoption of the revised delineations. First, the commenter cites the effect of the COVID–19 pandemic, which has caused extraordinary increases in costs and revenue losses, particularly for hospitals in this New York-Newark-Jersey City, NY-NY MSA. The commenter contends that, given the timing of when the FY 2021 IPPS/LTCH proposed rule was in development, the proposed policies could not have fully considered the effect of the crisis. Second, the commenter contends that adopting the proposed delineation changes is inconsistent with prior agency action because, as referenced by the agency in the proposed rule, CMS has typically only made minor changes to delineations between decennial census periods. The commenter stated that it is unprecedented for CMS to establish a new CBSA (the New Brunswick-Lakewood, NJ CBSA) based on OMB's delineation of a new Metropolitan Division outside of a decennial census. The commenter contends that OMB Bulletin 18–04 warned that comparing Metropolitan Divisions with entire MSAs would be inappropriate and further contend that neither CMS, nor OMB, have presented any evidence that the counties that constitute the New Brunswick-Lakewood, NJ CBSA function as a distinct area within the larger New York-Newark-Jersey City, NY-NJ MSA. Third, the commenter contends that while CMS cites an increase in the integrity of the IPPS wage index system as a rationale for implementing the revised OMB delineations, CMS has neither provided an explanation as to the integrity shortcomings within the current delineations, nor how they would be corrected by implementing the new delineations. The commenter highlights OMB's statement in Bulletin 18–04 instructing any agency using these delineations to seek public comment on their proposed use. They further explain that the New Brunswick-Lakewood Metropolitan Division was created because an OMB commuting threshold between Monmouth and Middlesex Counties was narrowly exceeded, meeting the criteria for Middlesex, Monmouth, and Ocean Counties to be deemed a separate division within the larger New York-Newark-Jersey City MSA, leading to their fourth point that the underlying commuting data used to create the delineations is fundamentally flawed. They specifically cite the effects of Superstorm Sandy, which came ashore in New York and New Jersey in late October of 2012 and caused many months of severe disruption to the area. Since the commuting patterns data utilized by OMB were based on the 2011–2015 5-Year ACS Commuting Flows dataset, the commenter states it is unreasonable to assume that Superstorm Sandy did not affect the commute-to-work data that OMB used to create Bulletin No. 18–04. Given this event, they believe relying on the commuting data used by OMB actually distorts the integrity of wage index system, rather than improving it.
Given these considerations discussed by this commenter and generally cited by several additional commenters, commenters urged CMS to delay implementation of the revised OMB delineations. Commenters warned that the adoption would create a “downward spiral” effect when hospitals may not have sufficient Medicare payments to meet future wage costs. One commenter specifically cited CMS's FY 2020 wage index “compression” policy as an additional financial challenge placed on hospitals the New York City metropolitan area, which will only be compounded through adopting the revised delineations. Another commenter stated, that while some affected hospitals may be eligible to obtain MGCRB reclassifications as early as FY 2022, the negative financial impacts for hospitals unable to reclassify would only further create competitive inequalities between hospitals within the same labor market area. Additional commenters urged CMS to engage further with stakeholders to develop a more comprehensive wage index reform to address the disparities that exist within the current wage index system.
We have closely reviewed all the comments received. While we understand implementing revisions to labor market area delineations may have either positive or negative effects on payment rates for some hospitals, we believe it is important for the IPPS to use the updated labor market area delineations in order to maintain a more accurate and up-to date payment system that reflects the reality of current labor market conditions. We believe that the updated OMB delineations increase the integrity of the IPPS wage index by creating a more accurate, updated representation of variations in area wage levels as compared to the current OMB delineations. In particular, while the revised delineations do not reflect the results of a new decennial census, they do incorporate the results from updated commuting survey data, the 2011–2015 American Commuting Survey (ACS). As such, we believe that the revised OMB delineations would help ensure more accurate and appropriate payments as compared to the current OMB delineations. We concur with commenters that CMS is not bound by statute to adhere to OMB definitions or delineations in calculating the IPPS wage index. However, because we believe we have broad authority under section 1886(d)(3)(E) of the Act to determine the labor market areas used for the IPPS wage index, and because we believe the updated delineations reflected in OMB Bulletin No. 18–04 better reflect the local economies and wage levels of the areas in which hospitals are currently located, we believe it is appropriate to implement the revised OMB delineations as described in the September 14, 2018 OMB Bulletin No. 18–04, for the IPPS wage index effective beginning in FY 2021. In response to commenters who stated that we have in the past delayed implementation of revised delineations in order to better evaluate their impacts on the IPPS wage index, we note that we have reviewed our findings and impacts relating to the revised OMB delineations set forth in OMB Bulletin No. 18–04, and for the reasons discussed above, we find no compelling reason to further delay implementation. Furthermore, as explained in section III.A.2.c of this final rule, we are implementing a wage index transition for FY 2021 under which we will apply a 5 percent cap on any decrease in a hospital's wage index compared to its wage index for FY 2020 to mitigate significant negative impacts of, and provide time for hospitals to adapt to, the revised OMB delineations. We believe that the transition described in Section III.A.2.c will provide negatively affected hospitals the necessary time to adjust and explore newly available reclassification options (please note, we address comments regarding this proposed transition in section III.A.2.c). Thus, for these reasons, we do not believe it is necessary or appropriate to delay or alter implementation of the revised delineations.
With regard to the comments that would seek a delay in adopting the revised delineations given the effects of the COVID–19 related public health emergency, because the revised OMB delineations would help ensure more accurate payments than under the current OMB delineations, we believe it is important to adopt the revised delineations as soon as possible. Nothing about the COVID–19 related public health emergency would diminish the importance of ensuring that payments are as accurate as possible. In addition, we note that CMS has taken unprecedented steps to provide the healthcare community, including hospitals, with flexibilities and support to respond to the COVID–19 public health emergency (for example, see
In response to the comment that contends that adopting the revised delineations would be inconsistent with prior agency action because CMS has typically only made minor changes to labor market areas between decennial censuses, we note that CMS has routinely adopted revised delineations issued by OMB between decennial censuses (for example, the revised delineations issued in OMB Bulletin Nos. 15–01 and 17–01). Thus, consistent with past agency practice, we proposed to adopt the revised delineations in OMB Bulletin No. 18–04. As stated in the proposed rule (85 FR 32696 through 32697), we acknowledge that the changes outlined in OMB Bulletin No. 18–04 are more significant than typical OMB delineation revisions issued between decennial censuses; however, the overall impacts of these revised delineations are still more limited in scope than revisions that accompany the release of decennial censuses. In addition, as we discuss earlier, we believe that the updated OMB delineations increase the integrity and accuracy of the IPPS wage index by creating a more accurate, updated representation of variations in area wage levels as compared to the current OMB delineations.
In response to commenters that contend that CMS should not establish a new CBSA based on OMB's delineation of a new Metropolitan Division between decennial census results and that comparing Metropolitan Divisions with entire MSAs would be inappropriate, we acknowledge that when OMB implemented the Statistical Area Definitions, including the “Metropolitan Division” definitions, OMB included guidance in Bulletin 04–02 and subsequent updates that these delineations should be evaluated by any Agency before use in program funding formulas. As we stated in the FY 2005 IPPS/LTCH final rule (69 FR 49027), while we recognize that CBSA-based delineations were not specifically designed to define labor market areas, we believe they do serve as useful proxies for this purpose. In that rule (69 FR 49029), we further articulated our finding that Metropolitan Divisions of MSAs most closely resembled the labor market configuration of the previous OMB “Primary Metropolitan Statistical Areas” delineations. That is, by treating Metropolitan Divisions of MSAs as separate labor market areas, the resulting configuration in FY 2005 would more closely resemble the labor market map in place prior to FY 2005. Therefore, we finalized our current policy to treat Metropolitan Divisions of MSAs as separate labor market areas when calculating wage index values. For sake of consistency, it has been CMS's longstanding practice to refer to Metropolitan Divisions, undivided MSAs, and State's rural area as CBSAs. Because, as discussed above, we believe that OMB's Statistical Area Definitions, including Metropolitan Division definitions, serve as useful proxies in defining labor market areas for purposes of the IPPS wage index, and that the revised OMB delineations, including Metropolitan Division delineations, based on updated commuting data create a more accurate representation of variations in area wage levels, and given
We note that the configuration of the New York-Newark-Jersey City MSA in 2005 (then titled New York-Northern New Jersey, Long Island) consisted of 5 metropolitan divisions. Broadly speaking, the divisions consisted of a New York City division (New York-White Plains-Wayne), a Long Island division (Nassau-Suffolk), a Mid-Hudson NY division (Poughkeepsie-Newburgh-Middletown), a North-Central, NJ division (Newark-Union), and a Central NJ-NJ Shore division (Edison). These delineations remained in effect until FY 2015 when CMS adopted revised delineations based OMB Bulletin No.13–01 (published February 28, 2013). This bulletin eliminated the Edison, NJ division, moving 3 of its 4 counties to the New York City division, and one to the North-Central, NJ division. Also in this bulletin, Orange County, NY (in the New York City division) and Putnam County, NY (in the Mid-Hudson division) swapped division assignments. Under the revised delineations in OMB Bulletin No. 18–04, the changes adopted in FY 2015 to the New York-Newark-Jersey City MSA have reverted back to the CBSA delineations in place from FY 2005 through FY 2014. The 4 counties of the former Edison, NJ metropolitan division are again joined together in the New Brunswick-Lakewood, NJ metropolitan division, and Orange and Putnam County, NY once again swapped division assignment. We note that, prior to FY 2005, CMS used OMB “Primary Metropolitan Statistical Areas” delineations (OMB Bulletin 95–04) to define labor market areas. Under those delineations, none of the 4 counties of the Edison, NJ/New Brunswick-Lakewood, NJ metropolitan division nor Orange County, NY were considered part the same labor market area as any county in the New York City labor market. Per OMB definitions, it is true that relatively small deviations in commuting interchange statistics may cause some counties to move between CBSAs if they are close to a specific threshold definition; however, we believe that including such changes in defining labor market areas would allow the wage index to more accurately reflect variations in area wage levels. Based upon our analysis of the 2011–2015 5-Year ACS Commuting Flows and Employment dataset and the 2010 OMB Standards for Delineating Metropolitan and Micropolitan Statistical Areas (75 FR 37249–37252), the New Brunswick-Lakewood, NJ metropolitan division was created from the larger New York-Newark-Jersey City NY-NJ MSA because two contiguous “secondary counties” (Middlesex County and Monmouth County) had an Employment Interchange Measure (EIM) greater than 15. The EIM, as defined by OMB (75 FR 37251), between these two counties was 14.8 based of the previous 2006–2010 ACS Commuting Flow dataset, and therefore did not qualify as a separate metropolitan division. In the updated 2011–2015 commuting dataset, the EIM between these two counties is 16.1. While the commenters claimed the 2011–2015 dataset results in these counties only narrowly meeting the threshold to be defined as a separate metropolitan division, because the EIM (16.1) based on the updated commuting dataset does clearly exceed the threshold, we believe it is appropriate to take this into account in updating the labor market area delineations. We note that the EIM measure of 14.8 based on the older 2006–2010 commuting dataset was far closer to the threshold. We are not convinced that the proposed delineation changes are unwarranted or that there is evidence of any distortion or exceptional statistical anomaly, such as the impacts of Superstorm Sandy, as suggested by commenters. In fact, by comparing the most recent combined three year average hourly wages for all hospitals in the counties being removed from the New York-Jersey City-White Plains, NY-NJ CBSA ($47.79) to the hospitals remaining in the proposed New York City-Jersey City-White Plains, NY-NJ CBSA ($59.21), it is evident that labor costs are significantly lower for most hospitals in the counties removed from the CBSA.
As far as comments regarding the lack of notice provided to hospitals regarding the proposed adoption of the revised delineations, we note that the delineation files produced by OMB have been public for nearly 2 years, and OMB definitions and criteria are subject to separate notice and comment rulemaking. In the past, we have delayed implementation of delineations in order to fully evaluate their impacts on IPPS wage index values, and as previously discussed, we have fully assessed the impacts of the revised delineations in OMB Bulletin No. 18–04. As discussed previously, we believe it would be appropriate to adopt the revised delineations to reflect a more accurate, updated representation of variations in area wage levels as compared to the current OMB delineations.
After consideration of the public comments we received, for the reasons set forth in this final rule and in the FY 2021 IPPS/LTCH PPS proposed rule, we are finalizing, without modification, our proposed implementation of the revised OMB delineations as described in the September 14, 2018 OMB Bulletin No. 18–04, effective beginning with the FY 2021 IPPS wage index.
As discussed in the FY 2005 IPPS final rule (69 FR 49029 through 49032), OMB defines a “Micropolitan Statistical Area” as a CBSA “associated with at least one urban cluster that has a population of at least 10,000, but less than 50,000” (75 FR 37252). We refer to these areas as Micropolitan Areas. Since FY 2005, we have treated Micropolitan Areas as rural and include hospitals located in Micropolitan Areas in each State's rural wage index. We refer the reader to the FY 2005 IPPS final rule (69 FR 49029 through 19032) and the FY 2015 IPPS/LTCH PPS final rule (79 FR 49952) for a complete discussion regarding this policy and our rationale for treating Micropolitan Areas as rural. We stated in the proposed rule (85 FR 32967) that, for the reasons discussed in the FY 2005 IPPS final rule and in the FY 2015 IPPS final rule, we believed that the best course of action would be to continue this policy and include hospitals located in Micropolitan Areas in each State's rural wage index. Therefore, in conjunction with our proposal to implement the new OMB statistical area delineations beginning in FY 2021, we proposed to continue to treat Micropolitan Areas as “rural” and to include Micropolitan Areas in the calculation of each state's rural wage index. We did not receive any comments specific to this proposal, and therefore, for the reasons set forth in this final rule and in the FY 2021 IPPS/LTCH PPS proposed rule, we are finalizing our proposal, without modification, to continue to treat Micropolitan Areas as “rural” and to include Micropolitan Areas in the calculation of each state's rural wage index.
As previously discussed, we proposed to implement the revised OMB statistical area delineations (based upon
We proposed that the wage data for all hospitals located in the counties listed in this chart would now be considered rural when calculating their respective State's rural wage index. We stated in the proposed rule (85 FR 32699) that we recognize that rural areas typically have lower area wage index values than urban areas, and hospitals located in these counties may experience a negative impact in their IPPS payment due to the adoption of the revised OMB delineations. We referred readers to our discussion of our proposed wage index transition policy to apply a 5 percent cap in FY 2021 for hospitals that may experience any decrease in their final wage index from the prior fiscal year. We also referred readers to the discussion of our proposed revisions to the list of counties deemed urban under section 1886(d)(8)(B) of the Act that would affect the hospitals located in these proposed rural counties.
In addition, we noted in the proposed rule that the provisions of § 412.102 of the regulations would continue to apply with respect to determining DSH payments. Specifically, we stated that in the first year after a hospital loses urban status, the hospital will receive an adjustment to its DSH payment that equals two-thirds of the difference between the urban DSH payments applicable to the hospital before its redesignation from urban to rural and the rural DSH payments applicable to the hospital subsequent to its redesignation from urban to rural. In the second year after a hospital loses urban status, the hospital will receive an adjustment to its DSH payment that equals one third of the difference between the urban DSH payments applicable to the hospital before its redesignation from urban to rural and the rural DSH payments applicable to the hospital subsequent to its redesignation from urban to rural.
We did not receive any comments specific to the proposed list of counties that would become rural under the revised OMB delineations. Thus, for the reasons set forth in this final rule and in the FY 2021 IPPS/LTCH PPS proposed rule, we are finalizing, without modification, our proposed reassignment of the 34 counties set forth in the chart from urban areas to rural areas for purposes of the IPPS wage index based on the revised OMB delineations in OMB Bulletin No. 18–04, effective beginning with the FY 2021 IPPS wage index.
As previously discussed, we proposed to implement the revised OMB statistical area delineations (based upon OMB Bulletin No. 18–04) beginning in FY 2021. In the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32699), we indicated that analysis of these OMB statistical area delineations shows that a total of 47 counties (and county equivalents) and 17 hospitals that were located in rural areas would be located in urban areas under the revised OMB delineations. In the proposed rule, we included the following chart listing the 47 rural counties that would be urban if we finalized our proposal to implement the revised OMB delineations.
We proposed that when calculating the area wage index, the wage data for hospitals located in these counties would be included in their new respective urban CBSAs. We stated in the proposed rule (85 FR 32701) that, typically, hospitals located in an urban area would receive a wage index value higher than or equal to hospitals located
In the proposed rule, we also noted that due to the adoption of the revised OMB delineations, some CAHs that were previously located in rural areas may be located in urban areas. The regulations at §§ 412.103(a)(6) and 485.610(b)(5) provide affected CAHs with a two-year transition period that begins from the date the redesignation becomes effective. We stated that the affected CAHs must reclassify as rural during this transition period in order to retain their CAH status after the two-year transition period ends. We referred readers to the FY 2015 IPPS/LTCH final rule (79 FR 50162 and 50163) for further discussion of the two-year transition period for CAHs.
After consideration of the public comments we received, for the reasons set forth in this final rule and in the FY 2021 IPPS/LTCH PPS proposed rule, we are finalizing, without modification, our proposed reassignment of the 47 counties (and county equivalents) listed in the chart from rural areas to urban areas for purposes of the IPPS wage index based on the revised OMB delineations in OMB Bulletin No. 18–04, effective beginning with the FY 2021 IPPS wage index.
As we stated in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32702), in addition to rural counties becoming urban and urban counties becoming rural, some urban counties would shift from one urban CBSA to another urban CBSA under our proposal to adopt the new OMB delineations. We stated that, in other cases, adopting the revised OMB delineations would involve a change only in CBSA name and/or number, while the CBSA continues to encompass the same constituent counties. For example, we noted that CBSA 19380 (Dayton, OH) would experience both a change to its number
In the proposed rule, we did not further discuss these changes because we stated that they were inconsequential changes with respect to the IPPS wage index. However, we stated that in other cases, if we adopted the revised OMB delineations, counties would shift between existing and new CBSAs, changing the constituent makeup of the CBSAs. For example, we noted that Kendall County, IL would be moved from the current CBSA 16974 (Chicago-Naperville-Arlington Height, IL) into CBSA 20994 (Elgin, IL). We further noted that the remaining counties in the current CBSA 16974 would be assigned to the CBSA 16984 (Chicago-Naperville-Evanston, IL). The constituent counties of CBSA 16974 would therefore be split into two different urban CBSAs. We also stated that there would be a significant rearrangement in the constituent counties among the New York City Area Metropolitan Divisions. Most notably, Monmouth, Middlesex, and Ocean Counties in NJ would move from the current CBSA 35614 (New York-Jersey City-White Plains, NY-NJ) to the CBSA 35154 (New Brunswick-Lakewood, NJ). Also, Somerset County, NJ would move from current CBSA 35084 (Newark, NJ-PA) to CBSA 35154. In the proposed rule, we included the following chart listing the urban counties that would move from one urban CBSA to a new or modified CBSA if we adopted the revised OMB delineations.
In the proposed rule (85 FR 32705), we stated that if hospitals located in these counties move from one CBSA to another under the revised OMB
We did not receive any comments on the CBSAs that would undergo a change in name and/or CBSA number only. The comments we received regarding the list of urban counties that would move from one urban CBSA to a new or modified CBSA are discussed in section III.I.2.c.(1) of this final rule. As discussed in that section, we are finalizing, without modification, our proposal to implement the revised OMB delineations as described in the September 14, 2018 OMB Bulletin No. 18–04, effective beginning with the FY 2021 IPPS wage index. After consideration of the public comments we received, for the reasons set forth in this final rule and in the FY 2021 IPPS/LTCH PPS proposed rule, we are finalizing, without modification, our proposed list of CBSAs that would move from one urban CBSA to a new or modified CBSA for purposes of the IPPS wage index based on the revised OMB delineations in OMB Bulletin No. 18–04, effective beginning with the FY 2021 IPPS wage index.
We stated in the proposed rule (85 FR 32706) that, overall, we believe implementing the revised OMB statistical area delineations would result in wage index values being more representative of the actual costs of labor in a given area. However, we recognized that some hospitals would experience decreases in wage index values as a result of our implementation of the revised labor market area delineations. We also stated that we realize that some hospitals would have higher wage index values due to our implementation of the new labor market area delineations.
In the past, we have proposed and finalized budget neutral transition policies to help mitigate negative impacts on hospitals of certain wage index proposals. For example, in the FY 2015 IPPS/LTCH PPS final rule (79 FR 49960 through 49963) when we implemented new OMB delineations based on the 2010 decennial census data, we finalized budget neutral transitions for certain situations. Specifically, in the FY 2015 IPPS/LTCH PPS final rule, for a period of 3 fiscal years, we allowed urban hospitals that became rural under the new delineations (and that had no form of wage index reclassification or redesignation) to maintain the wage index value of the CBSA in which they were physically located for FY 2014; and for hospitals that experienced a decrease in wage index values due to the change in labor market area definitions, we implemented a 1-year blended wage index where hospitals received 50 percent of their wage index based on the new OMB delineations that went into effect in FY 2015, and 50 percent of their wage index based on their FY 2014 labor market area. As we stated in the proposed rule, this blended wage index required us to calculate wage indexes for all hospitals using both old and new labor market definitions even though it only applied to hospitals that experienced a decrease in wage index values due to a change in labor market area definitions. More recently, in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42336 through 42338), we finalized a wage index transition to help mitigate any significant decreases in the wage index values of hospitals compared to their final wage index value from the prior fiscal year due to the combined effect of the changes to the FY 2020 wage index. Specifically, for FY 2020, we implemented a 5-percent cap on any decrease in a hospital's wage index from the hospital's final wage index in FY 2019.
As previously mentioned in this final rule and in the proposed rule (85 FR 32706), while the revised OMB delineations in OMB Bulletin 18–04 are not based on new census data, there were some material changes in the OMB delineations. Also, as previously mentioned, the revisions in this OMB bulletin are updates to the CBSA delineations already adopted in FY 2015 based on the 2010 census data. For these reasons, we stated in the proposed rule that, for FY 2021, we do not believe it is necessary to implement the multifaceted transitions we established in FY 2015 for the adoption of the new OMB delineations based on the new decennial census data. However, in accordance with our past practice of implementing transition policies to help mitigate negative impacts on hospitals of certain wage index proposals, we stated in the proposed rule that if we adopt the revised OMB delineations, we believe it would be appropriate to implement a transition policy since, as previously mentioned, some of these revisions are material, and may negatively impact payments to hospitals. For example, we explained that changes in the county makeup of a CBSA, by adding or removing a constituent county, may change the pool of hospitals contributing average hourly wage data, potentially resulting in lower wage index values for certain areas. We noted that when CMS implemented various changes to the hospital wage index in prior rulemaking, commenters frequently supported transition policies that ensured wage index values maintain a degree of year-to-year consistency (see comments to our FY 2015 IPPS/LTCH PPS final rule transition policies at 79 FR 49959 through 49961). Thus, we stated in the proposed rule that we believe applying a 5-percent cap on any decrease in a hospital's wage index from the hospital's final wage index from the prior fiscal year, as we did for FY 2020, would be an appropriate transition for FY 2021 for the revised OMB delineations as it provides predictability in payment levels from FY 2020 to the upcoming FY 2021. We stated that the FY 2021 5-percent cap on wage index decreases would be applied to all hospitals that have any decrease in their wage indexes, mitigating significant negative decrease in wage index values. Given the significant portion of Medicare IPPS payments that are adjusted by the wage index and how relatively few hospitals generally see wage index declines in excess of 5 percent, hospitals may have difficulty adapting to changes in the wage index of this magnitude all at once. For these reasons, we proposed that, for FY 2021, we would place a 5 percent cap on any decrease in a hospital's wage index from the hospital's final wage index for FY 2020, such that a hospital's final wage index for FY 2021 would not be less than 95 percent of its final wage index for FY 2020. We stated that this transition would allow the effects of our adoption of the revised CBSA delineations to be phased in over 2 years with no estimated reduction in the wage index of more than 5 percent in FY 2021 (that is, no cap would be applied the second year). As we explained in the proposed rule, we continue to believe 5 percent is a reasonable level for the cap because it would effectively mitigate any significant decreases in the wage index for FY 2021. We also stated that we believe this transition would afford hospitals adequate time to fully assess any additional reclassification options
The other transition adjustment we finalized in FY 2015 was for hospitals that experienced a decrease in wage index values due to the change in labor market area definitions. We implemented a 1-year blended wage index where hospitals received 50 percent of their wage index based on the new OMB delineations that went into effect in FY 2015, and 50 percent of their wage index based on their FY 2014 labor market area. We believe our proposed 5 percent cap transition policy for FY 2021 accomplishes the same policy goal as the transition policy we finalized in FY 2015; limiting potential losses for the upcoming fiscal year, while providing adequate time adjust and evaluate reclassification options. We believe the level of the cap amount, providing that FY 2021 wage index values are at least 95 percent of a hospital's FY 2020 wage index value, would adequately mitigate significant wage index decreases and provide wage index stability for affected hospitals for FY 2021. While we acknowledge that some providers will see negative impacts based upon the adoption of the revised OMB delineations, we also point out that some providers will experience increases in their wage index values due to the adoption of the revised OMB delineations. As we stated previously, CMS has in the past provided temporary adjustments to mitigate significant negative impacts from the adoption of new policies or procedures. However, we do not think it is necessary or appropriate to extend the transition period to additional years, as suggested by some commenters, to allow additional time to adjust to the revised OMB delineations in OMB Bulletin No. 18–04. The revised delineations adopted in FY 2015 were significantly more complex and wide ranging than those we proposed for FY 2021. Although the changes outlined in OMB Bulletin No. 18–04 are more significant than typical OMB delineation revisions issued between decennial censuses, the overall impacts of these revised delineations are still more limited in scope than revisions that accompany the release of decennial censuses. Given this, we do not think it is necessary or appropriate extend the transition period to additional years.
After consideration of the public comments we received, for the reasons discussed in this final rule and the FY 2021 IPPS/LTCH PPS proposed rule, we are finalizing, without modification, our proposal to place a 5 percent cap, for FY 2021, on any decrease in a hospital's wage index from the hospital's final wage index in FY 2020 so that a
For FY 2021, we proposed to apply a budget neutrality adjustment to the standardized amount so that our transition described in section III.A.2.c. is implemented in a budget neutral manner under our authority in section 1886(d)(5)(I) of the Act. In the proposed rule (85 FR 32706), we noted that implementing the transition wage index in a budget neutral manner is consistent with past practice (for example, 79 FR 50372 and 84 FR 42338) where CMS has used its exceptions and adjustments authority under section 1886(d)(5)(I)(i) of the Act to budget neutralize transition wage index policies when such policies allow for the application of a transitional wage index only when it benefits the hospital. We stated that we believed, and continue to believe, that it would be appropriate to ensure that such policies do not increase estimated aggregate Medicare payments beyond the payments that would be made had we never proposed these transition policies (79 FR 50372 and 84 FR 42337 through 42338). Therefore, for FY 2021, we proposed to use our exceptions and adjustments authority under section 1886(d)(5)(I)(i) of the Act to apply a budget neutrality adjustment to the standardized amount so that our transition (described in section III.A.2.c.) is implemented in a budget neutral manner.
Specifically, we proposed to apply a budget neutrality adjustment to ensure that estimated aggregate payments under our transition (described in section III.A.2.c. of the preamble of this final rule) for hospitals that have any decrease in their wage indexes for FY 2021 would equal what estimated aggregate payments would have been without the transition. To determine the associated budget neutrality factor, we compared estimated aggregate IPPS payments with and without the transition.
In the proposed rule, we calculated a budget neutrality adjustment factor (0.998580) based on proposed rule data that we stated would be applied to the FY 2021 standardized amount to achieve budget neutrality for the proposed transition. We noted that this number would be updated, as appropriate, based on final rule data.
We noted in the proposed rule that, consistent with past practice (69 FR 49034 and 79 FR 49963), we were not adopting the revised OMB delineations themselves in a budget neutral manner. We do not believe that the revision to the labor market areas in and of itself constitutes an “adjustment or update” to the adjustment for area wage differences, as provided under section 1886(d)(3)(E) of the Act.
We did not receive any comments regarding our proposal to apply a budget neutrality adjustment to the FY 2021 standardized amount to achieve budget neutrality for the transition described in section III.A.2.c. of the preamble of this final rule. Thus, for the reasons set forth in the final rule and in the FY 2021 IPPS/LTCH PPS proposed rule, we are finalizing this proposal without modification. Please see the table in section II.4.h. of the addendum of this final rule which contains the final transition budget neutrality factor (which is based on final rule data) that will be applied to the FY 2021 standardized amount to achieve budget neutrality for the transition.
CBSAs are made up of one or more constituent counties. Each CBSA and constituent county has its own unique identifying codes. There are two different lists of codes associated with counties: Social Security Administration (SSA) codes and Federal Information Processing Standard (FIPS) codes. Historically, CMS has listed and used SSA and FIPS county codes to identify and crosswalk counties to CBSA codes for purposes of the hospital wage index. As we discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38129 through 38130), we have learned that SSA county codes are no longer being maintained and updated. However, the FIPS codes continue to be maintained by the U.S. Census Bureau. We believe that using the latest FIPS codes will allow us to maintain a more accurate and up-to-date payment system that reflects the reality of population shifts and labor market conditions.
The Census Bureau's most current statistical area information is derived from ongoing census data received since 2010; the most recent data are from 2015. The Census Bureau maintains a complete list of changes to counties or county equivalent entities on the website at:
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38129 through 38130), we adopted a policy to discontinue the use of the SSA county codes and began using only the FIPS county codes for purposes of crosswalking counties to CBSAs. In addition, in the same rule, we implemented the latest FIPS code updates which were effective October 1, 2017, beginning with the FY 2018 wage indexes. These updates have been used to calculate the wage indexes in a manner generally consistent with the CBSA-based methodologies finalized in the FY 2005 IPPS final rule and the FY 2015 IPPS/LTCH PPS final rule.
For FY 2021, we are continuing to use only the FIPS county codes for purposes of crosswalking counties to CBSAs. For FY 2021, Tables 2 and 3 associated with this final rule and the County to CBSA Crosswalk File and Urban CBSAs and Constituent Counties for Acute Care Hospitals File posted on the CMS website reflect the latest FIPS code updates.
The FY 2021 wage index values are based on the data collected from the Medicare cost reports submitted by hospitals for cost reporting periods beginning in FY 2017 (the FY 2020 wage indexes were based on data from cost reporting periods beginning during FY 2016).
The FY 2021 wage index includes all of the following categories of data associated with costs paid under the IPPS (as well as outpatient costs):
• Salaries and hours from short-term, acute care hospitals (including paid lunch hours and hours associated with military leave and jury duty);
• Home office costs and hours;
• Certain contract labor costs and hours, which include direct patient care, certain top management, pharmacy, laboratory, and nonteaching physician Part A services, and certain contract indirect patient care services (as discussed in the FY 2008 final rule with comment period (72 FR 47315 through 47317)); and
• Wage-related costs, including pension costs (based on policies adopted in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51586 through 51590)) and other deferred compensation costs.
Consistent with the wage index methodology for FY 2020, the wage index for FY 2021 also excludes the direct and overhead salaries and hours for services not subject to IPPS payment, such as skilled nursing facility (SNF) services, home health services, costs related to GME (teaching physicians and residents) and certified registered nurse
Data collected for the IPPS wage index also are currently used to calculate wage indexes applicable to suppliers and other providers, such as SNFs, home health agencies (HHAs), ambulatory surgical centers (ASCs), and hospices. In addition, they are used for prospective payments to IRFs, IPFs, and LTCHs, and for hospital outpatient services. We note that, in the IPPS rules, we do not address comments pertaining to the wage indexes of any supplier or provider except IPPS providers and LTCHs. Such comments should be made in response to separate proposed rules for those suppliers and providers.
In the last few years, we have received wage index data appeals related to MACs' disallowances of wages and hours that hospitals believe are associated with Part A administrative physician time, but the MACs believe are not properly documented as such, or are in fact, associated with Part B billable activities, which are not included in the wage index. For physicians employed by a hospital, their salaries and hours associated with Part A administrative time, which are included in the wage index, are reported on CMS–2552–10 Worksheet S–3, Part II, line 4, and the salaries and hours of hospital employed physicians associated with billable Part B patient care activities, which are NOT included in the wage index, are reported on Worksheet S–3, Part II, line 5. Specifically, the instructions for lines 4 and 5 state the following:
•
•
In addition, for physicians that are not employed by the hospital but are under contract, the wages and hours associated with contract Physician Part A administrative activities are reported on Worksheet S–3, Part II, line 13. No salaries and hours related to Part B activities are allowed. Line 13 states the following:
In order to accurately report the wages and hours associated with Part A and Part B activities on lines 4 and 5 and 13 respectively, the providers are required to maintain records as to the allocation of physicians' time between various services to keep track of the amount of time the physicians spend on Part A versus Part B activities. 42 CFR 415.60(b) and CMS Pub. 15–1, chapter 21, section 2182.3.B. Specifically, 42 CFR 415.60(b) states, except as provided in paragraph (d) of the section, each provider that incurs physician compensation costs must allocate those costs, in proportion to the percentage of total time that is spent in furnishing each category of services, among—
• Physician services to the provider (as described in § 415.55);
• Physician services to patients (as described in § 415.102); and
• Activities of the physician, such as funded research, that are not paid under either Part A or Part B of Medicare.
To facilitate the MAC's review of whether physician wages and hours have been reported correctly, hospitals must submit the physician allocation agreements to the MAC. (See CMS Pub. 15–1, Section 2182.3.E.3. which states that allocation agreements are to be submitted annually as part of the cost report filing process.) In the absence of a written allocation agreement (such as Exhibit 1 in CMS Pub. 15–II, Chapter 40, Section 4004.2 and related instructions for this exhibit on Line 34 of Section 4004.2—that is, instructions for Form CMS–2552–10, Worksheet S–2, Part II, line 34), the MAC assumes that 100 percent of the physician compensation cost is allocated to Part B services (see 42 CFR 415.60(f)(2)). The hospital must maintain the information used to complete the physician allocation agreements as directed in CMS Pub. 15–
We did not receive any comments on the discussion in this section.
The wage data for the FY 2021 wage index were obtained from Worksheet S–3, Parts II and III of the Medicare cost report (Form CMS–2552–10, OMB Control Number 0938–0050 with expiration date March 31, 2022) for cost reporting periods beginning on or after October 1, 2016, and before October 1, 2017. For wage index purposes, we refer to cost reports during this period as the “FY 2017 cost report,” the “FY 2017 wage data,” or the “FY 2017 data.” Instructions for completing the wage index sections of Worksheet S–3 are included in the Provider Reimbursement Manual (PRM), Part 2 (Pub. 15–2), Chapter 40, Sections 4005.2 through 4005.4. The data file used to construct the final FY 2021 wage index includes FY 2017 data submitted to us as of the end of June 2020. As in past years, we performed an extensive review of the wage data, mostly through the use of edits designed to identify aberrant data.
We asked our MACs to revise or verify data elements that result in specific edit failures. For the proposed FY 2021 wage index, we identified and excluded 84 providers with aberrant data that should not be included in the wage index. However, we stated that if data elements for some of these providers were corrected, we intended to include data from those providers in the final FY 2021 wage index. We also adjusted certain aberrant data and included these data in the wage index. For example, in situations where a hospital did not have documentable salaries, wages, and hours for housekeeping and dietary services, we imputed estimates, in accordance with policies established in the FY 2015 IPPS/LTCH PPS final rule (79 FR 49965 through 49967). We instructed MACs to complete their data verification of questionable data elements and to transmit any changes to the wage data no later than March 19, 2020. For the final FY 2021 wage index, we restored 29 hospitals to the wage index because their data was either verified or improved, but we also removed the data of one hospital for the first time after the proposed rule due to its data being aberrant. Thus, 56 hospitals with aberrant data remain deleted from the final FY 2021 wage index (84−29 + 1 = 56).
In constructing the proposed FY 2021 wage index, we included the wage data for facilities that were IPPS hospitals in FY 2017, inclusive of those facilities that have since terminated their participation in the program as hospitals, as long as those data did not fail any of our edits for reasonableness. We stated in the proposed rule (85 FR 32709) that we believe including the wage data for these hospitals is, in general, appropriate to reflect the economic conditions in the various labor market areas during the relevant past period and to ensure that the current wage index represents the labor market area's current wages as compared to the national average of wages. However, we excluded the wage data for CAHs as discussed in the FY 2004 IPPS final rule (68 FR 45397 through 45398); that is, any hospital that is designated as a CAH by 7 days prior to the publication of the preliminary wage index public use file (PUF) is excluded from the calculation of the wage index. For the proposed FY 2021 wage index, we removed 8 hospitals that converted to CAH status on or after January 24, 2019, the cut-off date for CAH exclusion from the FY 2020 wage index, and through and including January 24, 2020, the cut-off date for CAH exclusion from the FY 2021 wage index. Since the proposed rule, we learned of 1 more hospital that converted to CAH status on or after January 24, 2019, and through and including January 24, 2020, the cut-off date for CAH exclusion from the FY 2021 wage index, for a total of 9 hospitals that were removed from the FY 2021 wage index due to conversion to CAH status. In summary, we calculated the final FY 2021 wage index using the Worksheet S–3, Parts II and III wage data of 3,222 hospitals.
For the FY 2021 wage index, we allotted the wages and hours data for a multicampus hospital among the different labor market areas where its campuses are located using campus full-time equivalent (FTE) percentages as originally finalized in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51591). Table 2, which contains the FY 2021 wage index associated with this final rule (available via the internet on the CMS website), includes separate wage data for the campuses of 16 multicampus hospitals. The following chart lists the multicampus hospitals by CSA certification number (CCN) and the FTE percentages on which the wages and hours of each campus were allotted to their respective labor market areas:
We note that, in past years, in Table 2, we have placed a “B” to designate the subordinate campus in the fourth position of the hospital CCN. However, for the FY 2019 IPPS/LTCH PPS proposed and final rules and subsequent rules, we have moved the “B” to the third position of the CCN. Because all IPPS hospitals have a “0” in the third position of the CCN, we believe that placement of the “B” in this third position, instead of the “0” for the subordinate campus, is the most efficient method of identification and interferes the least with the other, variable, digits in the CCN.
As we stated in the proposed rule (85 FR 32710), the method used to compute
Step 1.—We gathered data from each of the non-Federal, short-term, acute care hospitals for which data were reported on the Worksheet S–3, Parts II and III of the Medicare cost report for the hospital's cost reporting period relevant to the wage index (in this case, for FY 2021, these were data from cost reports for cost reporting periods beginning on or after October 1, 2016, and before October 1, 2017). In addition, we included data from some hospitals that had cost reporting periods beginning before October 2016 and reported a cost reporting period covering all of FY 2017. These data were included because no other data from these hospitals would be available for the cost reporting period as previously described, and because particular labor market areas might be affected due to the omission of these hospitals. However, we generally describe these wage data as FY 2017 data. We note that, if a hospital had more than one cost reporting period beginning during FY 2017 (for example, a hospital had two short cost reporting periods beginning on or after October 1, 2016, and before October 1, 2017), we include wage data from only one of the cost reporting periods, the longer, in the wage index calculation. If there was more than one cost reporting period and the periods were equal in length, we included the wage data from the later period in the wage index calculation.
Step 2.—Salaries.—The method used to compute a hospital's average hourly wage excludes certain costs that are not paid under the IPPS. (We note that, beginning with FY 2008 (72 FR 47315), we included what were then Lines 22.01, 26.01, and 27.01 of Worksheet S–3, Part II of CMS Form 2552–96 for overhead services in the wage index. Currently, these lines are lines 28, 33, and 35 on CMS Form 2552–10. However, we note that the wages and hours on these lines are not incorporated into Line 101, Column 1 of Worksheet A, which, through the electronic cost reporting software, flows directly to Line 1 of Worksheet S–3, Part II. Therefore, the first step in the wage index calculation is to compute a “revised” Line 1, by adding to the Line 1 on Worksheet S–3, Part II (for wages and hours respectively) the amounts on Lines 28, 33, and 35.) In calculating a hospital's Net Salaries (we note that we previously used the term “average” salaries in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51592), but we now use the term “net” salaries) plus wage-related costs, we first compute the following: Subtract from Line 1 (total salaries) the GME and CRNA costs reported on CMS Form 2552–10, Lines 2, 4.01, 7, and 7.01, the Part B salaries reported on Lines 3, 5 and 6, home office salaries reported on Line 8, and exclude salaries reported on Lines 9 and 10 (that is, direct salaries attributable to SNF services, home health services, and other subprovider components not subject to the IPPS). We also subtract from Line 1 the salaries for which no hours were reported. Therefore, the formula for Net Salaries (from Worksheet S–3, Part II) is the following:
((Line 1 + Line 28 + Line 33 + Line 35)−(Line 2 + Line 3 + Line 4.01 + Line 5 + Line 6 + Line 7 + Line 7.01 + Line 8 + Line 9 + Line 10)).
To determine Total Salaries plus Wage-Related Costs, we add to the Net Salaries the costs of contract labor for direct patient care, certain top management, pharmacy, laboratory, and nonteaching physician Part A services (Lines 11, 12 and 13), home office salaries and wage-related costs reported by the hospital on Lines 14.01, 14.02, and 15, and nonexcluded area wage-related costs (Lines 17, 22, 25.50, 25.51, and 25.52). We note that contract labor and home office salaries for which no corresponding hours are reported are not included. In addition, wage-related costs for nonteaching physician Part A employees (Line 22) are excluded if no corresponding salaries are reported for those employees on Line 4. The formula for Total Salaries plus Wage-Related Costs (from Worksheet S–3, Part II) is the following: ((Line 1 + Line 28 + Line 33 + Line 35)−(Line 2 + Line 3 + Line 4.01 + Line 5 + Line 6 + Line 7 + Line 7.01 + Line 8 + Line 9 + Line 10)) + (Line 11 + Line 12 + Line 13 + Line 14.01 + 14.02 + Line 15) + (Line 17 + Line 22 + 25.50 + 25.51 + 25.52).
Step 3.—Hours.—With the exception of wage-related costs, for which there are no associated hours, we compute total hours using the same methods as described for salaries in Step 2. The formula for Total Hours (from Worksheet S–3, Part II) is the following:
((Line 1 + Line 28 + Line 33 + Line 35)−(Line 2 + Line 3 + Line 4.01 + Line 5 + Line 6 + Line 7 + Line 7.01 + Line 8 + Line 9 + Line 10)) + (Line 11 + Line 12 + Line 13 + Line 14.01 + 14.02 + Line 15).
Step 4.—For each hospital reporting both total overhead salaries and total overhead hours greater than zero, we then allocate overhead costs to areas of the hospital excluded from the wage index calculation. First, we determine the “excluded rate”, which is the ratio of excluded area hours to Revised Total Hours (from Worksheet S–3, Part II) with the following formula: (Line 9 + Line 10)/(Line 1 + Line 28 + Line 33 + Line 35)−(Lines 2, 3, 4.01, 5, 6, 7, 7.01, and 8 and Lines 26 through 43). We then compute the amounts of overhead salaries and hours to be allocated to excluded areas by multiplying the above ratio by the total overhead salaries and hours reported on Lines 26 through 43 of Worksheet S–3, Part II. Next, we compute the amounts of overhead wage-related costs to be allocated to excluded areas using three steps:
• We determine the “overhead rate” (from Worksheet S–3, Part II), which is the ratio of overhead hours (Lines 26 through 43 minus the sum of Lines 28, 33, and 35) to revised hours excluding the sum of lines 28, 33, and 35 (Line 1 minus the sum of Lines 2, 3, 4.01, 5, 6, 7, 7.01, 8, 9, 10, 28, 33, and 35). We note that, for the FY 2008 and subsequent wage index calculations, we have been excluding the overhead contract labor (Lines 28, 33, and 35) from the determination of the ratio of overhead hours to revised hours because hospitals typically do not provide fringe benefits (wage-related costs) to contract personnel. Therefore, it is not necessary for the wage index calculation to exclude overhead wage-related costs for contract personnel. Further, if a hospital does contribute to wage-related costs for contracted personnel, the instructions for Lines 28, 33, and 35 require that associated wage-related costs be combined with wages on the respective contract labor lines. The formula for the Overhead Rate (from Worksheet S–3, Part II) is the following: (Lines 26 through 43−Lines 28, 33 and 35)/((((Line 1 + Lines 28, 33, 35)−(Lines 2, 3, 4.01, 5, 6, 7, 7.01, 8, and 26 through 43))−(Lines 9 and 10)) + (Lines 26 through 43−Lines 28, 33, and 35)).
• We compute overhead wage-related costs by multiplying the overhead hours ratio by wage-related costs reported on Part II, Lines 17, 22, 25.50, 25.51, and 25.52.
• We multiply the computed overhead wage-related costs by the previously described excluded area hours ratio.
Finally, we subtract the computed overhead salaries, wage-related costs, and hours associated with excluded areas from the total salaries (plus wage-
Step 5.—For each hospital, we adjust the total salaries plus wage-related costs to a common period to determine total adjusted salaries plus wage-related costs. To make the wage adjustment, we estimate the percentage change in the employment cost index (ECI) for compensation for each 30-day increment from October 14, 2016 through April 15, 2018, for private industry hospital workers from the BLS' Compensation and Working Conditions. We use the ECI because it reflects the price increase associated with total compensation (salaries plus fringes) rather than just the increase in salaries. In addition, the ECI includes managers as well as other hospital workers. This methodology to compute the monthly update factors uses actual quarterly ECI data and assures that the update factors match the actual quarterly and annual percent changes. We also note that, since April 2006 with the publication of March 2006 data, the BLS' ECI uses a different classification system, the North American Industrial Classification System (NAICS), instead of the Standard Industrial Codes (SICs), which no longer exist. We have consistently used the ECI as the data source for our wages and salaries and other price proxies in the IPPS market basket, and we did not propose to make any changes to the usage of the ECI for FY 2021. The factors used to adjust the hospital's data are based on the midpoint of the cost reporting period, as indicated in this rule.
Step 6.—Each hospital is assigned to its appropriate urban or rural labor market area before any reclassifications under section 1886(d)(8)(B), 1886(d)(8)(E), or 1886(d)(10) of the Act. Within each urban or rural labor market area, we add the total adjusted salaries plus wage-related costs obtained in Step 5 for all hospitals in that area to determine the total adjusted salaries plus wage-related costs for the labor market area.
Step 7.—We divide the total adjusted salaries plus wage-related costs obtained under Step 6 by the sum of the corresponding total hours (from Step 4) for all hospitals in each labor market area to determine an average hourly wage for the area.
Step 8.—We add the total adjusted salaries plus wage-related costs obtained in Step 5 for all hospitals in the Nation and then divide the sum by the national sum of total hours from Step 4 to arrive at a national average hourly wage.
Step 9.—For each urban or rural labor market area, we calculate the hospital wage index value, unadjusted for occupational mix, by dividing the area average hourly wage obtained in Step 7 by the national average hourly wage computed in Step 8.
Step 10.—For each urban labor market area for which we do not have any hospital wage data (either because there are no IPPS hospitals in that labor market area, or there are IPPS hospitals in that area but their data are either too new to be reflected in the current year's wage index calculation, or their data are aberrant and are deleted from the wage index), we finalized in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42305) that, for FY 2020 and subsequent years' wage index calculations, such CBSA's wage index would be equal to total urban salaries plus wage-related costs (from Step 5) in the State, divided by the total urban hours (from Step 4) in the State, divided by the national average hourly wage from Step 8 (see 84 FR 42305 and 42306) August 16, 2019). We stated that we believe that, in the absence of wage data for an urban labor market area, it is reasonable to use a statewide urban average, which is based on actual, acceptable wage data of hospitals in that State, rather than impute some other type of value using a different methodology. For calculation of the FY 2021 wage index, we note there is one urban CBSA for which we do not have IPPS hospital wage data. In Table 3 (which is available via the internet on the CMS website) which contains the area wage indexes, we include a footnote to indicate to which CBSAs this policy applies. These CBSAs' wage indexes would be equal to total urban salaries plus wage-related costs (from Step 5) in the respective State, divided by the total urban hours (from Step 4) in the respective State, divided by the national average hourly wage (from Step 8) (see 84 FR 42305 and 42306) August 16, 2019). Under this step, we also apply our policy with regard to how dollar amounts, hours, and other numerical values in the wage index calculations are rounded, as discussed in this section of this rule.
We refer readers to section II. of the Appendix of the final rule for the policy regarding rural areas that do not have IPPS hospitals.
Step 11.—Section 4410 of Public Law 105–33 provides that, for discharges on or after October 1, 1997, the area wage index applicable to any hospital that is located in an urban area of a State may not be less than the area wage index applicable to hospitals located in rural areas in that State. The areas affected by this provision are identified in Table 2 listed in section VI. of the Addendum to the final rule and available via the internet on the CMS website.
Following is our policy with regard to rounding of the wage data (dollar amounts, hours, and other numerical values) in the calculation of the unadjusted and adjusted wage index, as finalized in the FY 2020 IPPS/LTCH final rule (84 FR 42306; August 16, 2019). For data that we consider to be “raw data,” such as the cost report data on Worksheets S–3, Parts II and III, and the occupational mix survey data, we use such data “as is,” and do not round any of the individual line items or fields. However, for any dollar amounts within the wage index calculations, including any type of summed wage amount, average hourly wages, and the national average hourly wage (both the unadjusted and adjusted for occupational mix), we round the dollar amounts to 2 decimals. For any hour amounts within the wage index calculations, we round such hour amounts to the nearest whole number. For any numbers not expressed as dollars or hours within the wage index calculations, which could include ratios, percentages, or inflation factors, we round such numbers to 5 decimals. However, we continue rounding the actual unadjusted and adjusted wage indexes to 4 decimals, as we have done historically.
As discussed in the FY 2012 IPPS/LTCH PPS final rule, in “Step 5,” for each hospital, we adjust the total salaries plus wage-related costs to a common period to determine total adjusted salaries plus wage-related costs. To make the wage adjustment, we estimate the percentage change in the employment cost index (ECI) for compensation for each 30-day increment from October 14, 2016, through April 15, 2018, for private industry hospital workers from the BLS' Compensation and Working Conditions. We have consistently used the ECI as the data source for our wages and salaries and other price proxies in the IPPS market basket, and we did not propose any changes to the usage of the ECI for FY 2021. The factors used to adjust the hospital's data were based on the midpoint of the cost reporting period, as indicated in the following table.
For example, the midpoint of a cost reporting period beginning January 1, 2017, and ending December 31, 2017, is June 30, 2017. An adjustment factor of 1.01306 was applied to the wages of a hospital with such a cost reporting period.
Previously, we also would provide a Puerto Rico overall average hourly wage. As discussed in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56915), prior to January 1, 2017, Puerto Rico hospitals were paid based on 75 percent of the national standardized amount and 25 percent of the Puerto Rico-specific standardized amount. As a result, we calculated a Puerto Rico specific wage index that was applied to the labor-related share of the Puerto Rico-specific standardized amount. Section 601 of the Consolidated Appropriations Act, 2016 (Pub. L. 114–113) amended section 1886(d)(9)(E) of the Act to specify that the payment calculation with respect to operating costs of inpatient hospital services of a subsection (d) Puerto Rico hospital for inpatient hospital discharges on or after January 1, 2016, shall use 100 percent of the national standardized amount. As we stated in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56915 through 56916), because Puerto Rico hospitals are no longer paid with a Puerto Rico specific standardized amount as of January 1, 2016, under section 1886(d)(9)(E) of the Act, as amended by section 601 of the Consolidated Appropriations Act, 2016, there is no longer a need to calculate a Puerto Rico specific average hourly wage and wage index. Hospitals in Puerto Rico are now paid 100 percent of the national standardized amount and, therefore, are subject to the national average hourly wage (unadjusted for occupational mix) and the national wage index, which is applied to the national labor-related share of the national standardized amount. Therefore, for FY 2021, there is no Puerto Rico-specific overall average hourly wage or wage index.
Based on the previously described methodology, we stated in the proposed rule (85 FR 32712) that the proposed FY 2021 unadjusted national average hourly wage was the following:
As stated earlier, section 1886(d)(3)(E) of the Act provides for the collection of data every 3 years on the occupational mix of employees for each short-term, acute care hospital participating in the Medicare program, in order to construct an occupational mix adjustment to the wage index, for application beginning October 1, 2004 (the FY 2005 wage index). The purpose of the occupational mix adjustment is to control for the effect of hospitals' employment choices on the wage index. For example, hospitals may choose to employ different combinations of registered
Section 304(c) of the Consolidated Appropriations Act, 2001 (Pub. L. 106– 554) amended section 1886(d)(3)(E) of the Act to require CMS to collect data every 3 years on the occupational mix of employees for each short-term, acute care hospital participating in the Medicare program. As discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19903) and final rule (82 FR 38137), we collected data in 2016 to compute the occupational mix adjustment for the FY 2019, FY 2020, and FY 2021 wage indexes.
The FY 2021 occupational mix adjustment is based on the calendar year (CY) 2016 survey. Hospitals were required to submit their completed 2016 surveys (Form CMS–10079, OMB number 0938–0907, expiration date September 31, 2022) to their MACs by July 3, 2017. The preliminary, unaudited CY 2016 survey data were posted on the CMS website on July 12, 2017. As with the Worksheet S–3, Parts II and III cost report wage data, as part of the FY 2021 desk review process, the MACs revised or verified data elements in hospitals' occupational mix surveys that resulted in certain edit failures.
A new measurement of occupational mix is required for FY 2022. The FY 2022 occupational mix adjustment will be based on a new calendar year (CY) 2019 survey. The CY 2019 survey (CMS Form CMS–10079, OMB number 0938–0907, expiration date September 31, 2022) received OMB approval on October 18, 2019. The final CY 2019 Occupational Mix Survey Hospital Reporting Form is available on the CMS website at:
One commenter noted that the Occupational Mix Survey has historically been due one month after cost reports are due for hospitals with calendar year (CY) cost reporting year ends, and therefore should be extended consistent with the extension of the cost report due date until August 31 for hospitals with a December 31 Fiscal Year End (FYE). According to this commenter, requiring hospitals to complete the occupational mix survey before their cost reports are due would increase provider burden because hospitals with CY cost reporting periods use the process of completing their Medicare cost reports to complete the occupational mix survey.
Two commenters also asked that if CMS further extends the August 3rd, 2020 deadline, CMS should publicize the extension prior to the publication of the final rule via an update to the Emergency Declaration Blanket Waivers and other vehicles such as list-serve messages or the Tuesday “Office Hours” national teleconference.
We believe that this deadline, suggested by one commenter, is the most appropriate because it grants one additional month to the current extension, which will allow hospitals more time to accurately complete the survey while still allowing adequate time for CMS to review the data in time for inclusion in the FY 2022 wage index. Any further delay would jeopardize the FY 2022 wage index timeline and threaten timely implementation of the FY 2022 wage index.
CMS publicized this additional extension prior to the display of the final rule by updating the Emergency Declaration Blanket Waivers at
In summary, hospitals must submit their occupational mix surveys along with complete supporting documentation to their MACs by no later than September 3, 2020. Hospitals may then submit revisions to their occupational mix survey data as set forth on the CMS website to their MACs, if needed, by no later than September 10, 2020.
For FY 2021, we proposed to calculate the occupational mix adjustment factor using the same methodology that we have used since the FY 2012 wage index (76 FR 51582 through 51586) and to apply the occupational mix adjustment to 100 percent of the FY 2021 wage index. In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42308), we modified our methodology with regard to how dollar amounts, hours, and other numerical values in the unadjusted and adjusted wage index calculation are rounded, in order to ensure consistency in the calculation. According to the policy finalized in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42308 and 42309), for data that we consider to be “raw data,” such as the cost report data on Worksheets S–3, Parts II and III, and the occupational mix survey data, we continue to use these data “as is”, and not round any of the individual line items or fields. However, for any dollar amounts within the wage index calculations, including any type of summed wage amount, average hourly wages, and the national average hourly wage (both the unadjusted and adjusted for occupational mix), we round such dollar amounts to 2 decimals. We round any hour amounts within the wage index calculations to the nearest whole number. We round any numbers not expressed as dollars or hours in the wage index calculations, which could include ratios, percentages, or inflation factors, to 5 decimals. However, we continue rounding the actual unadjusted and adjusted wage indexes to 4 decimals, as we have done historically.
Similar to the method we use for the calculation of the wage index without occupational mix, salaries and hours for a multicampus hospital are allotted among the different labor market areas where its campuses are located. Table 2 associated with this final rule (which is available via the internet on the CMS website), which contains the final FY 2021 occupational mix adjusted wage index, includes separate wage data for the campuses of multicampus hospitals. We refer readers to section III.C. of the preamble of this final rule for a chart listing the multicampus hospitals and the FTE percentages used to allot their occupational mix data.
Because the statute requires that the Secretary measure the earnings and paid hours of employment by occupational category not less than once every 3 years, all hospitals that are subject to payments under the IPPS, or any hospital that would be subject to the IPPS if not granted a waiver, must complete the occupational mix survey, unless the hospital has no associated cost report wage data that are included in the FY 2021 wage index. For the proposed FY 2021 wage index, we used the Worksheet S–3, Parts II and III wage data of 3,196 hospitals, and we used the occupational mix surveys of 3,113 hospitals for which we also had Worksheet S–3 wage data, which represented a “response” rate of 97 percent (3,113/3,196). For the proposed FY 2021 wage index, we applied proxy data for noncompliant hospitals, new hospitals, or hospitals that submitted erroneous or aberrant data in the same manner that we applied proxy data for such hospitals in the FY 2012 wage index occupational mix adjustment (76 FR 51586). As a result of applying this methodology, the proposed FY 2021 occupational mix adjusted national average hourly wage was the following:
We did not receive any comments on our proposed calculation of the occupational mix adjustment to the FY 2021 wage index. Thus, for the reasons discussed in this final rule and in the FY 2021 IPPS/LTCH PPS proposed rule, we are finalizing our proposal, without modification, to calculate the occupational mix adjustment factor using the same methodology that we have used since the FY 2012 wage index and to apply the occupational mix adjustment to 100 percent of the FY 2021 wage index.
For the final FY 2021 wage index, we are using the Worksheet S–3, Parts II and III wage data of 3,223 hospitals, and we are using the occupational mix surveys of 3,140 hospitals for which we also have Worksheet S–3 wage data, which represented a “response” rate of 97 percent (3,140/3,223). For the final FY 2021 wage index, we are applying proxy data for noncompliant hospitals, new hospitals, or hospitals that submitted erroneous or aberrant data in the same manner that we applied proxy data for such hospitals in the FY 2012 wage index occupational mix adjustment (76 FR 51586). As a result of applying this methodology, the final FY 2021 occupational mix adjusted national average hourly wage is the following:
As discussed in section III.E. of the preamble of this final rule, for FY 2021, we are applying the occupational mix adjustment to 100 percent of the FY 2021 wage index. We calculated the occupational mix adjustment using data from the 2016 occupational mix survey data, using the methodology described in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51582 through 51586).
The FY 2021 national average hourly wages for each occupational mix nursing subcategory as calculated in Step 2 of the occupational mix calculation are as follows.
The national average hourly wage for the entire nurse category is computed in Step 5 of the occupational mix calculation. Hospitals with a nurse category average hourly wage (as calculated in Step 4) of greater than the national nurse category average hourly wage receive an occupational mix adjustment factor (as calculated in Step 6) of less than 1.0. Hospitals with a nurse category average hourly wage (as calculated in Step 4) of less than the national nurse category average hourly wage receive an occupational mix adjustment factor (as calculated in Step 6) of greater than 1.0.
Based on the 2016 occupational mix survey data, we determined (in Step 7 of the occupational mix calculation) that the national percentage of hospital employees in the nurse category is 42 percent, and the national percentage of hospital employees in the all other occupations category is 58 percent. At the CBSA level, the percentage of hospital employees in the nurse category ranged from a low of 27 percent in one CBSA to a high of 82 percent in another CBSA.
We compared the FY 2021 occupational mix adjusted wage indexes for each CBSA to the unadjusted wage indexes for each CBSA. Applying the occupational mix adjustment to the wage data resulted in the following:
These results indicate that a larger percentage of urban areas (57.5 percent) would benefit from the occupational mix adjustment than would rural areas (44.7 percent).
Section 4410(a) of Public Law 105–33 provides that, for discharges on or after October 1, 1997, the area wage index applicable to any hospital that is located in an urban area of a State may not be less than the area wage index applicable to hospitals located in rural areas in that State. This provision is referred to as the “rural floor”. Section 3141 of Public Law 111–148 also requires that a national budget neutrality adjustment be applied in implementing the rural floor. Based on the FY 2021 wage index associated with this final rule (which is available via the internet on the CMS website) and based on the calculation of the rural floor without the wage data of hospitals that have reclassified as rural under § 412.103, we estimate that 285 hospitals would receive an increase in their FY 2021 wage index due to the application of the rural floor.
Section 10324 of Public Law 111–148 requires that hospitals in frontier States cannot be assigned a wage index of less than 1.0000. (We refer readers to the regulations at 42 CFR 412.64(m) and to a discussion of the implementation of this provision in the FY 2011 IPPS/LTCH PPS final rule (75 FR 50160 through 50161).) In the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32715), we did not propose any changes to the frontier floor policy for FY 2021. In the proposed rule, we stated that 45 hospitals would receive the frontier floor value of 1.0000 for their FY 2021 wage index. These hospitals are located in Montana, North Dakota, South Dakota, and Wyoming.
We did not receive any public comments on the application of the State frontier floor for FY 2021. In this final rule, 44 hospitals will receive the frontier floor value of 1.0000 for their FY 2021 wage index. These hospitals are located in Montana, North Dakota, South Dakota, and Wyoming. We note that while Nevada meets the criteria of a frontier State, all hospitals within the State currently receive a wage index value greater than 1.0000.
The areas affected by the rural and frontier floor policies for the final FY 2021 wage index are identified in Table 2 associated with this final rule, which is available via the internet on the CMS website.
To help mitigate wage index disparities, including those resulting from the inclusion of hospitals with rural reclassifications under 42 CFR 412.103 in the rural floor, in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42325 through 42339), we finalized policies to reduce the disparity between high and low wage index hospitals by increasing the wage index values for certain hospitals with low wage index values and doing so in a budget neutral manner through an adjustment applied to the standardized amounts for all hospitals, as well as by changing the calculation of the rural floor. We also provided for a transition in FY 2020 for hospitals experiencing significant decreases in their wage index values as compared to their final FY 2019 wage index, and made these changes in a budget neutral manner.
We increase the wage index for hospitals with a wage index value below the 25th percentile wage index value for a fiscal year by half the difference between the otherwise applicable final wage index value for a year for that hospital and the 25th percentile wage index value for that year across all hospitals. We stated in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42326 through 42328) that this policy will be effective for at least 4 years, beginning in FY 2020, in order to allow employee compensation increases implemented by these hospitals sufficient time to be reflected in the wage index calculation. Therefore, we stated in the proposed rule that this policy will continue in FY 2021. Based on data for the proposed rule, we stated that, for FY 2021, the 25th percentile wage index value across
In addition, in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42332 through 42336), we removed urban to rural reclassifications from the calculation of the rural floor to prevent inappropriate payment increases under the rural floor due to rural reclassifications, such that, beginning in FY 2020, the rural floor is calculated without including the wage data of hospitals that have reclassified as rural under section 1886(d)(8)(E) of the Act (as implemented in the regulations at § 412.103). Also, for the purposes of applying the provisions of section 1886(d)(8)(C)(iii) of the Act, effective beginning in FY 2020, we remove the data of hospitals reclassified from urban to rural under section 1886(d)(8)(E) of the Act (as implemented in the regulations at § 412.103) from the calculation of “the wage index for rural areas in the State in which the county is located” as referred to in section 1886(d)(8)(C)(iii) of the Act. As previously mentioned in section III.G.1. of this final rule, the rural floor for this FY 2021 final rule is calculated without the wage data of hospitals that have reclassified as rural under § 412.103.
Lastly, for FY 2020, we placed a 5-percent cap on any decrease in a hospital's wage index from the hospital's final wage index in FY 2019 (84 FR 42336 through 42338). We applied a budget neutrality adjustment to the standardized amount so that this transition policy was implemented in a budget neutral manner. We clarified in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42337 through 42338) that this 5-percent cap on wage index decreases applied to all hospitals that have any decrease in their wage indexes, regardless of the circumstance causing the decline, so that a hospital's final wage index for FY 2020 will not be less than 95 percent of its final wage index for FY 2019. In light of the recent OMB updates described in section III.B.2. of this final rule, for FY 2021 we proposed to again cap any decreases in the wage index at 5 percent so that a hospital's final wage index for FY 2021 will not be less than 95 percent of its final wage index for FY 2020, and to apply a budget neutrality adjustment for this transition policy in the same manner as in FY 2020. As previously mentioned, on September 14, 2018, OMB issued OMB Bulletin No. 18–04 which established revised delineations. Consistent with our past practice of implementing transition policies to help mitigate negative impacts on hospitals of certain wage index proposals, due to the revised OMB delineations, for FY 2021 we proposed to again provide for a transition of a 5-percent cap on any decrease in a hospital's wage index from the hospital's final wage index from the prior fiscal year which would be FY 2020. We refer readers to section III.B.2.c. and d. of the preamble of this final rule for a complete discussion of the wage index transition policy.
Other commenters opposed continuing the low wage index hospital policy in FY 2021. The commenters expressed that the policy fails to recognize the legitimate differences in geographic labor markets. Commenters also noted that there is no requirement for hospitals to use the increased reimbursement to boost employee compensation, and suggested CMS begin evaluating the cost report data filed by hospitals in the lowest quartile to ascertain whether the increased funds are being used to raise employee compensation in deciding whether to continue this policy for FY 2022. Some commenters stated that the data lag CMS described in its rationale applies equally to all hospitals, not only those in the lowest quartile. Commenters questioned CMS's statutory authority to promulgate this policy under 42 U.S.C. 1395ww(d)(3)(E), which requires the agency to adjust payments to reflect area difference in wages, because it artificially inflates wage index values and creates a wage index system not based on actual data. These commenters expressed that CMS is using the wage index as a policy vehicle, not as a technical correction, and needs Congressional authority to provide additional funding to low‐wage hospitals.
In response to the commenters opposing our policy because the policy fails to recognize differences in geographic labor markets, we continue to believe, for the reasons stated in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42327–42328), that by preserving the rank order in wage index values, our policy continues to reflect meaningful distinctions between the employee compensation costs faced by hospitals in different geographic areas. Furthermore, as stated in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42327 through 42328), and as noted above, we believe that the low wage index hospital policy increases the accuracy of the wage index as a relative measure of wages across different geographic regions because it allows low wage index hospitals to increase their employee compensation in ways that we would expect if there were no lag in reflecting compensation adjustments in the wage index. Thus, under the low wage index hospital policy, we believe the wage index for low wage index hospitals appropriately reflects the relative hospital wage level in those areas compared to the national average hospital wage level. As explained in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42331), because the low wage index hospital policy is based on the actual wages that we expect low wage hospitals to pay, it falls within the scope of the authority in section 1886(d)(3)(E) of the Act. We appreciate the commenters' suggestions that CMS evaluate whether hospitals in the lowest
We refer readers to our discussion in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42326–42332) for further discussion of the low wage index hospital policy and our responses to similar comments.
Other commenters asked that CMS ensure that the budget neutrality adjustment factor not apply to hospitals falling below the 25th percentile or revert to its FY 2020 proposal to decrease the wage index for hospitals with values above the 75th percentile. One commenter specifically pointed out that hospitals between the 22nd and the 25th percentile are receiving an overall reduction because the amount of benefit received from the wage index boost is less than the reduction to the standardized rate. This commenter suggested CMS explore slightly reducing the labor share of those hospitals who have a wage index greater than 1.0000, or a graduated reduction to the standardized rate based on wage index percentile.
As we stated in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32715), we will continue to apply the policies we finalized in the FY 2020 IPPS/LTCH PPS final rule (84 FR 32715) to address wage index disparities—that is, the low wage index hospital policy, and the exclusion of the wage data of hospitals reclassified under section 1886(d)(8)(E) of the Act (as implemented in § 412.103) from the rural floor and from the calculation of “the wage index for rural areas in the State in which the county is located” as referred to in section 1886(d)(8)(C)(iii) of the Act. For purposes of the low wage index hospital policy, based on the data for this final rule, for FY 2021, the 25th percentile wage index value across all hospitals is 0.8465.
In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49498 and 49807 through 49808), we finalized a proposal to streamline and consolidate the wage index tables associated with the IPPS proposed and final rules for FY 2016 and subsequent fiscal years. Prior to FY 2016, the wage index tables had consisted of 12 tables (Tables 2, 3A, 3B, 4A, 4B, 4C, 4D, 4E, 4F, 4J, 9A, and 9C) that were made available via the internet on the CMS website. Effective beginning FY 2016, with the exception of Table 4E, we streamlined and consolidated 11 tables (Tables 2, 3A, 3B, 4A, 4B, 4C, 4D, 4F, 4J, 9A, and 9C) into 2 tables (Tables 2 and 3). As discussed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41380), beginning with FY 2019, we added Table 4 which was titled and included a “List of Counties Eligible for the Out-Migration Adjustment under Section 1886(d)(13) of the Act” for the relevant fiscal year. In this FY 2021 IPPS/LTCH PPS final rule, we have included Table 4A which is titled “List of Counties Eligible for the Out-Migration Adjustment under Section 1886(d)(13) of the Act” and Table 4B titled “Counties redesignated under section 1886(d)(8)(B) of the Act (Lugar Counties).” We refer readers to section VI. of the Addendum to this final rule for a discussion of the wage index tables for FY 2021.
Under section 1886(d)(10) of the Act, the Medicare Geographic Classification Review Board (MGCRB) considers applications by hospitals for geographic reclassification for purposes of payment under the IPPS. Hospitals must apply to the MGCRB to reclassify not later than 13 months prior to the start of the fiscal year for which reclassification is sought (usually by September 1). However, we note that this deadline has been extended for applications for FY 2022 reclassifications to 15 days after the public display date of the FY 2021 IPPS/LTCH final rule at the Office of the Federal Register, using our authority under Section 1135(b)(5) the Act due to the COVID–19 Public Health Emergency. Generally, hospitals must be proximate to the labor market area to which they are seeking reclassification and must demonstrate characteristics
In addition, in the FY 2012 IPPS/LTCH PPS final rule, we discussed the effects on the wage index of urban hospitals reclassifying to rural areas under 42 CFR 412.103. In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42332 through 42336), we finalized a policy to exclude the wage data of urban hospitals reclassifying to rural areas under 42 CFR 412.103 from the calculation of the rural floor. Hospitals that are geographically located in States without any rural areas are ineligible to apply for rural reclassification in accordance with the provisions of 42 CFR 412.103.
On April 21, 2016, we published an interim final rule with comment period (IFC) in the
We discussed that when there is both a § 412.103 redesignation and an MGCRB reclassification, the MGCRB reclassification controls for wage index calculation and payment purposes. We exclude hospitals with § 412.103 redesignations from the calculation of the reclassified rural wage index if they also have an active MGCRB reclassification to another area. That is, if an application for urban reclassification through the MGCRB is approved, and is not withdrawn or terminated by the hospital within the established timelines, we consider the hospital's geographic CBSA and the urban CBSA to which the hospital is reclassified under the MGCRB for the wage index calculation. We refer readers to the April 21, 2016 IFC (81 FR 23428 through 23438) and the FY 2017 IPPS/LTCH PPS final rule (81 FR 56922 through 56930) for a full discussion of the effect of simultaneous reclassifications under both the § 412.103 and the MGCRB processes on wage index calculations. For a discussion on the effects of reclassifications under § 412.103 on the rural area wage index and the calculation of the rural floor, we refer readers to the FY 2020 IPPS/LTCH PPS final rule (84 FR 42332 through 42336).
As previously stated, under section 1886(d)(10) of the Act, the MGCRB considers applications by hospitals for geographic reclassification for purposes of payment under the IPPS. The specific procedures and rules that apply to the geographic reclassification process are outlined in regulations under 42 CFR 412.230 through 412.280. At the time this final rule was constructed, the MGCRB had completed its review of FY 2021 reclassification requests. Based on such reviews, there are 392 hospitals approved for wage index reclassifications by the MGCRB starting in FY 2021. Because MGCRB wage index reclassifications are effective for 3 years, for FY 2021, hospitals reclassified beginning in FY 2019 or FY 2020 are eligible to continue to be reclassified to a particular labor market area based on such prior reclassifications for the remainder of their 3-year period. There were 245 hospitals approved for wage index reclassifications in FY 2019 that will continue for FY 2021, and 269 hospitals approved for wage index reclassifications in FY 2020 that will continue for FY 2021. Of all the hospitals approved for reclassification for FY 2019, FY 2020, and FY 2021, based upon the review at the time of this final rule, 895 hospitals are in a MGCRB reclassification status for FY 2021 (with 90 of these hospitals reclassified back to their geographic location).
Under the regulations at 42 CFR 412.273, hospitals that have been reclassified by the MGCRB are permitted to withdraw their applications if the request for withdrawal is received by the MGCRB any time before the MGCRB issues a decision on the application, or after the MGCRB issues a decision, provided the request for withdrawal is received by the MGCRB within 45 days of the date that CMS' annual notice of rulemaking is issued in the
Additionally, we used our authority under section 1135 of the Act to extend the deadline for hospitals to submit geographic reclassification applications for reclassifications beginning in FY 2022, as the commenters suggested. Due to the COVID–19 Public Health Emergency (PHE), under the authority of section 1135(b)(5) the Act, CMS modified the September 1 deadline to be 15 days after the public display date of the FY 2021 IPPS/LTCH final rule at the Office of the Federal Register. We notified hospitals about this extension via the CMS MGCRB Application website,
We proposed to modify the regulation at § 412.230(d)(2)(ii)(A) to clarify that a hospital may qualify for an individual wage index reclassification by the MGCRB under § 412.230 to another
After consideration of comments received, for the reasons discussed in this final rule and in the FY 2021 IPPS/LTCH PPS proposed rule, we are finalizing our proposed revisions to § 412.230(d)(2)(ii)(A) without modification. Specifically, we are reformatting § 412.230(d)(2)(ii)(A) so that it consists of two paragraphs (paragraphs (d)(2)(ii)(A)(1) and (2)), and including new language in new § 412.230(d)(2)(ii)(A)(2) stating that once a hospital has accumulated at least 1 year of wage data in the applicable 3-year average hourly wage period used by the MGCRB, the hospital is eligible to apply for reclassification based on those data.
We stated in the proposed rule (85 FR 32717) that because hospitals that have been reclassified beginning in FY 2019, 2020, or 2021 were reclassified based on the current labor market delineations, if we adopt the revised OMB delineations based on the OMB Bulletin No. 18–04 beginning in FY 2021, the areas to which they have been reclassified, or the areas where they are located, may change. We stated that under the revised OMB delineations, some existing CBSAs would be reconfigured. Hospitals with current reclassifications were encouraged to verify area wage indexes on Table 2 in the appendix of proposed rule, and confirm that the areas to which they have been reclassified for FY 2021 would continue to provide a higher wage index than their geographic area wage index. We stated that hospitals could withdraw or terminate their FY 2021 reclassifications by contacting the MGCRB within 45 days from the date the proposed rule was issued in the
As we stated in the proposed rule, in some cases, adopting the revised OMB delineations would result in counties splitting apart from CBSAs to form new CBSAs, or counties shifting from one CBSA designation to another CBSA. We noted that reclassifications granted under section 1886(d)(10) of the Act are effective for 3 fiscal years so that a hospital or county group of hospitals would be assigned a wage index based upon the wage data of hospitals in a nearby labor market area for a 3-year period. We explained that if CBSAs are split apart, or if counties shift from one CBSA to another under the revised OMB delineations, we must determine which reclassified area to assign to the hospital for the remainder of a hospital's 3-year reclassification period if the area to which the hospital reclassified split or had counties shift to another new or modified urban CBSA.
Consistent with the policy CMS implemented in the FY 2005 IPPS final rule (69 FR 49054 through 49056) and in the FY 2015 IPPS final rule (79 FR 49973 through 49977), for FY 2021, we stated in the proposed rule (85 FR 32717) that if a CBSA would be reconfigured due to adoption of the revised OMB delineations and it would not be possible for the reclassification to continue seamlessly to the reconfigured CBSA, we believe it would be appropriate for us to determine the best alternative location to reassign current reclassifications for the remaining 3 years. Therefore, to maintain the integrity of a hospital's 3-year reclassification period, we proposed that current geographic reclassifications (applications approved effective for FY 2019, FY 2020, or FY 2021) that would be affected by CBSAs that are split apart or counties that shift to another CBSA under the revised OMB delineations, would ultimately be assigned to a CBSA under the revised OMB delineations that contains at least one county from the reclassified CBSA under the current FY 2020 definitions, and would be generally consistent with rules that govern geographic reclassification. That is, consistent with the policy finalized in FY 2015 (79 FR 49973), we proposed a policy that affected reclassified hospitals be assigned to a CBSA that would contain the most proximate county that—(1) is located outside of the hospital's FY 2021 geographic labor market area, and (2) is part of the original CBSA (as of FY 2020) to which the hospital is reclassified. (We also noted that we made a minor
In the proposed rule (85 FR 32718), we recognized that the proposed reclassification reassignment policy, as previously described, for hospitals that are reclassified to CBSAs that would split apart or to counties that would shift to another CBSA under the revised OMB delineations may result in the reassignment of the hospital for the remainder of its 3-year reclassification period to a CBSA having a lower wage index than the wage index that would have been assigned for the reclassified hospital in the absence of the adoption of the revised OMB delineations. Therefore, as discussed in section III.B.2.e. of the preamble of the proposed rule, as a transition, we proposed to continue to apply for FY 2021 a 5-percent cap on any decrease in a hospital's wage index from the hospital's final wage index for the prior fiscal year. In other words, we stated we would apply a 5 percent cap in FY 2021 on any decrease in a hospital's wage index compared to its final wage index for FY 2020. We explained that we believe that this transitional wage index would mitigate significant negative payment impacts for FY 2021, and would afford hospitals adequate time to fully assess any additional reclassification options available to them.
We noted that if the CBSA to which a hospital is reclassified experiences only a change in name and/or number, (in other words, a county (or county equivalent) did not move to a new or different CBSA), we considered the CBSA, and associated reclassifications, to remain unchanged. For example, we noted that any hospital reclassified to current CBSA 19380 (Dayton, OH), 39140 (Prescott, AZ) or 43524 (Silver Spring-Frederick-Rockville, MD) would have its reclassification transferred to the equivalent CBSA 19430 (Dayton-Kettering, OH), 39150 (Prescott Valley-Prescott, AZ), and 23224 (Frederick-Gaithersburg-Rockville, MD), respectively.
In the proposed rule (85 FR 32718), we provided the following Table 1 which sets forth a list of current FY 2020 CBSAs (column 1) where one or more counties would be relocated to a new or different urban CBSA. We stated that hospitals with MGCRB reclassifications into the CBSAs in column 1 would be subject to the proposed reclassification assignment policy. The third column of “eligible” CBSAs lists all revised CBSAs that contain at least one county that is part of the current FY 2020 CBSA (in column 1).
In the proposed rule, we provided the following Table 2 which lists all hospitals subject to our proposed reclassification assignment policy and where their reclassifications would be assigned for FY 2021 under this policy. We stated in the proposed rule that the table lists reclassifications that would be in effect for FY 2021 under our proposed policy, and included in Table 2 in the addendum of the proposed rule. We stated that the table also includes reclassifications (noted by an asterisk on the “MGCRB Case Number”) that were approved in FY 2019 or FY 2020 and are superseded by a new FY 2021 reclassification. We explained that these prior year reclassifications, frequently referred to as “fallback” reclassifications, may become active if the subsequent FY 2021 reclassification is withdrawn. (We noted that the table did not include hospitals currently reclassified to their “home” geographic area, which were discussed in a separate section of the proposed rule).
We stated in the proposed rule (85 FR 32720) that if a hospital that is subject to the proposed reclassification assignment policy discussed earlier in this section wished to be reassigned to another eligible CBSA (that is, to a CBSA other than the CBSA to which their reclassification would be assigned under the proposed reclassification assignment policy and that contains at least one county from the CBSA to which they are reclassified for FY 2020) for which they meet the applicable proximity criteria, they could request reassignment within 45 days from the date the proposed rule is placed on display at the
We stated that all hospital requests for reassignment should contain the hospital's name, address, CCN, and point of contact information, and all requests must be sent to
We received three timely requests for reassignment to the
Regarding the comment that our policy violates the regulations at
Finally, in response to comments requesting CMS allow affected hospitals to submit expedited applications effective for FY 2021 to obtain a different wage index reclassification, we believe this action is unnecessary and would not be permitted under the statute. Under section 1886(d)(10)(C)(ii) of the Act, a hospital must submit a reclassification application to the MGCRB not later than 13 months before the fiscal year in which the reclassification is to take effect. Thus, applications for reclassifications effective in FY 2021 were due to the MGCRB on September 1, 2019. We note that in the proposed rule, hospitals were offered an opportunity to request assignment to an another eligible CBSA (other than the one to which they were assigned under our proposed reassignment policy) for which they met the applicable proximity criteria within 45 days from the date the proposed rule was placed on display at the
After consideration of the public comments received, for the reasons set forth in this final rule and in the FY 2021 IPPS/LTCH PPS proposed rule, we are finalizing the reclassification assignment policy as proposed, without modification.
The following final Table 1 sets forth a list of current FY 2020 CBSAs (column 1) where one or more counties will be relocated to a new or different urban CBSA beginning in FY 2021. Hospitals that are currently approved for MGCRB reclassification into the CBSAs in column 1 are subject to our final reclassification assignment policy. The third column of “eligible” CBSAs lists all revised CBSAs that contain at least one county that is part of the current FY 2020 CBSA (in column 1). Reclassifications to one of the seven CBSAs identified in Table 1 will be assigned, effective October 1, 2020, to the revised CBSA listed in Table 2. We note that these assignments will remain in effect for the remaining years of the reclassification.
The following Table 2 lists all hospitals subject to our final reclassification assignment policy and where their reclassifications will be assigned beginning FY 2021 under this policy. This table lists reclassifications that will be in effect beginning FY 2021 under our final policy, and are included in Table 2 in the addendum of this final rule. This table also lists reclassifications (marked with an asterisk), that have been withdrawn or terminated for FY 2021, but could be reinstated for future years. Reclassifications in the proposed Table 2 set forth earlier that were withdrawn or terminated effective for FY 2021 and cannot be reinstated in FY 2022 have been removed from this final table. We note that two hospitals (marked with **) were approved for reassignment to a different eligible CBSA than the CBSA they would be assigned to under our reclassification assignment policy, as discussed earlier in this section.
Under the previous assignment policy implemented in FY 2015 IPPS/LTCH PPS final rule, a hospital reclassified to a CBSA that had one or more counties moved to a new of different urban CBSA was required to be assigned a new or revised CBSA that is
We also noted that in the FY 2015 IPPS/LTCH PPS final rule (79 FR 49977), CMS terminated reclassifications when, as a result of adopting the revised OMB delineations, a hospital's geographic county was reassigned to the CBSA for which it was approved for MGCRB reclassification. At that time, “home area” reclassifications were not possible. However, we stated in the proposed rule that since CMS now allows “home area” reclassifications, as discussed previously, we would consider this scenario to be a “home area” reclassification and we do not believe it is necessary to terminate these reclassifications as we did in FY 2015. We noted that hospitals with a “home area” reclassification (or any other form of reclassification) are not eligible to receive an outmigration adjustment determined under section 1886(d)(13) of the Act. We stated in the proposed rule that if such an adjustment is available, a hospital could consider withdrawing or terminating its reclassification by contacting the MGCRB within 45 days of the date the proposed rule was issued in the
We did not receive any comment specific to these proposals. Therefore, for the reasons set forth in this final rule and in the FY 2021 IPPS/LTCH PPS proposed rule, we are finalizing these policies as proposed, without modification. The “home area” reclassifications listed in Table 3 of this section will be assigned to the revised CBSA listed in column 4 of that table for the remainder of the three year reclassification period.
In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51599 through 51600), we adopted the policy that, beginning with FY 2012, an eligible hospital that waives its Lugar status in order to receive the out-migration adjustment has effectively waived its deemed urban status and, thus, is rural for all purposes under the IPPS effective for the fiscal year in which the hospital receives the outmigration adjustment. In addition, in that rule, we adopted a minor procedural change that would allow a Lugar hospital that qualifies for and accepts the out-migration adjustment (through written notification to CMS within 45 days from the publication of the proposed rule) to waive its urban status for the full 3-year period for which its out-migration adjustment is effective. By doing so, such a Lugar hospital would no longer be required during the second and third years of eligibility for the out-migration adjustment to advise us annually that it prefers to continue being treated as rural and receive the out-migration adjustment. In the FY 2017 IPPS/LTCH PPS final rule (81 FR 56930), we further clarified that if a hospital wishes to reinstate its urban status for any fiscal
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42314 and 42315), we clarified that in circumstances where an eligible hospital elects to receive the outmigration adjustment within 45 days of the public display date of the proposed rule at the Office of the Federal Register in lieu of its Lugar wage index reclassification, and the county in which the hospital is located would no longer qualify for an out-migration adjustment when the final rule (or a subsequent correction notice) wage index calculations are completed, the hospital's request to accept the outmigration adjustment would be denied, and the hospital would be automatically assigned to its deemed urban status under section 1886(d)(8)(B) of the Act. We stated that final rule wage index values would be recalculated to reflect this reclassification, and in some instances, after taking into account this reclassification, the out-migration adjustment for the county in question could be restored in the final rule. However, as the hospital is assigned a Lugar reclassification under section 1886(d)(8)(B) of the Act, it would be ineligible to receive the county outmigration adjustment under section 1886(d)(13)(G) of the Act. Because the out-migration adjustment, once finalized, is locked for a 3-year period under section 1886(d)(13)(F) of the Act, the hospital would be eligible to accept its out-migration adjustment in either the second or third year.
As discussed in section III.A.2. of the preamble of the proposed rule, CMS proposed to update the CBSA labor market delineations to reflect the changes made in the September 14, 2018 OMB Bulletin 18–04. In that section, consistent with the revised OMB delineations, we proposed that 47 currently rural counties be added to new or existing urban CBSAs. We stated in the proposed rule (85 FR 32722) that, of those 47 counties, 23 are currently deemed urban under section 1886(d)(8)(B) of the Act. Hospitals located in such a “Lugar” county, barring another form of wage index reclassification, are assigned the reclassified wage index of a designated urban CBSA. Section 1886(d)(8)(B) of the Act defines a deemed urban county as a “rural county adjacent to one or more urban areas” that meets certain commuting thresholds. We explained in the proposed rule that since we proposed to modify the status of these 23 counties from rural to urban, they would no longer qualify as “Lugar” counties. We further stated that hospitals located within these counties would be considered geographically urban under the revised OMB delineations. In the proposed rule, we provided the following table listing the counties that would no longer be deemed urban under section 1886(d)(8)(B) of the Act if we adopt the revised OMB delineations.
We discuss in section III.A.2.b.ii of this final rule the comments we received related to counties that would no longer be deemed urban under section 1886(d)(8)(B) of the Act. After consideration of the public comments received, for the reasons set forth in this final rule and in the FY 2021 IPPS/LTCH PPS proposed rule, we are finalizing, without modification, the proposed list of counties no longer deemed urban under section 1886(d)(8)(B) of the Act.
We noted that in the FY 2015 IPPS/LTCH PPS final rule (79 FR 49973 through 49977), when we adopted large scale changes to the CBSA labor market delineations based on the new decennial census, we also re-evaluated the commuting data thresholds for all eligible rural counties in accordance with the methodology set forth in section 1886(d)(8)(B) of the Act. In FY 2015, the OMB bulletin we used to update the CBSA delineations was based on the results of the 2010 decennial census, and had broad ranging nationwide impacts. We stated in the proposed rule (85 FR 32724) that with some exceptions, notably the FY 2020 IPPS/LTCH final rule where we modified the CBSA assignment for some “Lugar” counties based on a revised interpretation of the statute (84 FR 42315 through 42318), it has been CMS's long-standing policy to only revise the list of qualifying counties in conjunction with the adoption of the large scale OMB delineation changes following the results of a decennial census. Typically, interim OMB bulletins (those issued between decennial censuses) have only contained minor modifications to labor market delineations. However, as we stated in the proposed rule, 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. We stated in the proposed rule that although we believe the transition wage index described in section III.B.2.e. of the preamble of this final rule would mitigate significant negative impacts on affected hospitals, and provide hospitals with adequate time to evaluate alternative wage index reclassification options, we were aware that several hospitals in counties that would be considered rural under the revised OMB delineations would qualify for “Lugar” status, were CMS to reevaluate the commuting data and new labor market delineations. We stated in the proposed rule that we believe providing Lugar status to these hospitals, as appropriate, would further mitigate any significant negative impacts on affected hospitals. We therefore proposed to reevaluate the “Lugar” status for all counties in FY 2021 using the same commuting data table used to evaluate the list of “Lugar”
By applying the 2010 ACS commuting data to the updated OMB labor market delineations, we proposed the following changes to the current “Lugar” county list. Most notably, we stated in the proposed rule (85 FR 32724) that, based on this commuting data and the revised OMB delineations, all 34 urban counties that became rural under the revised OMB delineations would qualify as “Lugar” counties and all hospitals located within them would be designated as “Lugar.” We noted that this would affect 10 current hospitals located in those counties. Additionally, due to the change in designation of some urban counties from “outlying” to “central” status by OMB, we proposed to add two current rural counties in NY as “Lugar” counties. Specifically, we stated that hospitals located in Columbia county, NY (FIPSCD 36021) would be deemed “Lugar” hospitals and reclassified to urban CBSA 10580 (Albany-Schenectady-Troy, NY) and hospitals located in Sullivan county, NY (FIPSCD 36105) would be deemed “Lugar” hospitals and reclassified to urban CBSA 39100 (Poughkeepsie-Newburgh-Middletown, NY). However, we noted that all hospitals in these New York counties currently have MGCRB reclassifications in place for FY 2021, which would supersede these “Lugar” reclassifications. Finally, we stated that Calhoun County, TX (FIPSCD 48057) would no longer qualify as a “Lugar” county due to the fact it is no longer adjacent to CBSA 18580 (Corpus Christi, TX). We proposed to remove Calhoun County from the list of “Lugar” counties. We noted that there are no IPPS hospitals located in Calhoun County.
In the proposed rule, we provided a table listing the proposed revised list of rural counties containing hospitals that would be redesignated as urban under section 1886(d)(8)(B) of the Act (based on the revised OMB delineations and 2010 census data) (see 85 FR 32725 through 32728). We note that this table of “Lugar” counties set forth in the proposed rule contained several alignment errors between columns. In some cases, counties were listed as being assigned to an incorrect CBSA number or name. However, the reclassification assignments were correct in the proposed rule wage index tables and those were used for wage index calculations. The final table included in this rule has been corrected.
We did not receive any comments related to the proposed revisions to the list of “Lugar” counties. Therefore, for the reasons set forth in this final rule and in the FY 2021 IPPS/LTCH PPS proposed rule, we are finalizing the proposed list of rural counties containing hospitals redesignated as urban under section 1886(d)(8)(B) of the Act with modifications to correct the errors discussed previously. The final table is set forth below.
In accordance with section 1886(d)(13) of the Act, as added by section 505 of Public Law 108–173, beginning with FY 2005, we established a process to make adjustments to the hospital wage index based on commuting patterns of hospital employees (the “out-migration” adjustment). The process, outlined in the FY 2005 IPPS final rule (69 FR 49061), provides for an increase in the wage index for hospitals located in certain counties that have a relatively high percentage of hospital employees who reside in the county but work in a different county (or counties) with a higher wage index.
Section 1886(d)(13)(B) of the Act requires the Secretary to use data the Secretary determines to be appropriate to establish the qualifying counties. When the provision of section 1886(d)(13) of the Act was implemented for the FY 2005 wage index, we analyzed commuting data compiled by the U.S. Census Bureau that were derived from a special tabulation of the 2000 Census journey-to-work data for all industries (CMS extracted data applicable to hospitals). These data were compiled from responses to the
To determine the out-migration adjustments and applicable counties for FY 2016, we analyzed commuting data compiled by the Census Bureau that were derived from a custom tabulation of the American Community Survey (ACS), an official Census Bureau survey, utilizing 2008 through 2012 (5-year) Microdata. The data were compiled from responses to the ACS questions regarding the county where workers reside and the county to which workers commute. As we discussed in the FYs 2016 through 2020 IPPS/LTCH PPS final rules (80 FR 49501, 81 FR 56930, 82 FR 38150, 83 FR 41384, and 84 FR 42318 respectively), the same policies, procedures, and computation that were used for the FY 2012 out-migration adjustment were applicable for FYs 2016 through 2020, and we proposed to use them again for FY 2021. We have applied the same policies, procedures, and computations since FY 2012, and we believe they continue to be appropriate for FY 2021. We refer readers to the FY 2016 IPPS/LTCH PPS final rule (80 FR 49500 through 49502) for a full explanation of the revised data source.
For FY 2021, the out-migration adjustment will continue to be based on the data derived from the custom tabulation of the ACS utilizing 2008 through 2012 (5-year) Microdata. For future fiscal years, we may consider determining out-migration adjustments based on data from the next Census or other available data, as appropriate. For FY 2021, we did not propose any changes to the methodology or data source that we used for FY 2016 (81 FR 25071). (We refer readers to a full discussion of the out-migration adjustment, including rules on deeming hospitals reclassified under section 1886(d)(8) or section 1886(d)(10) of the Act to have waived the out-migration adjustment, in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51601 through 51602).) We did not receive any public comments on this proposed policy for FY 2021. Therefore, for the reasons set forth in this final rule and in the FY 2021 IPPS/LTCH PPS proposed rule, for FY 2021, we are finalizing our proposal, without modification, to continue using the same policies, procedures, and computations that were used for the FY 2012 outmigration adjustment and that were applicable for FYs 2016 through 2020.
Table 2 associated with this final rule (which is available via the internet on the CMS website) includes the out-migration adjustments for the FY 2021 wage index. In addition, Table 4A associated with this final rule, “List of Counties Eligible for the Out-Migration Adjustment under Section 1886(d)(13) of the Act” (also available via the internet on the CMS website) consists of the following: A list of counties that are eligible for the out-migration adjustment for FY 2021 identified by FIPS county code, the final FY 2021 out-migration adjustment, and the number of years the adjustment will be in effect. We believe this table makes this information more transparent and provides the public with easier access to this information.
Under section 1886(d)(8)(E) of the Act, a qualifying prospective payment hospital located in an urban area may apply for rural status for payment purposes separate from reclassification through the MGCRB. Specifically, section 1886(d)(8)(E) of the Act provides that, not later than 60 days after the receipt of an application (in a form and manner determined by the Secretary) from a subsection (d) hospital that satisfies certain criteria, the Secretary shall treat the hospital as being located in the rural area (as defined in paragraph (2)(D)) of the State in which the hospital is located. We refer readers to the regulations at 42 CFR 412.103 for the general criteria and application requirements for a subsection (d) hospital to reclassify from urban to rural status in accordance with section 1886(d)(8)(E) of the Act. The FY 2012 IPPS/LTCH PPS final rule (76 FR 51595 through 51596) includes our policies regarding the effect of wage data from reclassified or redesignated hospitals. We refer readers to the FY 2020 IPPS/LTCH PPS final rule (84 FR 42332 through 42336) for a discussion on our current policy to calculate the rural floor without the wage data of urban hospitals reclassifying to rural areas under 42 CFR 412.103.
Because the wage index is part of the methodology for determining the prospective payments to hospitals for each fiscal year, we stated in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56931) that we believed there should be a definitive timeframe within which a hospital should apply for rural status in order for the reclassification to be reflected in the next Federal fiscal year's wage data used for setting payment rates. Therefore, in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56931 through 56932), we revised § 412.103(b) by adding paragraph (6) to add a lock-in date by which a hospital's application for rural status must be filed in order to be treated as rural in the wage index and budget neutrality calculations for payment rates for the next Federal fiscal year. In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41384 through 41386), we changed the lock-in date to provide for additional time in the ratesetting process and to match the lock-in date with another existing deadline, the usual public comment deadline for the IPPS proposed rule. We revised § 412.103(b)(6) to specify that, in order for a hospital to be treated as rural in the wage index and budget neutrality calculations under § 412.64(e)(1)(ii), (e)(2) and (4), and (h) for payment rates for the next Federal fiscal year, the hospital's application must be approved by the CMS Regional Office in accordance with the requirements of § 412.103 no later than 60 days after the public display date at the Office of the Federal Register of the IPPS proposed rule for the next Federal fiscal year.
The lock-in date does not affect the timing of payment changes occurring at the hospital-specific level as a result of reclassification from urban to rural under § 412.103. As we discussed in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56931) and the FY 2019 IPPS/LTCH PPS final rule (83 FR 41385 through 41386), this lock-in date also does not change the current regulation that allows hospitals that qualify under § 412.103(a) to request, at any time during a cost reporting period, to reclassify from urban to rural. A hospital's rural status and claims payment reflecting its rural status continue to be effective on the filing date of its reclassification application, which is the date the CMS Regional Office receives the application, in accordance with § 412.103(d). The hospital's IPPS claims will be paid reflecting its rural status beginning on the filing date (the effective date) of the reclassification, regardless of when the hospital applies.
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42322), we noted that if an
It has come to our attention that hospitals in certain states are indeed timing their rural reclassifications and applications to exploit the rural reclassification process in order to obtain higher wage index values. For example, at least twenty-one hospitals in one state obtained § 412.103 rural reclassifications after the FY 2020 lock-in date, effectively receiving their state's rural wage index without having their wage data included, which would have lowered their State's rural wage index. These hospitals then requested to cancel their § 412.103 rural reclassifications for FY 2021, in accordance with § 412.103(g)(3). Similarly, five hospitals in another state, hospitals with wage data that would have lowered their state's FY 2021 rural wage index, requested to cancel their § 412.103 rural reclassifications for FY 2021, so that the rural wage index would be set using the data of one geographically rural hospital and two hospitals reclassified under § 412.103 that withdrew their MGCRB reclassifications for FY 2021. We will continue to monitor this situation over the course of FY 2021 and may consider proposing in future rulemaking a policy similar to the minimum waiting period at § 412.103(g)(2)(ii) or other necessary actions to prevent this type of gaming.
The regulation at § 412.278(b)(1) addresses a hospital's request for the Administrator's review of an MGCRB decision. This regulation currently states that a request for Administrator review filed by facsimile (FAX) or other electronic means will not be accepted. In addition, § 412.278(b)(1) requires a hospital to mail a copy of its request for review to CMS's Hospital and Ambulatory Policy Group.
In the proposed rule (85 FR 32730), we stated that we believe these policies of prohibiting electronic submission of requests for Administrator review and requiring paper copies to be mailed to CMS are outdated and overly restrictive. In the interest of burden reduction and to promote ease of requests, we proposed to eliminate the prohibition on submitting a request by facsimile or other electronic means so that hospitals may also submit requests for Administrator review of MGCRB decisions electronically. In addition, we proposed to require the hospital to submit an electronic copy of its request for review to CMS's Hospital and Ambulatory Policy Group. We specified that copies to CMS' Hospital and Ambulatory Policy Group should be submitted via email to
Accordingly, we proposed to revise the regulation at § 412.278(b)(1) to read: The hospital's request for review must be in writing and sent to the Administrator, in care of the Office of the Attorney Advisor. The request must be received by the Administrator within 15 days after the date the MGCRB issues its decision. The hospital must also submit an electronic copy of its request for review to CMS's Hospital and Ambulatory Policy Group.
After consideration of the public comments received, for the reasons discussed in this final rule and in the FY 2021 IPPS/LTCH PPS proposed rule, we are finalizing, without modification, our proposed revisions to the regulation at § 412.278(b)(1) so that hospitals may also submit requests for Administrator review of MGCRB decisions electronically, and must send an electronic copy of the request to CMS's Hospital and Ambulatory Policy Group.
As discussed in section IV.D. of the preamble of this final rule, for purposes of qualifying for RRC classification, a rural hospital that does not meet the bed size requirement at § 412.96(b)(1)(ii) can qualify as an RRC if the hospital meets two mandatory prerequisites (a minimum case-mix index (CMI) and a minimum number of discharges), and at least one of three optional criteria (relating to specialty composition of medical staff, source of inpatients, or referral volume). Specifically, a hospital may demonstrate that its case-mix index is at least equal to the national case-mix index value as established by CMS or the median case-mix index value for urban hospitals located in each region, in accordance with § 412.96(c)(1), and that it has a number of discharges at least equal to 5,000 discharges or, if less, the median number of discharges for urban hospitals located in each region, in accordance with § 412.96(c)(2). CMS publishes the national and regional case-mix index values and the national and regional number of discharges for the purpose of these criteria in the annual notice of prospective payment rates published in the
For purposes of qualifying for urban to rural reclassification under § 412.103, a hospital can demonstrate that it would qualify as a rural referral center as set forth in § 412.96, if the hospital were located in a rural area. This condition is set forth at § 412.103(a)(3).
It has come to our attention that there is some confusion regarding which fiscal year's published case mix index (CMI) or numbers of discharges criteria would be used in the situation where a hospital is seeking to meet the urban to rural reclassification criterion at § 412.103(a)(3) by meeting the alternative criteria at § 412.96(c): (1) The criteria published in the final rule in effect on the filing date of the hospital's § 412.103 application, or (2) the criteria that would be in effect during the fiscal year that any RRC classification would become effective (that is, the beginning of the hospital's cost reporting period).
Therefore, we are clarifying that for purposes of meeting the urban to rural reclassification criterion at § 412.103(a)(3), the appropriate CMI values and numbers of discharges to demonstrate RRC eligibility are those published in the IPPS/LTCH PPS final rule in effect as of the filing date (that is, the effective date) of the hospital's application for reclassification under § 412.103. For purposes of RRC classification under § 412.96(c), the appropriate CMI values and numbers of discharges are those published in the IPPS/LTCH PPS final rule in effect when the RRC classification will be effective at the start of the hospital's next cost reporting period, consistent with § 412.96(h)(3) and (i)(3).
For example, Hospital A has a cost reporting period beginning October 1. It applies on September 1, 2020 for urban to rural reclassification under § 412.103(a)(3) and for RRC status, by meeting the alternative criteria at § 412.96(c). For Hospital A's urban to rural reclassification request, the appropriate national or regional CMI
We believe our policy is appropriate considering that a hospital may apply for rural reclassification under § 412.103 at any time, as previously discussed in section III.K.1. of the preamble of this final rule. We clarified in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38151) that while applications for RRC status must be submitted during the last quarter of a hospital's cost reporting period in accordance with section 1886(d)(5)(C)(i) of the Act, applications for rural reclassification may be submitted at any time, including applications of hospitals seeking rural reclassification under § 412.103(a)(3). A hospital is permitted at any time to submit an urban to rural reclassification request on the basis of qualifying for RRC status under § 412.103(a)(3), even before the publication of the CMI and discharge criteria in the IPPS/LTCH PPS final rule for the period in which any RRC classification would be effective (that is, the start of the hospital's next cost reporting period). We did not receive any comments on this clarification.
The preliminary, unaudited Worksheet S–3 wage data files and the preliminary CY 2016 occupational mix data files for the proposed FY 2021 wage index were made available on May 17, 2019 through the internet on the CMS website at:
On January 31, 2020, we posted a public use file (PUF) at:
In the interest of meeting the data needs of the public, beginning with the proposed FY 2009 wage index, we post an additional PUF on the CMS website that reflects the actual data that are used in computing the proposed wage index. The release of this file does not alter the current wage index process or schedule. We notify the hospital community of the availability of these data as we do with the current public use wage data files through our Hospital Open Door Forum. We encourage hospitals to sign up for automatic notifications of information about hospital issues and about the dates of the Hospital Open Door Forums at the CMS website at:
In a memorandum dated April 29, 2019, we instructed all MACs to inform the IPPS hospitals that they service of the availability of the preliminary wage index data files and the CY 2016 occupational mix survey data files posted on May 17, 2019, and the process and timeframe for requesting revisions.
If a hospital wished to request a change to its data as shown in the May 17, 2019 preliminary wage and occupational mix data files, the hospital had to submit corrections along with complete, detailed supporting documentation to its MAC so that the MAC received them by September 3, 2019. Hospitals were notified of this deadline and of all other deadlines and requirements, including the requirement to review and verify their data as posted in the preliminary wage index data files on the internet, through the letters sent to them by their MACs. November 15, 2019 was the deadline for MACs to complete all desk reviews for hospital wage and occupational mix data and transmit revised Worksheet S–3 wage data and occupational mix data to CMS.
November 5, 2019 was the date by when MACs notified State hospital associations regarding hospitals that failed to respond to issues raised during the desk reviews. Additional revisions made by the MACs were transmitted to CMS throughout January 2020. CMS published the wage index PUFs that included hospitals' revised wage index data on January 31, 2020. Hospitals had until February 14, 2020, to submit requests to the MACs to correct errors in the January 31, 2020 PUF due to CMS or MAC mishandling of the wage index data, or to revise desk review adjustments to their wage index data as included in the January 31, 2020 PUF. Hospitals also were required to submit sufficient documentation to support their requests. Hospitals' requests and supporting documentation must be received by the MAC by the February deadline (that is, by February 14, 2020 for the FY 2021 wage index).
After reviewing requested changes submitted by hospitals, MACs were required to transmit to CMS any additional revisions resulting from the hospitals' reconsideration requests by March 19, 2020. Under our current policy as adopted in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38153), the deadline for a hospital to request CMS intervention in cases where a hospital disagreed with a MAC's handling of wage data on any basis (including a policy, factual, or other dispute) was April 2, 2020. Data that were incorrect in the preliminary or January 31, 2020 wage index data PUFs, but for which no correction request was received by the February 14, 2020 deadline, are not considered for correction at this stage. In addition, April 2, 2020 was the deadline for hospitals to dispute data corrections made by CMS of which the hospital was notified after the January 31, 2020 PUF and at least 14 calendar days prior to April 2, 2020 (that is, March 19, 2020), that do not arise from a hospital's request for revisions. The hospital's request and supporting documentation must be received by CMS (and a copy received by the MAC) by the April deadline (that is, by April 2, 2020 for the FY 2021 wage index). We refer readers to the wage index timeline for complete details.
Hospitals were given the opportunity to examine Table 2 associated with the proposed rule, which was listed in
We posted the final wage index data PUFs on April 30, 2020 via the internet on the CMS website at:
After the release of the April 2020 wage index data PUFs, changes to the wage and occupational mix data could only be made in those very limited situations involving an error by the MAC or CMS that the hospital could not have known about before its review of the final wage index data files. Specifically, neither the MAC nor CMS will approve the following types of requests:
• Requests for wage index data corrections that were submitted too late to be included in the data transmitted to CMS by the MACs on or before March 19, 2020.
• Requests for correction of errors that were not, but could have been, identified during the hospital's review of the January 31, 2020 wage index PUFs.
• Requests to revisit factual determinations or policy interpretations made by the MAC or CMS during the wage index data correction process.
If, after reviewing the April 2020 final wage index data PUFs, a hospital believed that its wage or occupational mix data were incorrect due to a MAC or CMS error in the entry or tabulation of the final data, the hospital was given the opportunity to notify both its MAC and CMS regarding why the hospital believed an error exists and provide all supporting information, including relevant dates (for example, when it first became aware of the error). The hospital was required to send its request to CMS and to the MAC so that it was received no later than May 29, 2020. May 29, 2020 was also the deadline for hospitals to dispute data corrections made by CMS of which the hospital was notified on or after 13 calendar days prior to April 2, 2019 (that is, March 20, 2020), and at least 14 calendar days prior to May 29, 2020 (that is, May 15, 2020), that did not arise from a hospital's request for revisions. (Data corrections made by CMS of which a hospital was notified on or after 13 calendar days prior to May 29, 2020 (that is, May 16, 2020) may be appealed to the Provider Reimbursement Review Board (PRRB)). In accordance with the FY 2021 wage index timeline posted on the CMS website at:
Verified corrections to the wage index data received timely (that is, by May 29, 2020) by CMS and the MACs were incorporated into the final FY 2021 wage index, which will be effective October 1, 2020.
We created the processes previously described to resolve all substantive wage index data correction disputes before we finalize the wage and occupational mix data for the FY 2021 payment rates. Accordingly, hospitals that did not meet the procedural deadlines set forth earlier will not be afforded a later opportunity to submit wage index data corrections or to dispute the MAC's decision with respect to requested changes. Specifically, our policy is that hospitals that do not meet the procedural deadlines as previously set forth (requiring requests to MACs by the specified date in February and, where such requests are unsuccessful, requests for intervention by CMS by the specified date in April) will not be permitted to challenge later, before the PRRB, the failure of CMS to make a requested data revision. We refer readers also to the FY 2000 IPPS final rule (64 FR 41513) for a discussion of the parameters for appeals to the PRRB for wage index data corrections. As finalized in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38154 through 38156), this policy also applies to a hospital disputing corrections made by CMS that do not arise from a hospital's request for a wage index data revision. That is, a hospital disputing an adjustment made by CMS that did not arise from a hospital's request for a wage index data revision is required to request a correction by the first applicable deadline. Hospitals that do not meet the procedural deadlines set forth earlier will not be afforded a later opportunity to submit wage index data corrections or to dispute CMS' decision with respect to changes.
Again, we believe the wage index data correction process described earlier provides hospitals with sufficient opportunity to bring errors in their wage and occupational mix data to the MAC's attention. Moreover, because hospitals had access to the final wage index data PUFs by late April 2020, they had the opportunity to detect any data entry or tabulation errors made by the MAC or CMS before the development and publication of the final FY 2021 wage index by September 2020, and the implementation of the FY 2021 wage index on October 1, 2020. Given these processes, the wage index implemented on October 1 should be accurate. Nevertheless, in the event that errors are identified by hospitals and brought to our attention after May 29, 2020, we retain the right to make midyear changes to the wage index under very limited circumstances.
Specifically, in accordance with 42 CFR 412.64(k)(1) of our regulations, we make midyear corrections to the wage index for an area only if a hospital can show that: (1) The MAC or CMS made an error in tabulating its data; and (2) the requesting hospital could not have known about the error or did not have an opportunity to correct the error, before the beginning of the fiscal year. For purposes of this provision, “before the beginning of the fiscal year” means by the May deadline for making corrections to the wage data for the following fiscal year's wage index (for example, May 29, 2020 for the FY 2021 wage index). This provision is not available to a hospital seeking to revise another hospital's data that may be affecting the requesting hospital's wage index for the labor market area. As indicated earlier, because CMS makes the wage index data available to hospitals on the CMS website prior to publishing both the proposed and final IPPS rules, and the MACs notify hospitals directly of any wage index data changes after completing their desk reviews, we do not expect that midyear corrections will be necessary. However, under our current policy, if the
In the FY 2006 IPPS final rule (70 FR 47385 through 47387 and 47485), we revised 42 CFR 412.64(k)(2) to specify that, effective on October 1, 2005, that is, beginning with the FY 2006 wage index, a change to the wage index can be made retroactive to the beginning of the Federal fiscal year only when CMS determines all of the following: (1) The MAC or CMS made an error in tabulating data used for the wage index calculation; (2) the hospital knew about the error and requested that the MAC and CMS correct the error using the established process and within the established schedule for requesting corrections to the wage index data, before the beginning of the fiscal year for the applicable IPPS update (that is, by the May 29, 2020 deadline for the FY 2021 wage index); and (3) CMS agreed before October 1 that the MAC or CMS made an error in tabulating the hospital's wage index data and the wage index should be corrected.
In those circumstances where a hospital requested a correction to its wage index data before CMS calculated the final wage index (that is, by the May 29, 2020 deadline for the FY 2021 wage index), and CMS acknowledges that the error in the hospital's wage index data was caused by CMS' or the MAC's mishandling of the data, we believe that the hospital should not be penalized by our delay in publishing or implementing the correction. As with our current policy, we indicated that the provision is not available to a hospital seeking to revise another hospital's data. In addition, the provision cannot be used to correct prior years' wage index data; and it can only be used for the current Federal fiscal year. In situations where our policies would allow midyear corrections other than those specified in 42 CFR 412.64(k)(2)(ii), we continue to believe that it is appropriate to make prospective-only corrections to the wage index.
We note that, as with prospective changes to the wage index, the final retroactive correction will be made irrespective of whether the change increases or decreases a hospital's payment rate. In addition, we note that the policy of retroactive adjustment will still apply in those instances where a final judicial decision reverses a CMS denial of a hospital's wage index data revision request.
The process set forth with the wage index timeline discussed in section III.L.1. of the preamble of this final rule allows hospitals to request corrections to their wage index data within prescribed timeframes. In addition to hospitals' opportunity to request corrections of wage index data errors or MACs' mishandling of data, CMS has the authority under section 1886(d)(3)(E) of the Act to make corrections to hospital wage index and occupational mix data in order to ensure the accuracy of the wage index. As we explained in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49490 through 49491) and the FY 2017 IPPS/LTCH PPS final rule (81 FR 56914), section 1886(d)(3)(E) of the Act requires the Secretary to adjust the proportion of hospitals' costs attributable to wages and wage-related costs for area differences reflecting the relative hospital wage level in the geographic areas of the hospital compared to the national average hospital wage level. We believe that, under section 1886(d)(3)(E) of the Act, we have discretion to make corrections to hospitals' data to help ensure that the costs attributable to wages and wage-related costs in fact accurately reflect the relative hospital wage level in the hospitals' geographic areas.
We have an established multistep, 15-month process for the review and correction of the hospital wage data that is used to create the IPPS wage index for the upcoming fiscal year. Since the origin of the IPPS, the wage index has been subject to its own annual review process, first by the MACs, and then by CMS. As a standard practice, after each annual desk review, CMS reviews the results of the MACs' desk reviews and focuses on items flagged during the desk review, requiring that, if necessary, hospitals provide additional documentation, adjustments, or corrections to the data. This ongoing communication with hospitals about their wage data may result in the discovery by CMS of additional items that were reported incorrectly or other data errors, even after the posting of the January 31 PUF, and throughout the remainder of the wage index development process. In addition, the fact that CMS analyzes the data from a regional and even national level, unlike the review performed by the MACs that review a limited subset of hospitals, can facilitate additional editing of the data that may not be readily apparent to the MACs. In these occasional instances, an error may be of sufficient magnitude that the wage index of an entire CBSA is affected. Accordingly, CMS uses its authority to ensure that the wage index accurately reflects the relative hospital wage level in the geographic area of the hospital compared to the national average hospital wage level, by continuing to make corrections to hospital wage data upon discovering incorrect wage data, distinct from instances in which hospitals request data revisions.
We note that CMS corrects errors to hospital wage data as appropriate, regardless of whether that correction will raise or lower a hospital's average hourly wage. For example, as discussed in section III.C. of the preamble of the FY 2019 IPPS/LTCH PPS final rule (83 FR 41364), in situations where a hospital did not have documentable salaries, wages, and hours for housekeeping and dietary services, we imputed estimates, in accordance with policies established in the FY 2015 IPPS/LTCH PPS final rule (79 FR 49965 through 49967). Furthermore, if CMS discovers after conclusion of the desk review, for example, that a MAC inadvertently failed to incorporate positive adjustments resulting from a prior year's wage index appeal of a hospital's wage-related costs such as pension, CMS will correct that data error and the hospital's average hourly wage will likely increase as a result.
While we maintain CMS' authority to conduct additional review and make resulting corrections at any time during the wage index development process, in accordance with the policy finalized in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38154 through 38156) and as first implemented with the FY 2019 wage index (83 FR 41389), hospitals are able to request further review of a correction made by CMS that did not arise from a hospital's request for a wage index data correction. Instances where CMS makes a correction to a hospital's data after the January 31 PUF based on a different understanding than the hospital about certain reported costs, for example, could potentially be resolved using this process before the final wage index is calculated. We believe this process and the timeline for requesting such corrections (as described earlier and in the FY 2018 IPPS/LTCH PPS final rule) promote additional transparency to instances where CMS makes data corrections after the January 31 PUF, and provide opportunities for hospitals to request further review of CMS changes in time for the most accurate data to be reflected in the final wage index calculations. These additional appeals opportunities are described
During the FY 2021 wage index development process, we received inquiries regarding the time zone for deadlines in the Wage Index Development Timetable. Specifically, hospitals asked if revision requests submitted after 11:59 p.m. Eastern Standard Time (EST) could be accepted if the deadline had not yet passed in the time zone where the hospitals are located. The current timetable does not specify time zones. To eliminate confusion and promote clear deadlines, we proposed to use Eastern Standard Time (EST) as the time zone for wage index deadlines after October 1, 2020 on the FY 2022 Wage Index Development Timetable. We stated in the proposed rule (85 FR 32733) that we believe using one time zone is important for a clear and consistent deadline for all hospitals. We further stated that we also believe that EST is an appropriate time zone for the deadline because CMS's central office headquarters are located in the EST time zone and because it is consistent with the time zone used for other CMS deadlines, such as the deadline to register to report certain quality data via the CMS Web Interface (see the Registration Guide available for download at
We did not receive any comments on our proposal. Therefore, for the reasons set forth in this final rule and in the FY 2021 IPPS/LTCH PPS proposed rule, we are finalizing, without modification, our proposal to use Eastern Standard Time (EST) as the time zone for wage index deadlines after October 1, 2020 on the FY 2022 Wage Index Development Timetable.
Section 1886(d)(3)(E) of the Act directs the Secretary to adjust the proportion of the national prospective payment system base payment rates that are attributable to wages and wage-related costs by a factor that reflects the relative differences in labor costs among geographic areas. It also directs the Secretary to estimate from time to time the proportion of hospital costs that are labor-related and to adjust the proportion (as estimated by the Secretary from time to time) of hospitals' costs that are attributable to wages and wage-related costs of the DRG prospective payment rates. We refer to the portion of hospital costs attributable to wages and wage-related costs as the labor-related share. The labor-related share of the prospective payment rate is adjusted by an index of relative labor costs, which is referred to as the wage index.
Section 403 of Public Law 108–173 amended section 1886(d)(3)(E) of the Act to provide that the Secretary must employ 62 percent as the labor-related share unless this would result in lower payments to a hospital than would otherwise be made. However, this provision of Public Law 108–173 did not change the legal requirement that the Secretary estimate from time to time the proportion of hospitals' costs that are attributable to wages and wage-related costs. Thus, hospitals receive payment based on either a 62-percent labor-related share, or the labor-related share estimated from time to time by the Secretary, depending on which labor-related share resulted in a higher payment.
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38158 through 38175), we rebased and revised the hospital market basket. We established a 2014-based IPPS hospital market basket to replace the FY 2010-based IPPS hospital market basket, effective October 1, 2017. Using the 2014-based IPPS market basket, we finalized a labor-related share of 68.3 percent for discharges occurring on or after October 1, 2017. In addition, in FY 2018, we implemented this revised and rebased labor-related share in a budget neutral manner (82 FR 38522). However, consistent with section 1886(d)(3)(E) of the Act, we did not take into account the additional payments that would be made as a result of hospitals with a wage index less than or equal to 1.0000 being paid using a labor-related share lower than the labor-related share of hospitals with a wage index greater than 1.0000. In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42325), for FY 2020, we continued to use a labor-related share of 68.3 percent for discharges occurring on or after October 1, 2019.
The labor-related share is used to determine the proportion of the national IPPS base payment rate to which the area wage index is applied. We include a cost category in the labor-related share if the costs are labor intensive and vary with the local labor market. In the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32734), for FY 2021, we did not propose to make any further changes to the national average proportion of operating costs that are attributable to wages and salaries, employee benefits, professional fees: Labor-related, administrative and facilities support services, installation, maintenance, and repair services, and all other labor-related services. Therefore, for FY 2021, we proposed to continue to use a labor-related share of 68.3 percent for discharges occurring on or after October 1, 2020.
As discussed in section IV.B. of the preamble of this final rule, prior to January 1, 2016, Puerto Rico hospitals were paid based on 75 percent of the national standardized amount and 25 percent of the Puerto Rico-specific standardized amount. As a result, we applied the Puerto Rico-specific labor-related share percentage and nonlabor-related share percentage to the Puerto Rico-specific standardized amount. Section 601 of the Consolidated Appropriations Act, 2016 (Pub. L. 114–113) amended section 1886(d)(9)(E) of the Act to specify that the payment calculation with respect to operating costs of inpatient hospital services of a subsection (d) Puerto Rico hospital for inpatient hospital discharges on or after January 1, 2016, shall use 100 percent of the national standardized amount. Because Puerto Rico hospitals are no longer paid with a Puerto Rico-specific standardized amount as of January 1, 2016, under section 1886(d)(9)(E) of the Act as amended by section 601 of the Consolidated Appropriations Act, 2016, there is no longer a need for us to calculate a Puerto Rico-specific labor-related share percentage and nonlabor-related share percentage for application to the Puerto Rico-specific standardized amount. Hospitals in Puerto Rico are now paid 100 percent of the national standardized amount and, therefore, are subject to the national labor-related share and nonlabor-related share percentages that are applied to the national standardized amount. Accordingly, for FY 2021, we did not propose a Puerto Rico-specific labor-related share percentage or a nonlabor-related share percentage.
We did not receive any public comments on our proposals related to the labor-related share percentage. Therefore, for the reasons set forth in this final rule and in the FY 2021 IPPS/LTCH PPS proposed rule, we are finalizing our proposals, without
Tables 1A and 1B, which are published in section VI. of the Addendum to this FY 2021 IPPS/LTCH PPS final rule and available via the internet on the CMS website, reflect the national labor-related share, which is also applicable to Puerto Rico hospitals. For FY 2021, for all IPPS hospitals (including Puerto Rico hospitals) whose wage indexes are less than or equal to 1.0000, we are applying the wage index to a labor-related share of 62 percent of the national standardized amount. For all IPPS hospitals (including Puerto Rico hospitals) whose wage indexes are greater than 1.000, for FY 2021, we are applying the wage index to a labor-related share of 68.3 percent of the national standardized amount.
Existing regulations at 42 CFR 412.4(a) define discharges under the IPPS as situations in which a patient is formally released from an acute care hospital or dies in the hospital. Section 412.4(b) defines acute care transfers, and § 412.4(c) defines postacute care transfers. Our policy set forth in § 412.4(f) provides that when a patient is transferred and his or her length of stay is less than the geometric mean length of stay for the MS–DRG to which the case is assigned, the transferring hospital is generally paid based on a graduated per diem rate for each day of stay, not to exceed the full MS–DRG payment that would have been made if the patient had been discharged without being transferred.
The per diem rate paid to a transferring hospital is calculated by dividing the full MS–DRG payment by the geometric mean length of stay for the MS–DRG. Based on an analysis that showed that the first day of hospitalization is the most expensive (60 FR 45804), our policy generally provides for payment that is twice the per diem amount for the first day, with each subsequent day paid at the per diem amount up to the full MS–DRG payment (§ 412.4(f)(1)). Transfer cases also are eligible for outlier payments. In general, the outlier threshold for transfer cases, as described in § 412.80(b), is equal to the fixed-loss outlier threshold for nontransfer cases (adjusted for geographic variations in costs), divided by the geometric mean length of stay for the MS–DRG, and multiplied by the length of stay for the case, plus 1 day.
We established the criteria set forth in § 412.4(d) for determining which DRGs qualify for postacute care transfer payments in the FY 2006 IPPS final rule (70 FR 47419 through 47420). The determination of whether a DRG is subject to the postacute care transfer policy was initially based on the Medicare Version 23.0 GROUPER (FY 2006) and data from the FY 2004 MedPAR file. However, if a DRG did not exist in Version 23.0 or a DRG included in Version 23.0 is revised, we use the current version of the Medicare GROUPER and the most recent complete year of MedPAR data to determine if the DRG is subject to the postacute care transfer policy. Specifically, if the MS–DRG's total number of discharges to postacute care equals or exceeds the 55th percentile for all MS–DRGs and the proportion of short-stay discharges to postacute care to total discharges in the MS–DRG exceeds the 55th percentile for all MS–DRGs, CMS will apply the postacute care transfer policy to that MS–DRG and to any other MS–DRG that shares the same base MS–DRG. The statute directs us to identify MS–DRGs based on a high volume of discharges to postacute care facilities and a disproportionate use of postacute care services. As discussed in the FY 2006 IPPS final rule (70 FR 47416), we determined that the 55th percentile is an appropriate level at which to establish these thresholds. In that same final rule (70 FR 47419), we stated that we will not revise the list of DRGs subject to the postacute care transfer policy annually unless we are making a change to a specific MS–DRG.
To account for MS–DRGs subject to the postacute care policy that exhibit exceptionally higher shares of costs very early in the hospital stay, § 412.4(f) also includes a special payment methodology. For these MS–DRGs, hospitals receive 50 percent of the full MS–DRG payment, plus the single per diem payment, for the first day of the stay, as well as a per diem payment for subsequent days (up to the full MS–DRG payment (§ 412.4(f)(6)). For an MS–DRG to qualify for the special payment methodology, the geometric mean length of stay must be greater than 4 days, and the average charges of 1-day discharge cases in the MS–DRG must be at least 50 percent of the average charges for all cases within the MS–DRG. MS–DRGs that are part of an MS–DRG severity level group will qualify under the MS–DRG special payment methodology policy if any one of the MS–DRGs that share that same base MS–DRG qualifies (§ 412.4(f)(6)).
Prior to the enactment of the Bipartisan Budget Act of 2018 (Pub. L. 115–123), under section 1886(d)(5)(J) of the Act, a discharge was deemed a “qualified discharge” if the individual was discharged to one of the following postacute care settings:
• A hospital or hospital unit that is not a subsection (d) hospital.
• A skilled nursing facility.
• Related home health services provided by a home health agency provided within a timeframe established by the Secretary (beginning within 3 days after the date of discharge).
Section 53109 of the Bipartisan Budget Act of 2018 amended section 1886(d)(5)(J)(ii) of the Act to also include discharges to hospice care provided by a hospice program as a qualified discharge, effective for discharges occurring on or after October 1, 2018. Accordingly, effective for discharges occurring on or after October 1, 2018, if a discharge is assigned to one of the MS–DRGs subject to the postacute care transfer policy and the individual is transferred to hospice care by a hospice program, the discharge is subject to payment as a transfer case. In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41394), we made conforming amendments to § 412.4(c) of the regulation to include discharges to hospice care occurring on or after October 1, 2018 as qualified discharges. We specified that hospital bills with a Patient Discharge Status code of 50 (Discharged/Transferred to Hospice—Routine or Continuous Home Care) or 51 (Discharged/Transferred to Hospice, General Inpatient Care or Inpatient Respite) are subject to the postacute care transfer policy in accordance with this statutory amendment. Consistent with our policy for other qualified discharges, CMS claims processing software has been revised to identify cases in which hospice benefits were billed on the date of hospital discharge without the appropriate discharge status code. Such claims will be returned as unpayable to the hospital and may be rebilled with a corrected discharge code.
As discussed in section II.F. of the preamble of the FY 2021 IPPS/LTCH PPS final rule, based on our analysis of FY 2019 MedPAR claims data, we proposed to make changes to a number of MS–DRGs, effective for FY 2021. Specifically, we proposed to do the following:
• Reassign procedure codes from MS–DRG 16 (Autologous Bone Marrow
• Create new MS–DRG 019 (Simultaneous Pancreas and Kidney Transplant with Hemodialysis).
• Reassign procedures involving head, face, neck, ear, nose, mouth, or throat by creating six new MS–DRGs 140–142 (Major Head and Neck Procedures with MCC, with CC, and without CC/MCC, respectively) and 143–145 (Other Ear, Nose, Mouth and Throat O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) and deleting MS–DRGs 129–130 (Major Head and Neck Procedures with CC/MCC or Major Device, and without CC/MCC, respectively, MS–DRGs 131–132 (Cranial and Facial Procedures with CC/MCC and without CC/MCC, respectively) and MS–DRGs 133–134 (Other Ear, Nose, Mouth and Throat O.R. Procedures with CC/MCC and without CC/MCC, respectively).
• Reassign procedure codes from MS–DRGs 469–470 (Major Hip and Knee Joint Replacement or Reattachment of Lower Extremity with MCC or Total Ankle Replacement, and without MCC, respectively) and create two new MS–DRGs, 521 and 522 (Hip Replacement with Principal Diagnosis of Hip Fracture with MCC and without MCC, respectively) for cases reporting a hip replacement procedure with a principal diagnosis of a hip fracture.
• Reassign procedure codes from MS–DRG 652 (Kidney Transplant) into two new MS–DRGs, 650 and 651 (Kidney Transplant with Hemodialysis with MCC and without MCC, respectively) for cases reporting hemodialysis with a kidney transplant during the same admission.
As discussed in the proposed rule, in light of the proposed changes to these MS–DRGs for FY 2021, according to the regulations under § 412.4(d), we evaluated these MS–DRGs using the general postacute care transfer policy criteria and data from the FY 2019 MedPAR file. If an MS–DRG qualified for the postacute care transfer policy, we also evaluated that MS–DRG under the special payment methodology criteria according to regulations at § 412.4(f)(6). We continue to believe it is appropriate to assess new MS–DRGs and reassess revised MS–DRGs when proposing reassignment of procedure codes or diagnosis codes that would result in material changes to an MS–DRG. We noted that MS–DRGs 469 and 470 (Major Hip and Knee Joint Replacement or Reattachment of Lower Extremity with MCC or Total Ankle Replacement, and without MCC, respectively) are currently subject to the postacute care transfer policy, and as proposed to be revised, would continue to qualify to be included on the list of MS–DRGs that are subject to the postacute care transfer policy. Proposed new MS–DRGs 521 and 522 (Hip Replacement with Principal Diagnosis of Hip Fracture with MCC and without MCC, respectively) would also qualify to be included on the list of MS–DRGs that are subject to the postacute care transfer policy. We therefore proposed to add MS–DRGs 521 and 522 to the list of MS–DRGs that are subject to the postacute care transfer policy. We noted that MS–DRGs that are subject to the postacute transfer policy for FY 2020 and are not revised will continue to be subject to the policy in FY 2021. We note that, as discussed in section II. of this final rule, we are finalizing these proposed changes to the MS–DRGs.
Using the March 2020 update of the FY 2019 MedPAR file, we developed the following updated chart which sets forth the analysis of the postacute care transfer policy criteria completed for this final rule with respect to each of these new or revised MS–DRGs. We note that this chart is updated from the MedPAR file used in the proposed rule (the December 2019 update of the FY 2019 MedPAR file).
Based on our annual review of proposed new or revised MS–DRGs and analysis of the December 2019 update of the FY 2019 MedPAR file, we identified MS–DRGs that we proposed to include on the list of MS–DRGs subject to the special payment policy methodology. Based on our analysis of proposed changes to MS–DRGs included in the proposed rule, we determined that MS–DRGs 521 and 522 (Hip Replacement with Principal Diagnosis of Hip Fracture with MCC and without MCC, respectively) would meet the criteria for the MS–DRG special payment methodology. Therefore, we proposed that MS–DRGs 521 and 522 would be subject to the MS–DRG special payment methodology, effective FY 2021. The following table include updates from the March 2020 update of the FY 2019 MedPAR file.
After consideration of the comments we received, we are finalizing our proposal to add MS–DRGs 521 and 522 to the list of MS–DRGs that are subject to the postacute care transfer policy and the MS DRG special payment methodology for FY 2021.
The postacute care transfer and special payment policy status of these MS–DRGs is reflected in Table 5 associated with this final rule, which is listed in section VI. of the Addendum to this final rule and available via the internet on the CMS website.
In accordance with section 1886(b)(3)(B)(i) of the Act, each year we update the national standardized amount for inpatient hospital operating costs by a factor called the “applicable percentage increase.” For FY 2021, we are setting the applicable percentage increase by applying the adjustments listed in this section in the same sequence as we did for FY 2020. (We note that section 1886(b)(3)(B)(xii) of the Act required an additional reduction each year only for FYs 2010 through 2019.) Specifically, consistent with section 1886(b)(3)(B) of the Act, as amended by sections 3401(a) and 10319(a) of the Affordable Care Act, we are setting the applicable percentage increase by applying the following adjustments in the following sequence. The applicable percentage increase under the IPPS for FY 2021 is equal to the rate-of-increase in the hospital market basket for IPPS hospitals in all areas, subject to all of the following:
• A reduction of one-quarter of the applicable percentage increase (prior to the application of other statutory adjustments; also referred to as the market basket update or rate-of-increase (with no adjustments)) for hospitals that fail to submit quality information under rules established by the Secretary in accordance with section 1886(b)(3)(B)(viii) of the Act.
• A reduction of three-quarters of the applicable percentage increase (prior to the application of other statutory adjustments; also referred to as the market basket update or rate-of-increase (with no adjustments)) for hospitals not considered to be meaningful EHR users in accordance with section 1886(b)(3)(B)(ix) of the Act.
• An adjustment based on changes in economy-wide productivity (the multifactor productivity (MFP) adjustment).
Section 1886(b)(3)(B)(xi) of the Act, as added by section 3401(a) of the Affordable Care Act, states that application of the MFP adjustment may result in the applicable percentage increase being less than zero.
In compliance with section 404 of the MMA, in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38158 through 38175), we replaced the FY 2010-based IPPS operating market basket with the rebased and revised 2014-based IPPS operating market basket, effective with FY 2018.
We proposed to base the proposed FY 2021 market basket update used to determine the applicable percentage increase for the IPPS on IHS Global Inc.'s (IGI's) fourth quarter 2019 forecast of the 2014-based IPPS market basket rate-of-increase with historical data through third quarter 2019, which was estimated to be 3.0 percent. We also proposed that if more recent data
For this final rule, based on IGI's second quarter 2020 forecast with historical data through the first quarter of 2020, the FY 2021 growth rate of the 2014-based IPPS market basket is estimated to be 2.4 percent. We note that the fourth quarter 2019 forecast used for the proposed market basket update was developed prior to the economic impacts of the COVID–19 pandemic. This lower update (2.4 percent) for FY 2021 relative to the proposed rule (3.0 percent) is primarily driven by slower than anticipated compensation growth for both health-related and other occupations as labor markets are expected to be significantly impacted during the recession that started in February 2020 and throughout the anticipated recovery.
For FY 2021, depending on whether a hospital submits quality data under the rules established in accordance with section 1886(b)(3)(B)(viii) of the Act (hereafter referred to as a hospital that submits quality data) and is a meaningful EHR user under section 1886(b)(3)(B)(ix) of the Act (hereafter referred to as a hospital that is a meaningful EHR user), there are four possible applicable percentage increases that can be applied to the standardized amount, as specified in the table that appears later in this section.
In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51689 through 51692), we finalized our methodology for calculating and applying the MFP adjustment. As we explained in that rule, section 1886(b)(3)(B)(xi)(II) of the Act, as added by section 3401(a) of the Affordable Care Act, defines this productivity adjustment as equal to the 10-year moving average of changes in annual economy-wide, private nonfarm business MFP (as projected by the Secretary for the 10-year period ending with the applicable fiscal year, calendar year, cost reporting period, or other annual period). The Bureau of Labor Statistics (BLS) publishes the official measure of private nonfarm business MFP. We refer readers to the BLS website at
MFP is derived by subtracting the contribution of labor and capital input growth from output growth. The projections of the components of MFP are currently produced by IGI, a nationally recognized economic forecasting firm with which CMS contracts to forecast the components of the market baskets and MFP. As we discussed in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49509), beginning with the FY 2016 rulemaking cycle, the MFP adjustment is calculated using the revised series developed by IGI to proxy the aggregate capital inputs. Specifically, in order to generate a forecast of MFP, IGI forecasts BLS aggregate capital inputs using a regression model. A complete description of the MFP projection methodology is available on the CMS website at:
In the FY 2021 IPPS/LTCH PPS proposed rule, we proposed an MFP adjustment of 0.4 percentage point. Similar to the market basket update, for the proposed rule, we used IGI's fourth quarter 2019 forecast of the MFP adjustment to compute the proposed FY 2021 MFP adjustment. As noted previously, we proposed that if more recent data subsequently become available, we would use such data, if appropriate, to determine the FY 2021 market basket update and the MFP for the final rule.
Based on the more recent data available for this final rule, the current estimate of the 10-year moving average growth of MFP for FY 2021 is -0.1 percentage point. This MFP is based on the most recent macroeconomic outlook from IGI at the time of rulemaking (released June 2020) in order to reflect more current historical economic data. IGI produces monthly macroeconomic forecasts, which include projections of all of the economic series used to derive MFP. In contrast, IGI only produces forecasts of the more detailed price proxies used in the 2014-based IPPS market basket on a quarterly basis. Therefore, IGI's second quarter 2020 forecast is the most recent forecast of the 2014-based IPPS market basket increase.
We note that it has typically been our practice to base the projection of the market basket price proxies and MFP in the final rule on the second quarter IGI forecast. For this final rule, we are using the IGI June 2020 macroeconomic forecast for MFP because it is a more recent forecast, and it is important to use more recent data during this period when economic trends, particularly employment and labor productivity, are notably uncertain because of the COVID–19 pandemic. Historically, the MFP adjustment based on the second quarter IGI forecast has been very similar to the MFP adjustment derived with IGI's June macroeconomic forecast. Substantial changes in the macroeconomic indicators in between monthly forecasts are atypical.
Given the unprecedented economic uncertainty as a result of the COVID–19 pandemic, the changes in the IGI macroeconomic series used to derive MFP between the IGI second quarter 2020 forecast and the IGI June 2020 macroeconomic forecast are significant. Therefore, we believe it is appropriate to use IGI's more recent June 2020 macroeconomic forecast to determine the MFP adjustment for the final rule as it reflects more recent historical data. For comparison purposes, the 10-year moving average growth of MFP for FY 2021 is projected to be -0.1 percentage point based on IGI's June 2020 macroeconomic forecast compared to the 10-year moving average growth of MFP for FY 2021 of 0.7 percentage point based on IGI's second quarter 2020 forecast. Mechanically subtracting the negative 10-year moving average growth of MFP from the hospital market basket percentage increase using the data from the IGI June 2020 macroeconomic forecast would have resulted in a 0.1 percentage point increase in the FY 2021 market basket update. However, under section 1886(b)(3)(B)(xi)(I) of the Act, the Secretary is required to reduce (not increase) the hospital market basket percentage increase by changes in economy-wide productivity. Accordingly, we are applying a 0.0 MFP adjustment to the FY 2021 market basket percentage increase.
Based on these most recent data available, we have determined four applicable percentage increases to the standardized amount for FY 2021, as specified in the following table:
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42344), we revised our regulations at 42 CFR 412.64(d) to reflect the current law for the update for FY 2020 and subsequent fiscal years. Specifically, in accordance with section 1886(b)(3)(B) of the Act, we added paragraph (d)(1)(viii) to § 412.64 to set forth the applicable percentage increase to the operating standardized amount for FY 2020 and subsequent fiscal years as the percentage increase in the market basket index, subject to the reductions specified under § 412.64(d)(2) for a hospital that does not submit quality data and § 412.64(d)(3) for a hospital that is not a meaningful EHR user, less an MFP adjustment. (As previously noted, section 1886(b)(3)(B)(xii) of the Act required an additional reduction each year only for FYs 2010 through 2019.)
Section 1886(b)(3)(B)(iv) of the Act provides that the applicable percentage increase to the hospital-specific rates for SCHs and MDHs equals the applicable percentage increase set forth in section 1886(b)(3)(B)(i) of the Act (that is, the same update factor as for all other hospitals subject to the IPPS). Therefore, the update to the hospital-specific rates for SCHs and MDHs also is subject to section 1886(b)(3)(B)(i) of the Act, as amended by sections 3401(a) and 10319(a) of the Affordable Care Act. (Under current law, the MDH program is effective for discharges on or before September 30, 2022, as discussed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41429 through 41430).)
For FY 2021, we proposed the following updates to the hospital-specific rates applicable to SCHs and MDHs: A proposed update of 2.6 percent for a hospital that submits quality data and is a meaningful EHR user; a proposed update of 1.85 percent for a hospital that fails to submit quality data and is a meaningful EHR user; a proposed update of 0.35 percent for a hospital that submits quality data and is not a meaningful EHR user; and a proposed update of -0.4 percent for a hospital that fails to submit quality data and is not an meaningful EHR user. As noted previously, for the FY 2021 IPPS/LTCH PPS proposed rule, we used IGI's fourth quarter 2019 forecast of the 2014-based IPPS market basket update with historical data through third quarter 2019. Similarly, we used IGI's fourth quarter 2019 forecast of the MFP adjustment. We proposed that if more recent data subsequently became available (for example, a more recent estimate of the market basket increase and the MFP), we would use such data, if appropriate, to determine the update in the final rule.
We did not receive any public comments on our proposal. Therefore, we are finalizing the proposal to determine the update to the hospital-specific rates for SCHs and MDHs in this final rule using the most recent available data, as previously discussed.
For this final rule, based on the most recent available data, we are finalizing the following updates to the hospital specific rates applicable to SCHs and MDHs: An update of 2.4 percent for a hospital that submits quality data and is a meaningful EHR user; an update of 1.8 percent for a hospital that fails to submit quality data and is a meaningful EHR user; an update of 0.6 percent for a hospital that submits quality data and is not a meaningful EHR user; and an update of 0.0 percent for a hospital that fails to submit quality data and is not a meaningful EHR user.
As discussed in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56937 through 56938), prior to January 1, 2016, Puerto Rico hospitals were paid based on 75 percent of the national standardized amount and 25 percent of the Puerto Rico-specific standardized amount. Section 601 of Public Law 114–113 amended section 1886(d)(9)(E) of the Act to specify that the payment calculation with respect to operating costs of inpatient hospital services of a subsection (d) Puerto Rico hospital for inpatient hospital discharges on or after January 1, 2016, shall use 100 percent of the national standardized amount. Because Puerto Rico hospitals are no longer paid with a Puerto Rico-specific standardized amount under the amendments to section 1886(d)(9)(E) of the Act, there is no longer a need for us to determine an update to the Puerto Rico standardized amount. Hospitals in Puerto Rico are now paid 100 percent of the national standardized amount and, therefore, are subject to the same update to the national standardized amount discussed under section IV.B.1. of the preamble of this final rule. Accordingly, in the FY 2021 IPPS/LTCH PPS proposed rule, for FY 2021, we proposed an applicable percentage increase of 2.6 percent to the standardized amount for hospitals located in Puerto Rico.
We did not receive any public comment on our proposal with respect to the Puerto Rico hospital update.
Based on the most recent data available for this final rule (as discussed previously in section IV.B.1. of the preamble of this final rule), we are finalizing an applicable percentage increase of 2.4 percent to the standardized amount for hospitals located in Puerto Rico. We note that section 1886(b)(3)(B)(viii) of the Act, which specifies the adjustment to the applicable percentage increase for “subsection (d)” hospitals that do not submit quality data under the rules established by the Secretary, is not applicable to hospitals located in Puerto Rico. In addition, section 602 of Public Law 114–113 amended section 1886(n)(6)(B) of the Act to specify that Puerto Rico hospitals are eligible for incentive payments for the meaningful use of certified EHR technology, effective beginning FY 2016, and also to apply the adjustments to the applicable percentage increase under section 1886(b)(3)(B)(ix) of the Act to Puerto Rico hospitals that are not meaningful EHR users, effective FY 2022. Accordingly, because the provisions of section 1886(b)(3)(B)(ix) of the Act are not applicable to hospitals located in Puerto Rico until FY 2022, the adjustments under this provision are not applicable for FY 2021.
Sections 1886(d)(5)(D) and (d)(5)(G) of the Act provide special payment protections under the IPPS to sole community hospitals (SCHs) and Medicare-dependent, small rural hospitals (MDHs), respectively. Section 1886(d)(5)(D)(iii) of the Act defines an SCH in part as a hospital that the Secretary determines is located more than 35 road miles from another hospital or that, by reason of factors such as isolated location, weather conditions, travel conditions, or absence of other like hospitals (as determined by the Secretary), is the sole source of inpatient hospital services reasonably available to Medicare beneficiaries. The regulations at 42 CFR 412.92 set forth the criteria that a hospital must meet to be classified as a SCH. For more information on SCHs, we refer readers to the FY 2009 IPPS/LTCH PPS final rule (74 FR 43894 through 43897).
The criteria to be classified as an SCH are set forth at 42 CFR 412.92(a). Under the criteria at 42 CFR 412.92(a)(1)(i) and (ii), CMS classifies a hospital as a sole community hospital if it is located: (1) In a rural area; and (2) between 25 and 35 miles from other like hospitals and meets one of the following criteria:
• No more than 25 percent of residents who become hospital inpatients or no more than 25 percent of the Medicare beneficiaries who become hospital inpatients in the hospital's service area are admitted to other like hospitals located within a 35-mile radius of the hospital, or, if larger, within its service area.
• The hospital has fewer than 50 beds and the MAC certifies that the hospital would have met the previously discussed criteria were it not for the fact that some beneficiaries or residents were forced to seek care outside the service area due to the unavailability of necessary specialty services at the community hospital.
The term “service area” is defined under the regulations at 42 CFR 412.92(c)(3) as the area from which a hospital draws at least 75 percent of its inpatients during the most recent 12-month cost reporting period ending before it applies for classification as a sole community hospital. For more information on service areas, we refer readers to the FY 2002 IPPS final rule (66 FR 39875).
We have become aware of some situations where a hospital's most recent cost reporting period prior to seeking SCH classification is a short cost reporting period (that is, less than a 12-month cost reporting period). Therefore, in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32740), we proposed to amend § 412.92(c)(3) to clarify our policy in this situation. Specifically, we proposed to amend § 412.92(c)(3) to reflect that where the hospital's cost reporting period ending before it applies for classification as a sole community hospital is for less than 12 months, the hospital's most recent 12-month or longer cost reporting period before the short period is used. We noted that this policy is consistent with our policy for determining Medicare utilization for purposes of MDH classification, as reflected in the regulations at 42 CFR 412.108(a)(1)(v). We invited public comment on our proposed amendment to § 412.92(c)(3).
We did not receive any public comments on our proposed amendment to § 412.92(c)(3). Therefore, we are finalizing our proposal as previously described, without modification.
Under the authority of section 1886(d)(5)(C)(i) of the Act, the regulations at § 412.96 set forth the criteria that a hospital must meet in order to qualify under the IPPS as a rural referral center (RRC). RRCs receive special treatment under both the DSH payment adjustment and the criteria for geographic reclassification.
Section 402 of Public Law 108–173 raised the DSH payment adjustment for RRCs such that they are not subject to the 12-percent cap on DSH payments that is applicable to other rural hospitals. RRCs also are not subject to the proximity criteria when applying for geographic reclassification. In addition, they do not have to meet the requirement that a hospital's average hourly wage must exceed, by a certain percentage, the average hourly wage of the labor market area in which the hospital is located.
Section 4202(b) of Public Law 105–33 states, in part, that any hospital classified as an RRC by the Secretary for FY 1991 shall be classified as such an RRC for FY 1998 and each subsequent fiscal year. In the August 29, 1997 IPPS final rule with comment period (62 FR 45999), we reinstated RRC status for all hospitals that lost that status due to triennial review or MGCRB reclassification. However, we did not reinstate the status of hospitals that lost RRC status because they were now urban for all purposes because of the OMB designation of their geographic area as urban. Subsequently, in the August 1, 2000 IPPS final rule (65 FR 47089), we indicated that we were revisiting that decision. Specifically, we stated that we would permit hospitals that previously qualified as an RRC and lost their status due to OMB redesignation of the county in which they are located from rural to urban, to be reinstated as an RRC. Otherwise, a hospital seeking RRC status must satisfy all of the other applicable criteria. We use the definitions of “urban” and “rural” specified in subpart D of 42 CFR part 412. One of the criteria under which a hospital may qualify as an RRC is to have 275 or more beds available for use (§ 412.96(b)(1)(ii)). A rural hospital that does not meet the bed size requirement can qualify as an RRC if the hospital meets two mandatory prerequisites (a minimum case-mix index (CMI) and a minimum number of discharges), and at least one of three optional criteria (relating to specialty composition of medical staff, source of inpatients, or referral volume). (We refer readers to § 412.96(c)(1) through (5) and the September 30, 1988
• The hospital's CMI is at least equal to the lower of the median CMI for
• The hospital's number of discharges is at least 5,000 per year, or, if fewer, the median number of discharges for urban hospitals in the census region in which the hospital is located. The number of discharges criterion for an osteopathic hospital is at least 3,000 discharges per year, as specified in section 1886(d)(5)(C)(i) of the Act.
Section 412.96(c)(1) provides that CMS establish updated national and regional CMI values in each year's annual notice of prospective payment rates for purposes of determining RRC status. The methodology we used to determine the national and regional CMI values is set forth in the regulations at § 412.96(c)(1)(ii). The national median CMI value for FY 2021 is based on the CMI values of all urban hospitals nationwide, and the regional median CMI values for FY 2021 are based on the CMI values of all urban hospitals within each census region, excluding those hospitals with approved teaching programs (that is, those hospitals that train residents in an approved GME program as provided in § 413.75). These values are based on discharges occurring during FY 2019 (October 1, 2018 through September 30, 2019), and include bills posted to CMS' records through March 2020.
In the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32741), we proposed that, in addition to meeting other criteria, if rural hospitals with fewer than 275 beds are to qualify for initial RRC status for cost reporting periods beginning on or after October 1, 2020, they must have a CMI value for FY 2019 that is at least—
• 1.70435 (national—all urban); or
• The median CMI value (not transfer-adjusted) for urban hospitals (excluding hospitals with approved teaching programs as identified in § 413.75) calculated by CMS for the census region in which the hospital is located.
The proposed median CMI values by region were set forth in a table in the proposed rule (85 FR 32741). We stated in the proposed rule that we intended to update the proposed CMI values in the FY 2021 final rule to reflect the updated FY 2019 MedPAR file, which will contain data from additional bills received through March 2020.
We did not receive any public comments on our proposals.
Based on the latest available data (FY 2019 bills received through March 2020), in addition to meeting other criteria, if rural hospitals with fewer than 275 beds are to qualify for initial RRC status for cost reporting periods beginning on or after October 1, 2020, they must have a CMI value for FY 2019 that is at least:
• 1.7049 (national—all urban); or
• The median CMI value (not transfer-adjusted) for urban hospitals (excluding hospitals with approved teaching programs as identified in § 413.75) calculated by CMS for the census region in which the hospital is located.
The final CMI values by region are set forth in the following table.
A hospital seeking to qualify as an RRC should obtain its hospital-specific CMI value (not transfer-adjusted) from its MAC. Data are available on the Provider Statistical and Reimbursement (PS&R) System. In keeping with our policy on discharges, the CMI values are computed based on all Medicare patient discharges subject to the IPPS MS–DRG-based payment.
Section 412.96(c)(2)(i) provides that CMS set forth the national and regional numbers of discharges criteria in each year's annual notice of prospective payment rates for purposes of determining RRC status. As specified in section 1886(d)(5)(C)(ii) of the Act, the national standard is set at 5,000 discharges. In the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32741), for FY 2021, we proposed to update the regional standards based on discharges for urban hospitals' cost reporting periods that began during FY 2018 (that is, October 1, 2017 through September 30, 2018), which were the latest cost report data available at the time the proposed rule was developed. Therefore, we proposed that, in addition to meeting other criteria, a hospital, if it is to qualify for initial RRC status for cost reporting periods beginning on or after October 1, 2020, must have, as the number of discharges for its cost reporting period that began during FY 2018, at least—
• 5,000 (3,000 for an osteopathic hospital); or
• If less, the median number of discharges for urban hospitals in the census region in which the hospital is located. (We refer readers to the table set forth in the FY 2021 IPPS/LTCH PPS proposed rule at 85 FR 32742). In the proposed rule, we stated that we intended to update these numbers in the FY 2021 final rule based on the latest available cost report data.
We did not receive any public comments on our proposals.
Based on the latest discharge data available at this time, that is, for cost reporting periods that began during FY 2018, the final median number of discharges for urban hospitals by census
We note that because the median number of discharges for hospitals in each census region is greater than the national standard of 5,000 discharges, under this final rule, 5,000 discharges is the minimum criterion for all hospitals, except for osteopathic hospitals for which the minimum criterion is 3,000 discharges.
As previously noted, in addition to meeting other criteria, to qualify for initial RRC status for cost reporting periods beginning on or after October 1 of a given fiscal year, under § 412.96(c)(2), a hospital must meet the minimum number of discharges during its cost reporting period that began during the same fiscal year as the cost reporting periods used to compute the regional median discharges. We typically use the cost reporting periods that are 3 years prior to the fiscal year for which a hospital is seeking RRC status to compute the regional median discharges, as these are generally the latest cost report data available at the time of the development of the proposed and final rules. For example, and as discussed previously, for FY 2021, we are updating the regional standards based on discharges for urban hospitals' cost reporting periods that began during FY 2018.
We have become aware of situations where a hospital's cost reporting period that began during the fiscal year used to compute the regional median discharge values for a given fiscal year is a short cost reporting period (that is, less than 12 months) and as a result, the provider may not meet the minimum discharges requirement. Conversely, there may also be situations where a hospital's cost reporting period that began during the fiscal year used to compute the regional median discharge values for a given fiscal year is a long cost reporting period (that is, greater than 12 months). In the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32742), we proposed to amend the RRC regulations to add a new paragraph (c)(2)(iii) to § 412.96 stating that if the hospital's cost reporting period that began during the same fiscal year as the cost reporting periods used to compute the regional median discharges is for less than 12 months or longer than 12 months, the hospital's number of discharges for that cost reporting period will be annualized to estimate the total number of discharges for a 12 month cost reporting period. We stated that we believe this policy, which is generally consistent with how we have addressed short cost reporting periods for purposes of determining discharges for RRC status in the past, provides a more uniform treatment among hospitals for purposes of determining the number of discharges for those hospitals for which the applicable cost reporting period is shorter or longer than 12 months. We proposed that to annualize the discharges, the MAC would divide the discharges by the number of days in the hospital's cost reporting period and then multiply by the length of a full year (365 or 366 calendar days, as applicable) to estimate the total number of discharges for a 12-month cost reporting period. For example, a short cost reporting period beginning on January 1 and ending on October 31 that is 10 months (or 304 days) with 4,200 discharges would be annualized in a non-leap year as follows: (4,200 ÷ 304) × 365 = 5,043 discharges annualized. Under this proposal, if the hospital has multiple cost reports beginning in the same fiscal year and none of those cost reports are for 12 months, the hospital's number of discharges in the hospital's longest cost report beginning in that fiscal year would be annualized to estimate the total number of discharges for a 12 month cost reporting period. We invited public comment on our proposed annualization methodology and our proposed amendment to § 412.96(c)(2).
After consideration of the public comments we received, we are finalizing our proposal as previously described, without modification.
Section 1886(d)(12) of the Act provides for an additional payment to each qualifying low-volume hospital under the IPPS beginning in FY 2005. The additional payment adjustment to a low-volume hospital provided for under section 1886(d)(12) of the Act is in addition to any payment calculated under section 1886 of the Act. Therefore, the additional payment adjustment is based on the per discharge amount paid to the qualifying hospital under section 1886 of the Act. In other words, the low-volume hospital payment adjustment is based on total
As discussed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41398 through 41399), section 50204 of the Bipartisan Budget Act of 2018 (Pub. L. 115–123) modified the definition of a low-volume hospital and the methodology for calculating the payment adjustment for low-volume hospitals for FYs 2019 through 2022. (Section 50204 also extended prior changes to the definition of a low-volume hospital and the methodology for calculating the payment adjustment for low-volume hospitals through FY 2018.) Currently, the low-volume hospital qualifying criteria provide that a hospital must have fewer 3,800 total discharges during the fiscal year, and the hospital must be located more than 15 road miles from the nearest “subsection (d)” hospital. These criteria will remain in effect through FY 2022. Beginning with FY 2023, the low-volume hospital qualifying criteria and payment adjustment will revert to the statutory requirements that were in effect prior to FY 2011. Therefore, in order for a hospital to continue to qualify as a low-volume hospital on or after October 1, 2022, it must have fewer than 200 total discharges during the fiscal year and be located more than 25 road miles from the nearest “subsection (d)” hospital (see § 412.101(b)(2)(i)). (For additional information on the low-volume hospital payment adjustment prior to FY 2018, we refer readers to the FY 2017 IPPS/LTCH PPS final rule (81 FR 56941 through 56943). For additional information on the low-volume hospital payment adjustment for FY 2018, we refer readers to the FY 2018 IPPS notice (CMS–1677–N) that appeared in the
As discussed earlier, section 50204 of the Bipartisan Budget Act of 2018 further modified the definition of a low-volume hospital and the methodology for calculating the payment adjustment for low-volume hospitals for FYs 2019 through 2022. Specifically, the qualifying criteria for low-volume hospitals under section 1886(d)(12)(C)(i) of the Act were amended to specify that, for FYs 2019 through 2022, a subsection (d) hospital qualifies as a low-volume hospital if it is more than 15 road miles from another subsection (d) hospital and has less than 3,800 total discharges during the fiscal year. Section 1886(d)(12)(D) of the Act was also amended to provide that, for discharges occurring in FYs 2019 through 2022, the Secretary shall determine the applicable percentage increase using a continuous, linear sliding scale ranging from an additional 25 percent payment adjustment for low-volume hospitals with 500 or fewer discharges to a zero percent additional payment for low-volume hospitals with more than 3,800 discharges in the fiscal year. Consistent with the requirements of section 1886(d)(12)(C)(ii) of the Act, the term “discharge” for purposes of these provisions refers to total discharges, regardless of payer (that is, Medicare and non-Medicare discharges).
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41399), to implement this requirement, we specified a continuous, linear sliding scale formula to determine the low-volume hospital payment adjustment for FYs 2019 through 2022 that is similar to the continuous, linear sliding scale formula used to determine the low-volume hospital payment adjustment originally established by the Affordable Care Act and implemented in the regulations at § 412.101(c)(2)(ii) in the FY 2011 IPPS/LTCH PPS final rule (75 FR 50240 through 50241). Consistent with the statute, we provided that qualifying hospitals with 500 or fewer total discharges will receive a low-volume hospital payment adjustment of 25 percent. For qualifying hospitals with fewer than 3,800 discharges but more than 500 discharges, the low-volume payment adjustment is calculated by subtracting from 25 percent the proportion of payments associated with the discharges in excess of 500. As such, for qualifying hospitals with fewer than 3,800 total discharges but more than 500 total discharges, the low-volume hospital payment adjustment for FYs 2019 through 2022 is calculated using the following formula:
Low-Volume Hospital Payment Adjustment = 0.25−[0.25/3300] × (number of total discharges−500) = (95/330)−(number of total discharges/13,200).
For this purpose, we specified that the “number of total discharges” is determined as total discharges, which includes Medicare and non-Medicare discharges during the fiscal year, based on the hospital's most recently submitted cost report. The low-volume hospital payment adjustment for FYs 2019 through 2022 is set forth in the regulations at 42 CFR 412.101(c)(3).
In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50238 through 50275 and 50414) and subsequent rulemaking (for example, the FY 2019 IPPS/LTCH PPS final rule (83 FR 41399 through 41401), we discussed the process for requesting and obtaining the low-volume hospital payment adjustment. Under this previously established process, a hospital makes a written request for the low-volume payment adjustment under § 412.101 to its MAC. This request must contain sufficient documentation to establish that the hospital meets the applicable mileage and discharge criteria. The MAC will determine if the hospital qualifies as a low-volume hospital by reviewing the data the hospital submits with its request for low-volume hospital status in addition to other available data. Under this approach, a hospital will know in advance whether or not it will receive a payment adjustment under the low-volume hospital policy. The MAC and CMS may review available data such as the number of discharges, in addition to the data the hospital submits with its request for low-volume hospital status, in order to determine whether or not the hospital meets the qualifying criteria. (For additional information on our existing process for requesting the low-volume hospital payment adjustment, we refer readers to the FY 2019 IPPS/LTCH PPS final rule (83 FR 41399 through 41401).)
As explained earlier, for FY 2019 and subsequent fiscal years, the discharge determination is made based on the hospital's number of total discharges, that is, Medicare and non-Medicare discharges, as was the case for FYs 2005 through 2010. Under § 412.101(b)(2)(i) and § 412.101(b)(2)(iii), a hospital's most recently submitted cost report is used to determine if the hospital meets the discharge criterion to receive the low-volume payment adjustment in the current year. As discussed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41399 and 41400), we use cost report data to determine if a hospital meets the discharge criterion because this is the best available data source that includes information on both Medicare and non-Medicare discharges. (For FYs 2011 through 2018, the most recently available MedPAR data were used to determine the hospital's Medicare discharges because non-Medicare discharges were not used to determine
As also discussed in the FY 2019 IPPS/LTCH PPS final rule, in addition to the discharge criterion, for FY 2019 and for subsequent fiscal years, eligibility for the low-volume hospital payment adjustment is also dependent upon the hospital meeting the applicable mileage criterion specified in § 412.101(b)(2)(i) or (iii) for the fiscal year. Specifically, to meet the mileage criterion to qualify for the low-volume hospital payment adjustment for FY 2021, as was the case for FYs 2019 and 2020, a hospital must be located more than 15 road miles from the nearest subsection (d) hospital. (We define in § 412.101(a) the term “road miles” to mean “miles” as defined in § 412.92(c)(1) (75 FR 50238 through 50275 and 50414).) For establishing that the hospital meets the mileage criterion, the use of a web-based mapping tool as part of the documentation is acceptable. The MAC will determine if the information submitted by the hospital, such as the name and street address of the nearest hospitals, location on a map, and distance from the hospital requesting low-volume hospital status, is sufficient to document that it meets the mileage criterion. If not, the MAC will follow up with the hospital to obtain additional necessary information to determine whether or not the hospital meets the applicable mileage criterion.
We discussed in the proposed rule that in accordance with our previously established process, a hospital must make a written request for low-volume hospital status that is received by its MAC by September 1 immediately preceding the start of the Federal fiscal year for which the hospital is applying for low-volume hospital status in order for the applicable low-volume hospital payment adjustment to be applied to payments for its discharges for the fiscal year beginning on or after October 1 immediately following the request (that is, the start of the Federal fiscal year). We stated that for a hospital whose request for low-volume hospital status is received after September 1, if the MAC determines the hospital meets the criteria to qualify as a low-volume hospital, the MAC will apply the applicable low-volume hospital payment adjustment to determine payment for the hospital's discharges for the fiscal year, effective prospectively within 30 days of the date of the MAC's low-volume status determination.
Consistent with this previously established process, for FY 2021, we proposed that a hospital must submit a written request for low-volume hospital status to its MAC that includes sufficient documentation to establish that the hospital meets the applicable mileage and discharge criteria (as described earlier). Consistent with historical practice, for FY 2021, we proposed that a hospital's written request must be received by its MAC no later than September 1, 2020 in order for the low-volume hospital payment adjustment to be applied to payments for its discharges beginning on or after October 1, 2020. If a hospital's written request for low-volume hospital status for FY 2021 is received after September 1, 2020, and if the MAC determines the hospital meets the criteria to qualify as a low-volume hospital, we stated that the MAC would apply the low-volume hospital payment adjustment to determine the payment for the hospital's FY 2021 discharges, effective prospectively within 30 days of the date of the MAC's low-volume hospital status determination. We noted in the proposed rule that this proposal was consistent with the process for requesting and obtaining the low-volume hospital payment adjustment for FY 2020 (84 FR 42348 through 42349).
Under this process, a hospital receiving the low-volume hospital payment adjustment for FY 2020 may continue to receive a low-volume hospital payment adjustment for FY 2021 without reapplying if it continues to meet the applicable mileage and discharge criteria (which, as discussed previously, are the same qualifying criteria that apply for FY 2020). In this case, a hospital's request can include a verification statement that it continues to meet the mileage criterion applicable for FY 2021. (Determination of meeting the discharge criterion is discussed earlier in this section.) We noted in the proposed rule that a hospital must continue to meet the applicable qualifying criteria as a low-volume hospital (that is, the hospital must meet the applicable discharge criterion and mileage criterion for the fiscal year) in order to receive the payment adjustment in that fiscal year; that is, low-volume hospital status is not based on a “one-time” qualification (75 FR 50238 through 50275). Consistent with historical policy, a hospital must submit its request, including this written verification, for each fiscal year for which it seeks to receive the low-volume hospital payment adjustment, and in accordance with the timeline described earlier.
As discussed in section I.A.2 of this FY 2021 IPPS/LTCH PPS final rule, we are waiving the delayed effective date for this final rule. The proposed deadline of September 1, 2020 for receipt of a hospital's written request by its MAC in order for the low-volume hospital payment adjustment to be applied to payments for its discharges beginning on or after October 1, 2020, may occur very near or on the date of issuance of this final rule. Due to this unique circumstance, in this final rule we are modifying the proposed deadline to September 15, 2020. Accordingly, for FY 2021, we are establishing that a hospital's written request must be received by its MAC no later than September 15, 2020 in order for the low-volume hospital payment adjustment to be applied to payments for its discharges beginning on or after October 1, 2020. If a hospital's written request for low-volume hospital status for FY 2021 is received after September 15, 2020, and if the MAC determines the hospital meets the criteria to qualify as a low-volume hospital, the MAC will apply the low-volume hospital payment adjustment to determine the payment for the hospital's FY 2021 discharges, effective prospectively within 30 days of the date of the MAC's low-volume hospital status determination.
Under the IPPS, an additional payment amount is made to hospitals with residents in an approved graduate medical education (GME) program in order to reflect the higher indirect patient care costs of teaching hospitals relative to nonteaching hospitals. The payment amount is determined by use of a statutorily specified adjustment factor. The regulations regarding the calculation of this additional payment, known as the IME adjustment, are located at § 412.105. We refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51680) for a full discussion of the IME adjustment and IME adjustment factor. Section 1886(d)(5)(B)(ii)(XII) of the Act provides that, for discharges occurring during FY 2008 and fiscal years thereafter, the IME formula multiplier is 1.35. Accordingly, for discharges occurring during FY 2021,
We did not receive any comments regarding the IME adjustment factor, which, as noted earlier, is statutorily required. Accordingly, for discharges occurring during FY 2021, the IME formula multiplier is 1.35.
Section 1886(d)(5)(F) of the Act provides for additional Medicare payments to subsection (d) hospitals that serve a significantly disproportionate number of low-income patients. The Act specifies two methods by which a hospital may qualify for the Medicare disproportionate share hospital (DSH) adjustment. Under the first method, hospitals that are located in an urban area and have 100 or more beds may receive a Medicare DSH payment adjustment if the hospital can demonstrate that, during its cost reporting period, more than 30 percent of its net inpatient care revenues are derived from State and local government payments for care furnished to needy patients with low incomes. This method is commonly referred to as the “Pickle method.” The second method for qualifying for the DSH payment adjustment, which is the most common, is based on a complex statutory formula under which the DSH payment adjustment is based on the hospital's geographic designation, the number of beds in the hospital, and the level of the hospital's disproportionate patient percentage (DPP). A hospital's DPP is the sum of two fractions: The “Medicare fraction” and the “Medicaid fraction.” The Medicare fraction (also known as the “SSI fraction” or “SSI ratio”) is computed by dividing the number of the hospital's inpatient days that are furnished to patients who were entitled to both Medicare Part A and Supplemental Security Income (SSI) benefits by the hospital's total number of patient days furnished to patients entitled to benefits under Medicare Part A. The Medicaid fraction is computed by dividing the hospital's number of inpatient days furnished to patients who, for such days, were eligible for Medicaid, but were not entitled to benefits under Medicare Part A, by the hospital's total number of inpatient days in the same period.
Because the DSH payment adjustment is part of the IPPS, the statutory references to “days” in section 1886(d)(5)(F) of the Act have been interpreted to apply only to hospital acute care inpatient days. Regulations located at 42 CFR 412.106 govern the Medicare DSH payment adjustment and specify how the DPP is calculated as well as how beds and patient days are counted in determining the Medicare DSH payment adjustment. Under § 412.106(a)(1)(i), the number of beds for the Medicare DSH payment adjustment is determined in accordance with bed counting rules for the IME adjustment under § 412.105(b).
Section 3133 of the Patient Protection and Affordable Care Act, as amended by section 10316 of the same Act and section 1104 of the Health Care and Education Reconciliation Act (Pub. L. 111–152), added a section 1886(r) to the Act that modifies the methodology for computing the Medicare DSH payment adjustment. (For purposes of this final rule, we refer to these provisions collectively as section 3133 of the Affordable Care Act.) Beginning with discharges in FY 2014, hospitals that qualify for Medicare DSH payments under section 1886(d)(5)(F) of the Act receive 25 percent of the amount they previously would have received under the statutory formula for Medicare DSH payments. This provision applies equally to hospitals that qualify for DSH payments under section 1886(d)(5)(F)(i)(I) of the Act and those hospitals that qualify under the Pickle method under section 1886(d)(5)(F)(i)(II) of the Act.
The remaining amount, equal to an estimate of 75 percent of what otherwise would have been paid as Medicare DSH payments, reduced to reflect changes in the percentage of individuals who are uninsured, is available to make additional payments to each hospital that qualifies for Medicare DSH payments and that has uncompensated care. The payments to each hospital for a fiscal year are based on the hospital's amount of uncompensated care for a given time period relative to the total amount of uncompensated care for that same time period reported by all hospitals that receive Medicare DSH payments for that fiscal year.
As provided by section 3133 of the Affordable Care Act, section 1886(r) of the Act requires that, for FY 2014 and each subsequent fiscal year, a subsection (d) hospital that would otherwise receive DSH payments made under section 1886(d)(5)(F) of the Act receives two separately calculated payments. Specifically, section 1886(r)(1) of the Act provides that the Secretary shall pay to such subsection (d) hospital (including a Pickle hospital) 25 percent of the amount the hospital would have received under section 1886(d)(5)(F) of the Act for DSH payments, which represents the empirically justified amount for such payment, as determined by the MedPAC in its March 2007 Report to Congress. We refer to this payment as the “empirically justified Medicare DSH payment.”
In addition to this empirically justified Medicare DSH payment, section 1886(r)(2) of the Act provides that, for FY 2014 and each subsequent fiscal year, the Secretary shall pay to such subsection (d) hospital an additional amount equal to the product of three factors. The first factor is the difference between the aggregate amount of payments that would be made to subsection (d) hospitals under section 1886(d)(5)(F) of the Act if subsection (r) did not apply and the aggregate amount of payments that are made to subsection (d) hospitals under section 1886(r)(1) of the Act for such fiscal year. Therefore, this factor amounts to 75 percent of the payments that would otherwise be made under section 1886(d)(5)(F) of the Act.
The second factor is, for FY 2018 and subsequent fiscal years, 1 minus the percent change in the percent of individuals who are uninsured, as determined by comparing the percent of individuals who were uninsured in 2013 (as estimated by the Secretary, based on data from the Census Bureau or other sources the Secretary determines appropriate, and certified by the Chief Actuary of CMS), and the percent of individuals who were uninsured in the most recent period for which data are available (as so estimated and certified), minus statutory adjustment of 0.2 percentage point for FYs 2018 and 2019.
The third factor is a percent that, for each subsection (d) hospital, represents the quotient of the amount of uncompensated care for such hospital for a period selected by the Secretary (as estimated by the Secretary, based on appropriate data), including the use of alternative data where the Secretary determines that alternative data are available which are a better proxy for the costs of subsection (d) hospitals for treating the uninsured, and the aggregate amount of uncompensated care for all subsection (d) hospitals that receive a payment under section 1886(r) of the Act. Therefore, this third factor represents a hospital's uncompensated care amount for a given time period relative to the uncompensated care amount for that same time period for all
For each hospital, the product of these three factors represents its additional payment for uncompensated care for the applicable fiscal year. We refer to the additional payment determined by these factors as the “uncompensated care payment.”
Section 1886(r) of the Act applies to FY 2014 and each subsequent fiscal year. In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50620 through 50647) and the FY 2014 IPPS interim final rule with comment period (78 FR 61191 through 61197), we set forth our policies for implementing the required changes to the Medicare DSH payment methodology made by section 3133 of the Affordable Care Act for FY 2014. In those rules, we noted that, because section 1886(r) of the Act modifies the payment required under section 1886(d)(5)(F) of the Act, it affects only the DSH payment under the operating IPPS. It does not revise or replace the capital IPPS DSH payment provided under the regulations at 42 CFR part 412, subpart M, which were established through the exercise of the Secretary's discretion in implementing the capital IPPS under section 1886(g)(1)(A) of the Act.
Finally, section 1886(r)(3) of the Act provides that there shall be no administrative or judicial review under section 1869, section 1878, or otherwise of any estimate of the Secretary for purposes of determining the factors described in section 1886(r)(2) of the Act or of any period selected by the Secretary for the purpose of determining those factors. Therefore, there is no administrative or judicial review of the estimates developed for purposes of applying the three factors used to determine uncompensated care payments, or the periods selected in order to develop such estimates.
As explained earlier, the payment methodology under section 3133 of the Affordable Care Act applies to “subsection (d) hospitals” that would otherwise receive a DSH payment made under section 1886(d)(5)(F) of the Act. Therefore, hospitals must receive empirically justified Medicare DSH payments in a fiscal year in order to receive an additional Medicare uncompensated care payment for that year. Specifically, section 1886(r)(2) of the Act states that, in addition to the payment made to a subsection (d) hospital under section 1886(r)(1) of the Act, the Secretary shall pay to such subsection (d) hospitals an additional amount. Because section 1886(r)(1) of the Act refers to empirically justified Medicare DSH payments, the additional payment under section 1886(r)(2) of the Act is limited to hospitals that receive empirically justified Medicare DSH payments in accordance with section 1886(r)(1) of the Act for the applicable fiscal year.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50622) and the FY 2014 IPPS interim final rule with comment period (78 FR 61193), we provided that hospitals that are not eligible to receive empirically justified Medicare DSH payments in a fiscal year will not receive uncompensated care payments for that year. We also specified that we would make a determination concerning eligibility for interim uncompensated care payments based on each hospital's estimated DSH status for the applicable fiscal year (using the most recent data that are available). We indicated that our final determination on the hospital's eligibility for uncompensated care payments will be based on the hospital's actual DSH status at cost report settlement for that payment year.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50622) and in the rulemaking for subsequent fiscal years, we have specified our policies for several specific classes of hospitals within the scope of section 1886(r) of the Act. In this FY 2021 IPPS/LTCH PPS final rule, we discuss our specific policies regarding eligibility to receive empirically justified Medicare DSH payments and uncompensated care payments for FY 2021 with respect to the following hospitals:
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As we have discussed earlier, section 1886(r)(1) of the Act requires the Secretary to pay 25 percent of the amount of the Medicare DSH payment that would otherwise be made under section 1886(d)(5)(F) of the Act to a subsection (d) hospital. Because section 1886(r)(1) of the Act merely requires the program to pay a designated percentage of these payments, without revising the criteria governing eligibility for DSH payments or the underlying payment methodology, we stated in the FY 2014 IPPS/LTCH PPS final rule that we did not believe that it was necessary to develop any new operational mechanisms for making such payments. Therefore, in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50626), we implemented this provision by advising MACs to simply adjust the interim claim payments to the requisite 25 percent of what would have otherwise been paid. We also made corresponding changes to the hospital cost report so that these empirically justified Medicare DSH payments can be settled at the appropriate level at the time of cost report settlement. We provided more detailed operational instructions and cost report instructions following issuance of the FY 2014 IPPS/LTCH PPS final rule that are available on the CMS website at:
As we discussed earlier, section 1886(r)(2) of the Act provides that, for each eligible hospital in FY 2014 and subsequent years, the uncompensated care payment is the product of three factors. These three factors represent our estimate of 75 percent of the amount of Medicare DSH payments that would otherwise have been paid, an adjustment to this amount for the percent change in the national rate of uninsurance compared to the rate of uninsurance in 2013, and each eligible hospital's estimated uncompensated care amount relative to the estimated uncompensated care amount for all eligible hospitals. In this section of this final rule, we discuss the data sources and methodologies for computing each of these factors, our final policies for FYs 2014 through 2020, and the policies we are finalizing for FY 2021.
Section 1886(r)(2)(A) of the Act establishes Factor 1 in the calculation of the uncompensated care payment. Section 1886(r)(2)(A) of the Act states that this factor is equal to the difference between: (1) The aggregate amount of payments that would be made to subsection (d) hospitals under section 1886(d)(5)(F) of the Act if section 1886(r) of the Act did not apply for such fiscal year (as estimated by the Secretary); and (2) the aggregate amount of payments that are made to subsection (d) hospitals under section 1886(r)(1) of the Act for such fiscal year (as so estimated). Therefore, section 1886(r)(2)(A)(i) of the Act represents the estimated Medicare DSH payments that would have been made under section 1886(d)(5)(F) of the Act if section 1886(r) of the Act did not apply for such fiscal year. Under a prospective payment system, we would not know the precise aggregate Medicare DSH payment amount that would be paid for
Therefore, Factor 1 is the difference between our estimates of: (1) The amount that would have been paid in Medicare DSH payments for the fiscal year, in the absence of the new payment provision; and (2) the amount of empirically justified Medicare DSH payments that are made for the fiscal year, which takes into account the requirement to pay 25 percent of what would have otherwise been paid under section 1886(d)(5)(F) of the Act. In other words, this factor represents our estimate of 75 percent (100 percent minus 25 percent) of our estimate of Medicare DSH payments that would otherwise be made, in the absence of section 1886(r) of the Act, for the fiscal year.
As we did for FY 2020, in this FY 2021 IPPS/LTCH PPS final rule, in order to determine Factor 1 in the uncompensated care payment formula for FY 2021, we proposed to continue the policy established in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50628 through 50630) and in the FY 2014 IPPS interim final rule with comment period (78 FR 61194) of determining Factor 1 by developing estimates of both the aggregate amount of Medicare DSH payments that would be made in the absence of section 1886(r)(1) of the Act and the aggregate amount of empirically justified Medicare DSH payments to hospitals under 1886(r)(1) of the Act. Consistent with the policy that has applied in previous years, these estimates will not be revised or updated subsequent to the publication of our final projections in this FY 2021 IPPS/LTCH PPS final rule.
Therefore, in order to determine the two elements of Factor 1 for FY 2021 (Medicare DSH payments prior to the application of section 1886(r)(1) of the Act, and empirically justified Medicare DSH payments after application of section 1886(r)(1) of the Act), for this final rule, we used the most recently available projections of Medicare DSH payments for the fiscal year, as calculated by CMS' Office of the Actuary using the most recently filed Medicare hospital cost reports with Medicare DSH payment information and the most recent Medicare DSH patient percentages and Medicare DSH payment adjustments provided in the IPPS Impact File. The determination of the amount of DSH payments is partially based on the Office of the Actuary's Part A benefits projection model. One of the results of this model is inpatient hospital spending. Projections of DSH payments require projections for expected increases in utilization and case-mix. The assumptions that were used in making these projections and the resulting estimates of DSH payments for FY 2018 through FY 2021 are discussed in the table titled “Factors Applied for FY 2018 through FY 2021 to Estimate Medicare DSH Expenditures Using FY 2017 Baseline.”
For purposes of calculating our proposal for Factor 1 and modeling the impact of the FY 2021 IPPS/LTCH PPS proposed rule, we used the Office of the Actuary's December 2019 Medicare DSH estimates, which were based on data from the September 2019 update of the Medicare Hospital Cost Report Information System (HCRIS) and the FY 2020 IPPS/LTCH PPS final rule IPPS Impact File, published in conjunction with the publication of the FY 2020 IPPS/LTCH PPS final rule. Because SCHs that are projected to be paid under their hospital-specific rate are excluded from the application of section 1886(r) of the Act, these hospitals also were excluded from the December 2019 Medicare DSH estimates. Furthermore, because section 1886(r) of the Act specifies that the uncompensated care payment is in addition to the empirically justified Medicare DSH payment (25 percent of DSH payments that would be made without regard to section 1886(r) of the Act), Maryland hospitals, which are not eligible to receive DSH payments, were also excluded from the Office of the Actuary's December 2019 Medicare DSH estimates. The 27 hospitals that were then participating in the Rural Community Hospital Demonstration Program were also excluded from these estimates because, under the payment methodology that applies during the second 5 years of the extension period, these hospitals are not eligible to receive empirically justified Medicare DSH payments or interim and final uncompensated care payments.
For the proposed rule, using the data sources as previously discussed, the Office of the Actuary's December 2019 estimate for Medicare DSH payments for FY 2021 without regard to the application of section 1886(r)(1) of the Act, was approximately $14.004 billion. Therefore, also based on the December 2019 estimate, the estimate of empirically justified Medicare DSH payments for FY 2021, with the application of section 1886(r)(1) of the Act, was approximately $3.840 billion (or 25 percent of the total amount of estimated Medicare DSH payments for FY 2021). Under § 412.106(g)(1)(i) of the regulations, Factor 1 is the difference between these two estimates of the Office of the Actuary. Therefore, in the proposed rule, we proposed that Factor 1 for FY 2021 would be $ 11,518,901,035.84, which was equal to 75 percent of the total amount of estimated Medicare DSH payments for FY 2021 ($15,358,534,714.46 minus $3,839,633,678.61). In the FY 20201 IPPS/LTCH PPS proposed rule (85 FR 32748), we noted that consistent with our approach in previous rulemakings, OACT intended to use more recent data that may become available for purposes of projecting the final Factor 1 estimates for the FY 2021 IPPS/LTCH PPS final rule.
We noted in the FY 2021 IPPS/LTCH PPS proposed rule, that the Factor 1 estimates for final rules are generally consistent with the economic assumptions and actuarial analysis used to develop the President's Budget estimates under current law, and the Factor 1 estimates for the final rule are generally consistent with those used for the Midsession Review of the President's Budget. As we have in the past, for additional information on the development of the President's Budget, we refer readers to the OMB website at:
For a general overview of the principal steps involved in projecting future inpatient costs and utilization, we referred readers to the “2019 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds” available on the CMS website at:
In the FY 2021 IPPS/LTCH PPS proposed rule, we referred readers to the 2017 Actuarial Report on the Financial Outlook for Medicaid for a discussion of general issues regarding Medicaid projections. (available at:
To provide context, we note that Factor 1 is not estimated in isolation from other projections made by OACT. The Factor 1 estimates for proposed rules are generally consistent with the economic assumptions and actuarial analysis used to develop the President's Budget estimates under current law, and the Factor 1 estimates in this final rule are generally consistent with those used for the “2020 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds” available on the CMS website at:
For a general overview of the principal steps involved in projecting future inpatient costs and utilization, we refer readers to the 2020 Medicare Trustees Report. We note that the annual reports of the Medicare Boards of Trustees to Congress represent the Federal Government's official evaluation of the financial status of the Medicare Program. The actuarial projections contained in these reports are based on numerous assumptions regarding future trends in program enrollment, utilization and costs of health care services covered by Medicare, as well as other factors affecting program expenditures. In addition, although the methods used to estimate future costs based on these assumptions are complex, they are subject to periodic review by independent experts to ensure their validity and reasonableness.
We also refer readers to the 2018 Actuarial Report on the Financial Outlook for Medicaid which is available on the CMS website at:
Regarding the commenters' requests for further information on our assumptions regarding Medicaid expansion on the Medicaid population, we provide a discussion of more recent estimates and assumptions regarding Medicaid expansion as part of the discussion of the final Factor 1 for FY 2021, which also incorporates the estimated impact of the COVID–19 pandemic.
Commenters highlighted the proposed decrease in Factor 1 of $919 million from FY 2020 to FY 2021 and cited several data sources that they believe would indicate that such a decrease in estimated DSH payments would be inconsistent with the current economic situation. For example, several commenters pointed out that, according to the Congressional Budget Office (CBO), the unemployment rate is projected to be 9.5 percent by the end of FY 2021, which in turn would indicate an increase in Medicaid enrollment. Many commenters also cited estimates by the Urban Institute, which estimated that 12 to 21 million people would become eligible for Medicaid as a result of losing Employer-Sponsored Insurance (ESI) due to the COVID–19 PHE. Commenters also referenced a Kaiser Family Foundation estimate that 27 million would lose ESI as of May 2, 2020, with nearly half being eligible for Medicaid. A few commenters also referenced estimates generated by independent consulting firms, one of which predicted Medicaid enrollment would increase by 30 million as a result of the adverse economic effects from the COVID–19 PHE. To this end, many stakeholders urged CMS to use more recent, or alternative data sources, to account for the projected increase in Medicaid beneficiaries in the calculation of Factor 1.
A commenter also observed that due to the COVID–19 PHE, disproportionate patient percentages (DPPs) would be expected to increase nationwide in FY 2021, increasing the projected amount of traditional DSH payments above the levels originally projected based on the economic assumptions and actuarial analysis used in the President's Budget. Finally, a handful of commenters raised the issue of deferral of inpatient non-emergency services due to the COVID–19 PHE, suggesting that these services would likely be shifted to next year, and expressing concern about the impact that this shift might have on the calculation of Factor 1 for FY 2021. Some commenters suggested that the agency take into account the shift in hospital payer mix resulting from the COVID–19 PHE, as well as hospital case volume degradation, when updating its estimates of DSH payments.
After consideration of the public comments we received, we are finalizing, as proposed, the methodology for calculating Factor 1 for FY 2021. We discuss the resulting Factor 1 amount for FY 2021 in this section. For this final rule, the OACT used the most recently submitted Medicare cost report data from the March 31, 2020 update of HCRIS to identify Medicare DSH payments and the most recent Medicare DSH payment adjustments provided in the Impact File published in conjunction with the publication of the FY 2020 IPPS/LTCH PPS final rule and applied update factors and assumptions for future changes in utilization and case-mix to estimate Medicare DSH payments for the upcoming fiscal year. The July 2020 OACT estimate for Medicare DSH payments for FY 2021, without regard to the application of section 1886(r)(1) of the Act, was approximately $15.171 billion. This estimate excluded Maryland hospitals participating in the Maryland All-Payer Model, hospitals participating in the Rural Community Hospital Demonstration, and SCHs paid under their hospital-specific payment rate. Therefore, based on the July 2020 estimate, the estimate of empirically justified Medicare DSH payments for FY 2021, with the application of section 1886(r)(1) of the Act, was approximately $3.793 billion (or 25 percent of the total amount of estimated Medicare DSH payments for FY 2021). Under § 412.106(g)(1)(i) of the regulations, Factor 1 is the difference between these two estimates of the OACT. Therefore, in this final rule, Factor 1 for FY 2021 is $11,378,005,107.01, which is equal to 75 percent of the total amount of estimated Medicare DSH payments for FY 2021 ($15,170,673,476.01 minus $ 3,792,668,369.00). The Office of the Actuary's final estimates for FY 2021 began with a baseline of $14.004 billion in Medicare DSH expenditures for FY 2017. The following table shows the factors applied to update this baseline through the current estimate for FY 2021:
In this table, the discharges column shows the changes in the number of Medicare fee-for-service (FFS) inpatient hospital discharges. The figures for FY 2018 and FY 2019 are based on Medicare claims data that have been adjusted by a completion factor to account for incomplete claims data. The discharge figure for FY 2020 is based on preliminary data for 2020. The discharge figure for FY 2021 is an assumption based on recent trends recovering back to the long-term trend and assumptions related to how many beneficiaries will be enrolled in Medicare Advantage (MA) plans. The discharge figures for 2020 and 2021 include the estimated impact of the COVID–19 pandemic. The case-mix column shows the estimated changes in case-mix for IPPS hospitals. The case-mix figures for FY 2018 and FY 2019 are based on actual data adjusted by a completion factor. The FY 2020 increase is based on preliminary data. The FY 2021 figure is an estimate based on the recommendation of the 2010–2011 Medicare Technical Review Panel. The case-mix factor figures for 2020 and 2021 have also been adjusted for the estimated impact of the COVID–19 pandemic. The “Other” column shows the increase in other factors that contribute to the Medicare DSH estimates. These factors include the difference between the total inpatient hospital discharges and the IPPS discharges, and various adjustments to the payment rates that have been included over the years but are not reflected in the other columns (such as the change in rates for the 2-midnight stay policy and the 20 percent add on for COVID–19 discharges). In addition, the “Other” column includes a factor for the Medicaid expansion due to the Affordable Care Act. The factor for Medicaid expansion was developed using public information and statements for each State regarding its intent to implement the expansion. Based on this information, it is assumed that 55 percent of all individuals who were potentially newly eligible Medicaid enrollees in 2018 and 2019 resided in States that had elected to expand Medicaid eligibility, and 60 percent of all individuals who were potentially newly eligible Medicaid enrollees in 2020 and thereafter, resided in States that had elected to expand Medicaid eligibility. In the future, these assumptions may change based on actual participation by States. The “Other” column also includes the estimated impacts on Medicaid enrollment from the pandemic. We note that it is estimated that Medicaid enrollment increased by 4.0 percent in FY 2020 and will increase by an additional 0.3 percent in FY 2021. For a discussion of general issues regarding Medicaid projections, we refer readers to the 2018 Actuarial Report on the Financial Outlook for Medicaid, which is available on the CMS website at:
The following table shows the factors that are included in the “Update” column of the previous table:
Section 1886(r)(2)(B) of the Act establishes Factor 2 in the calculation of the uncompensated care payment. Section 1886(r)(2)(B)(ii) of the Act provides that, for FY 2018 and subsequent fiscal years, the second factor is 1 minus the percent change in the percent of individuals who are uninsured, as determined by comparing the percent of individuals who were uninsured in 2013 (as estimated by the Secretary, based on data from the Census Bureau or other sources the Secretary determines appropriate, and certified by the Chief Actuary of CMS) and the percent of individuals who were uninsured in the most recent period for which data are available (as so estimated and certified), minus a statutory adjustment of 0.2 percentage point for FYs 2018 and 2019. In FY 2020 and subsequent fiscal years, there is no longer a reduction. We note that, unlike section 1886(r)(2)(B)(i) of the Act, which governed the calculation of Factor 2 for FYs 2014, 2015, 2016, and 2017, section 1886(r)(2)(B)(ii) of the Act permits the use of a data source other than the CBO estimates to determine the percent change in the rate of uninsurance beginning in FY 2018. In addition, for FY 2018 and subsequent years, the statute does not require that the estimate of the percent of individuals who are uninsured be limited to individuals who are under 65 years of age.
As we discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38197), in our analysis of a potential data source for the rate of uninsurance for purposes of computing Factor 2 in FY 2018, we considered the following: (a) The extent to which the source accounted for the full U.S. population; (b) the extent to which the source comprehensively accounted for both public and private health insurance coverage in deriving its estimates of the number of uninsured; (c) the extent to which the source utilized data from the Census Bureau; (d) the timeliness of the estimates; (e) the continuity of the estimates over time; (f) the accuracy of the estimates; and (g) the availability of projections (including the availability of projections using an established estimation methodology that would allow for calculation of the rate of uninsurance for the applicable Federal fiscal year). As we explained in the FY 2018 IPPS/LTCH PPS final rule, these considerations are consistent with the statutory requirement that this estimate be based on data from the Census Bureau or other sources the Secretary determines appropriate and help to ensure the data source will provide reasonable estimates for the rate of uninsurance that are available in conjunction with the IPPS rulemaking cycle. In the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32750), we proposed to use the same methodology as was used in FY 2018 through FY 2020 to determine Factor 2 for FY 2021.
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38197 and 38198), we explained that we had determined that the source that, on balance, best meets all of these considerations is the uninsured estimates produced by CMS' Office of the Actuary (OACT) as part of the development of the National Health Expenditure Accounts (NHEA). The NHEA represents the government's official estimates of economic activity (spending) within the health sector. The information contained in the NHEA has been used to study numerous topics related to the health care sector, including, but not limited to, changes in the amount and cost of health services purchased and the payers or programs that provide or purchase these services; the economic causal factors at work in the health sector; the impact of policy changes, including major health reform; and comparisons to other countries' health spending. Of relevance to the determination of Factor 2 is that the comprehensive and integrated structure of the NHEA creates an ideal tool for evaluating changes to the health care system, such as the mix of the insured and uninsured, because this information is integral to the well-established NHEA methodology. In the FY 2021 IPPS/LTCH PPS proposed rule, we described some aspects of the methodology used to develop the NHEA that were particularly relevant in estimating the percent change in the rate of uninsurance for FY 2018 through FY 2020 that we believe continue to be relevant in developing the estimate for FY 2021. A full description of the methodology used to develop the NHEA is available on the CMS website at:
The NHEA estimates of U.S. population reflect the Census Bureau's definition of the resident-based population, which includes all people who usually reside in the 50 States or the District of Columbia, but excludes residents living in Puerto Rico and areas under U.S. sovereignty, members of the U.S. Armed Forces overseas, and U.S. citizens whose usual place of residence is outside of the United States, plus a small (typically less than 0.2 percent of population) adjustment to reflect Census undercounts. In past years, the estimates for Factor 2 were made using the CBO's uninsured population estimates for the under 65 population. For FY 2018 and subsequent years, the statute does not restrict the estimate to the measurement of the percent of individuals under the age of 65 who are uninsured. Accordingly, as we explained in the FY 2018 IPPS/LTCH PPS proposed and final rules, we believe it is appropriate to use an estimate that reflects the rate of uninsurance in the United States across all age groups. In addition, we
The NHEA includes comprehensive enrollment estimates for total private health insurance (PHI) (including direct and employer-sponsored plans), Medicare, Medicaid, the Children's Health Insurance Program (CHIP), and other public programs, and estimates of the number of individuals who are uninsured. Estimates of total PHI enrollment are available for 1960 through 2018, estimates of Medicaid, Medicare, and CHIP enrollment are available for the length of the respective programs, and all other estimates (including the more detailed estimates of direct-purchased and employer-sponsored insurance) are available for 1987 through 2018. The NHEA data are publicly available on the CMS website at:
In order to compute Factor 2, the first metric that is needed is the proportion of the total U.S. population that was uninsured in 2013. In developing the estimates for the NHEA, OACT's methodology included using the number of uninsured individuals for 1987 through 2009 based on the enhanced Current Population Survey (CPS) from the State Health Access Data Assistance Center (SHADAC). The CPS, sponsored jointly by the U.S. Census Bureau and the U.S. Bureau of Labor Statistics (BLS), is the primary source of labor force statistics for the population of the United States. (We refer readers to the website at:
To estimate the number of uninsured individuals for 2010 through 2018, the OACT extrapolates from the 2009 CPS data using data from the National Health Interview Survey (NHIS). The NHIS is one of the major data collection programs of the National Center for Health Statistics (NCHS), which is part of the CDC. The U.S. Census Bureau is the data collection agent for the NHIS. The NHIS results have been instrumental over the years in providing data to track health status, health care access, and progress toward achieving national health objectives. For further information regarding the NHIS, we refer readers to the CDC website at:
The next metrics needed to compute Factor 2 are projections of the rate of uninsurance in both CY 2020 and CY 2021. On an annual basis, OACT projects enrollment and spending trends for the coming 10-year period. Those projections (currently for years 2019 through 2028) use the latest NHEA historical data, which presently run through 2018. The NHEA projection methodology accounts for expected changes in enrollment across all of the categories of insurance coverage previously listed. The sources for projected growth rates in enrollment for Medicare, Medicaid, and CHIP include the latest Medicare Trustees Report, the Medicaid Actuarial Report, or other updated estimates as produced by OACT. Projected rates of growth in enrollment for private health insurance and the uninsured are based largely on OACT's econometric models, which rely on the set of macroeconomic assumptions underlying the latest Medicare Trustees Report. Greater detail can be found in OACT's report titled “Projections of National Health Expenditure: Methodology and Model Specification,” which is available on the CMS website at:
The use of data from the NHEA to estimate the rate of uninsurance is consistent with the statute and meets the criteria we have identified for determining the appropriate data source. Section 1886(r)(2)(B)(ii) of the Act instructs the Secretary to estimate the rate of uninsurance for purposes of Factor 2 based on data from the Census Bureau or other sources the Secretary determines appropriate. The NHEA utilizes data from the Census Bureau; the estimates are available in time for the IPPS rulemaking cycle; the estimates are produced by OACT on an annual basis and are expected to continue to be produced for the foreseeable future; and projections are available for calendar year time periods that span the upcoming fiscal year. Timeliness and continuity are important considerations because of our need to be able to update this estimate annually. Accuracy is also a very important consideration and, all things being equal, we would choose the most accurate data source that sufficiently meets our other criteria.
As discussed in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32751), using these data sources and the previously described methodologies, the OACT estimated that the uninsured rate for the historical, baseline year of 2013 was 14 percent and for CYs 2020 and 2021 is 9.5 percent and 9.5 percent, respectively.
As with the CBO estimates on which we based Factor 2 in prior fiscal years, the NHEA estimates are for a calendar year. In the rulemaking for FY 2014, many commenters noted that the uncompensated care payments are made for the fiscal year and not on a calendar year basis and requested that CMS normalize the CBO estimate to reflect a fiscal year basis. Specifically, commenters requested that CMS calculate a weighted average of the CBO estimate for October through December 2013 and the CBO estimate for January through September 2014 when determining Factor 2 for FY 2014. We agreed with the commenters that normalizing the estimate to cover FY 2014 rather than CY 2014 would more accurately reflect the rate of uninsurance that hospitals would experience during the FY 2014 payment year. Accordingly, we estimated the rate of uninsurance for FY 2014 by calculating a weighted average of the CBO estimates for CY 2013 and CY 2014 (78 FR 50633). We have continued this weighted average approach to rate of uninsurance projections for each Federal fiscal year since the FY 2014 IPPS/LTCH PPS final rule.
We continue to believe that, in order to estimate the rate of uninsurance during a fiscal year more accurately, Factor 2 should reflect the estimated rate of uninsurance that hospitals will experience during the fiscal year, rather
The calculation of the proposed Factor 2 for FY 2021 using a weighted average of the OACT's projections for CY 2020 and CY 2021 was as follows:
• Percent of individuals without insurance for CY 2013: 14 percent.
• Percent of individuals without insurance for CY 2020: 9.5 percent.
• Percent of individuals without insurance for CY 2021: 9.5 percent.
• Percent of individuals without insurance for FY 2021 (0.25 times 0.095) + (0.75 times 0.095): 9.5 percent.
1−|((0.095−0.14)/0.14)| = 1−0.3214 = 0.6786 (67.86 percent).
For FY 2020 and subsequent fiscal years, section 1886(r)(2)(B)(ii) of the Act no longer includes any reduction to the previous calculation. Therefore, we proposed that Factor 2 for FY 2021 would be 67.86 percent.
The proposed FY 2021 uncompensated care amount was $11,518,901,035.84 * 0.6786 = $7,816,726,242.92. (We note that this calculation is Factor 1 * Factor 2. In the proposed rule, this sentence inadvertently referenced the total amount of estimated Medicare DSH payments before the application of § 1886(r)(1), rather than 75% of that amount, as required by § 412.106(g)(1)(i). However, the proposed total uncompensated care amount was accurately included in the FY 2021 proposed rule and is shown again below).
We invited public comments on our methodology for calculating Factor 2 for FY 2021.
Many commenters cited the substantial increase in the unemployment rate, and the likely loss of employer-sponsored health insurance, as the main factor influencing the uninsured rate since the outset of the COVID–19 PHE. Commenters referenced various sources for the unemployment rate, including estimates from the Bureau of Labor Statistics as well as from independent research groups. Several commenters also proposed updated estimates of the uninsured rate and alternative approaches on how to adjust Factor 2 and the estimated uncompensated care amount to reflect the impact of the COVID–19 PHE. A commenter raised the idea of using the correlation between the unemployment rate and the uninsured rate, which they projected to be 21.86%, by arguing that the uninsured rate is approximately 2.86 times the unemployment rate. Considering this relationship, the commenter estimated the uncompensated care amount for FY 2021 should be $18 billion. The commenter further suggested that the increase in uncompensated care payments from the proposed amount could be funded by the CARES Act.
Several different estimates of the uninsured percentage were suggested by other stakeholders. Those who cited the Kaiser Family Foundation estimated that 3.8 million of the newly unemployed would remain uninsured in January 2021. A commenter stated that this would increase the number of uninsured to 35.3 million and, therefore, would increase Factor 2. Another stakeholder, also citing the Kaiser Family Foundation estimate, added that it would be unrealistic to assume that only 3.8 million people would remain uninsured in 2021 because not everyone eligible for coverage in the Affordable Care Act (ACA) exchanges or Medicaid would actually enroll in such coverage. The commenter suggested that an optimistic estimate of those actually enrolling would be closer to 75% of the newly uninsured; given this assumption, the commenter indicated that the uninsured number would actually increase by 9.6 million or 2.6 percentage points, which would increase the uncompensated care amount by 2.3 billion dollars. Several other commenters echoed this concern, stating that there is no guarantee that individuals losing ESI would actually enroll in alternative forms of coverage, primarily Medicaid and plans available through the ACA exchanges. For example, a commenter stated that previous estimates have shown that only 43% of ACA exchange eligible enroll, adding that increased Medicaid eligibility is limited to expansion states, further limiting potential enrollment.
Other commenters provided estimates developed by consulting groups of both the uninsured rate and the uncompensated care amount. For example, a commenter referenced an estimate that the total uninsured population could increase to 40 million due to the COVID–19 PHE and indicated that inputting this number into the estimate based on the National Health Expenditure Accounts (NHEA) would result in an uninsured rate of 11% to 12%. The resulting increase in Factor 2 would translate to more than one billion dollars in additional funds for uncompensated care payments. Another commenter simulated the uncompensated care amount based on the uninsured and Medicaid enrollment estimates from the Urban Institute and the Kaiser Family Foundation and found that the uncompensated care amount would be closer to $10 billion. A handful of commenters also suggested that CMS maintain the same level of
Several commenters urged that CMS revise its methodology for estimating Factor 2 to incorporate the effects of COVID–19 on the uninsured rate in FY 2021 and the impact of any future public health emergency.
Lastly, commenters urged CMS to be transparent in the calculation of Factor 2 and stated that agency assumptions and data sources should be accurate and publicly available.
In response to the comments concerning transparency, we reiterate that we have been and continue to be transparent with respect to the methodology and data used to estimate Factor 2. The FY 2021 IPPS/LTCH PPS proposed rule included a detailed discussion of our proposed Factor 2 methodology as well as the data sources that would be used in making our final estimate. For purposes of this final rule, we are using an updated projected rate of uninsurance to reflect the impact of the PHE for the COVID–19 pandemic. A detailed description of the methodology used to update our estimates can be found in the accompanying memo (available at:
After consideration of the public comments we received, we are updating the calculation of Factor 2 for FY 2021 to incorporate more recent data. The final estimates of the percent of uninsured individuals have been certified by the Chief Actuary of CMS. The calculation of the final Factor 2 for FY 2021 using a weighted average of OACT's updated projections for CY 2020 and CY 2021 is as follows:
• Percentof individuals without insurance for CY 2013: 14 percent.
• Percentof individuals without insurance for CY 2020: 10.3 percent.
• Percentof individuals without insurance for CY 2021: 10.2 percent.
• Percentof individuals without insurance for FY 2021 (0.25 times 0.103) + (0.75 times 0.102): 10.2 percent.
1−|((0.0102−0.14)/0.14)| = 1−0.2714 = 0.7286 (72.86 percent). Therefore, the final Factor 2 for FY 2021 is 72.86 percent. The final FY 2021 uncompensated care amount is $11,378,005,107.01 * 0.7286 = $8,290,014,520.96.
Section 1886(r)(2)(C) of the Act defines Factor 3 in the calculation of the uncompensated care payment. As we have discussed earlier, section 1886(r)(2)(C) of the Act states that Factor 3 is equal to the percent, for each subsection (d) hospital, that represents the quotient of: (1) The amount of uncompensated care for such hospital for a period selected by the Secretary (as estimated by the Secretary, based on appropriate data (including, in the case where the Secretary determines alternative data are available that are a better proxy for the costs of subsection (d) hospitals for treating the uninsured, the use of such alternative data)); and (2) the aggregate amount of uncompensated care for all subsection (d) hospitals that receive a payment under section 1886(r) of the Act for such period (as so estimated, based on such data).
Therefore, Factor 3 is a hospital-specific value that expresses the proportion of the estimated uncompensated care amount for each subsection (d) hospital and each subsection (d) Puerto Rico hospital with the potential to receive Medicare DSH payments relative to the estimated uncompensated care amount for all hospitals estimated to receive Medicare DSH payments in the fiscal year for which the uncompensated care payment is to be made. Factor 3 is applied to the product of Factor 1 and Factor 2 to determine the amount of the uncompensated care payment that each eligible hospital will receive for FY 2014 and subsequent fiscal years. In order to implement the statutory requirements for this factor of the uncompensated care payment formula, it was necessary to determine: (1) The definition of uncompensated care or, in other words, the specific items that are to be included in the numerator (that is, the estimated uncompensated care amount for an individual hospital) and the denominator (that is, the estimated uncompensated care amount for all hospitals estimated to receive Medicare DSH payments in the applicable fiscal year); (2) the data source(s) for the estimated uncompensated care amount; and (3) the timing and manner of computing the quotient for each hospital estimated to receive Medicare DSH payments. The statute instructs the Secretary to estimate the amounts of uncompensated care for a period based on appropriate data. In addition, we note that the statute permits the Secretary to use alternative data in the case where the Secretary determines that such alternative data are available that are a better proxy for the costs of subsection (d) hospitals for treating individuals who are uninsured.
In the course of considering how to determine Factor 3 during the rulemaking process for FY 2014, the first year this provision was in effect, we considered defining the amount of uncompensated care for a hospital as the uncompensated care costs of that hospital and determined that Worksheet S–10 of the Medicare cost report potentially provides the most complete data regarding uncompensated care
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38202), we stated that we could no longer conclude that alternative data to the Worksheet S–10 are available for FY 2014 that are a better proxy for the costs of subsection (d) hospitals for treating individuals who are uninsured. Hospitals were on notice as of FY 2014 that Worksheet S–10 could eventually become the data source for CMS to calculate uncompensated care payments. Furthermore, hospitals' cost reports from FY 2014 had been publicly available for some time, and CMS had analyses of Worksheet S–10, conducted both internally and by stakeholders, demonstrating that Worksheet S–10 accuracy had improved over time. Analyses performed by MedPAC had already shown that the correlation between audited uncompensated care data from 2009 and the data from the FY 2011 Worksheet S–10 was over 0.80, as compared to a correlation of approximately 0.50 between the audited uncompensated care data and 2011 Medicare SSI and Medicaid days. Based on this analysis, MedPAC concluded that use of Worksheet S–10 data was already better than using Medicare SSI and Medicaid days as a proxy for uncompensated care costs, and that the data on Worksheet S–10 would improve over time as the data are actually used to make payments (81 FR 25090). In addition, a 2007 MedPAC analysis of data from the Government Accountability Office (GAO) and the American Hospital Association (AHA) had suggested that Medicaid days and low-income Medicare days are not an accurate proxy for uncompensated care costs (80 FR 49525).
Subsequent analyses from Dobson/DaVanzo, originally commissioned by CMS for the FY 2014 rulemaking and updated in later years, compared Worksheet S–10 and IRS Form 990 data and assessed the correlation in Factor 3s derived from each of the data sources. Our analyses on balance led us to believe that we had reached a tipping point in FY 2018 with respect to the use of the Worksheet S–10 data. We refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38201 through 38203) for a complete discussion of these analyses.
We found further evidence for this tipping point when we examined changes to the FY 2014 Worksheet S–10 data submitted by hospitals following the publication of the FY 2017 IPPS/LTCH PPS final rule. In the FY 2017 IPPS/LTCH PPS final rule, as part of our ongoing quality control and data improvement measures for the Worksheet S–10, we referred readers to Change Request 9648, Transmittal 1681, titled “The Supplemental Security Income (SSI)/Medicare Beneficiary Data for Fiscal Year 2014 for Inpatient Prospective Payment System (IPPS) Hospitals, Inpatient Rehabilitation Facilities (IRFs), and Long Term Care Hospitals (LTCHs),” issued on July 15, 2016 (available at:
We also recognized commenters' concerns that, in using Medicaid days as part of the proxy for uncompensated care, it would be possible for hospitals in States that choose to expand Medicaid to receive higher uncompensated care payments because they may have more Medicaid patient days than hospitals in a State that does not choose to expand Medicaid. Because the earliest Medicaid expansions under the Affordable Care Act began in 2014,
To address concerns raised by commenters regarding a lack of clear and concise line level instructions, CMS issued Transmittal 10, which clarified and revised the instructions for reporting charity care on Worksheet S–10. For a discussion of the revisions and clarifications included in Transmittal 10, we refer the reader to the FY 2020 IPPS/LTCH PPS final rule (84 FR 42360). On September 29, 2017, we issued Transmittal 11, which clarified the definitions and instructions for uncompensated care, non-Medicare bad debt, non-reimbursed Medicare bad debt, and charity care, as well as modifying the calculations relative to uncompensated care costs and adding edits to ensure the integrity of the data reported on Worksheet S–10. Transmittal 11 is available for download on the CMS website at:
As discussed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41424), due to the overwhelming feedback from commenters emphasizing the importance of audits in ensuring the accuracy and consistency of data reported on the Worksheet S–10, we expected to begin audits of the Worksheet S–10 in the Fall of 2018. The audit protocol instructions were still under development at the time of the FY 2019 IPPS/LTCH PPS final rule; yet, we noted the audit protocols would be provided to the MACs in advance of the audit. Once the audit protocol instructions were complete, we began auditing the Worksheet S–10 data for selected hospitals in the Fall of 2018 so that the audited uncompensated care data from these hospitals would be available in time for use in the FY 2020 IPPS/LTCH PPS proposed rule. The audits began with 1 year of data (that is, FY 2015 cost reports) in order to maximize the available audit resources and not spread those audit resources over multiple years, potentially diluting their effectiveness. We chose to begin the audits with the FY 2015 cost reports primarily because this was the most recent year of data that we had broadly allowed to be resubmitted by hospitals, and many hospitals had already made considerable efforts to amend their FY 2015 reports in preparation for the FY 2019 rulemaking. We also considered that we had used the FY 2015 data as part of the calculation of the FY 2019 uncompensated care payments; therefore, the data had been subject to public comment and scrutiny.
Section 1886(r)(2)(C) of the Act governs both the selection of the data to be used in calculating Factor 3, and also allows the Secretary the discretion to determine the time periods from which we will derive the data to estimate the numerator and the denominator of the Factor 3 quotient. Specifically, section 1886(r)(2)(C)(i) of the Act defines the numerator of the quotient as the amount of uncompensated care for such hospital for a period selected by the Secretary. Section 1886(r)(2)(C)(ii) of the Act defines the denominator as the aggregate amount of uncompensated care for all subsection (d) hospitals that receive a payment under section 1886(r) of the Act for such period. In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50638), we adopted a process of making interim payments with final cost report settlement for both the empirically justified Medicare DSH payments and the uncompensated care payments required by section 3133 of the Affordable Care Act. Consistent with that process, we also determined the time period from which to calculate the numerator and denominator of the Factor 3 quotient in a way that would be consistent with making interim and final payments. Specifically, we must have Factor 3 values available for hospitals that we estimate will qualify for Medicare DSH payments and for those hospitals that we do not estimate will qualify for Medicare DSH payments but that may ultimately qualify for Medicare DSH payments at the time of cost report settlement.
In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19418 and 19419), we proposed to use audited FY 2015 data to calculate Factor 3 for FY 2020. Given that we had conducted audits of the FY 2015 Worksheet S–10 data and had previously used the FY 2015 data to determine uncompensated care payments, and the fact that the FY 2015 data were the most recent data that we had allowed to be resubmitted to date, we believed, on balance, that the FY 2015 Worksheet S–10 data were the best available data to use for calculating Factor 3 for FY 2020.
In the FY 2020 IPPS/LTCH PPS proposed rule, we recognized that, for FY 2019, we used 3 years of data in the calculation of Factor 3 in order to smooth over anomalies between cost reporting periods and to mitigate undue fluctuations in the amount of uncompensated care payments from year to year. However, we stated that, for FY 2020, we believed mixing audited and unaudited data for individual hospitals by averaging multiple years of data could potentially lead to a less smooth result, which would be counter to our original goal in using 3 years of data. As we stated in the FY 2020 IPPS/LTCH PPS proposed rule, to the extent that the audited FY 2015 data for a hospital are relatively different from its unaudited FY 2014 data and/or its unaudited FY 2016 data, we potentially would be diluting the effect of our considerable auditing efforts and introducing unnecessary variability into the calculation if we continued to use 3 years of data to calculate Factor 3. As an example, we noted that approximately 10 percent of
Although we proposed to use the Worksheet S–10 data from the FY 2015 cost reports to calculate Factor 3 for FY 2020, we acknowledged that some hospitals had raised concerns regarding some of the adjustments made to the FY 2015 cost reports following the audits of those cost reports (for example adjustments made to Line 22 of Worksheet S–10). In particular, hospitals had raised concerns regarding the instructions in effect for FY 2015, especially compared to the reporting instructions that were effective for cost reporting periods beginning on or after October 1, 2016, contending that some adjustments would not have been made if CMS had chosen as an alternative to audit the FY 2017 reports. Accordingly, we sought public comments on whether the changes in the reporting instructions between the FY 2015 cost reports and the FY 2017 cost reports had resulted in a better common understanding among hospitals of how to report uncompensated care costs and improved relative consistency and accuracy across hospitals in reporting these costs. We also sought public comments on whether, due to the changes in the reporting instructions, we should use a single year of uncompensated care cost data from the FY 2017 reports, instead of the FY 2015 reports, to calculate Factor 3 for FY 2020.
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42368), we finalized our proposal to use the FY 2015 Worksheet S–10 cost report data in the methodology for determining Factor 3 for FY 2020. Although some commenters expressed support for the alternative policy of using the FY 2017 Worksheet S–10 data to determine each hospital's share of uncompensated care costs in FY 2020, given the feedback from commenters in response to both the FY 2019 and FY 2020 IPPS/LTCH PPS proposed rules, emphasizing the importance of audits in ensuring the accuracy and consistency of data reported on the Worksheet S–10, we concluded that the FY 2015 Worksheet S–10 data were the best available audited data to be used in determining Factor 3 for FY 2020. We also noted that we had begun auditing the FY 2017 data in July 2019, with the goal of having the FY 2017 audited data available for future rulemaking.
With respect to the Worksheet S–10 data, we indicated our belief that the definition of uncompensated care adopted in FY 2018 was still appropriate because it incorporates the most commonly used factors within uncompensated care as reported by stakeholders, including charity care costs and non-Medicare bad debt costs. Therefore, for purposes of calculating Factor 3 and uncompensated care costs for FY 2020, we again defined “uncompensated care” as the amount on Line 30 of Worksheet S–10, which is the cost of charity care (Line 23) and the cost of non-Medicare bad debt and non-reimbursable Medicare bad debt (Line 29).
In the FY 2020 IPPS/LTCH PPS final rule, we continued to apply the following policies as part of the Factor 3 methodology: (1) The merger policies that were initially adopted in the FY 2015 IPPS/LTCH PPS final rule (79 FR 50020); (2) the policy for providers with multiple cost reports, beginning in the same fiscal year, of using the longest cost report and annualizing Medicaid data and uncompensated care data if a hospital's cost report does not equal 12 months of data; (3) the policy for the rare cases where a provider has multiple cost reports, beginning in the same fiscal year, but one report also spans the entirety of the following fiscal year, such that the hospital has no cost report for that fiscal year, of using the cost report that spans both fiscal years for the latter fiscal year; and (4) the policies regarding the application of statistical trim methodologies to potentially aberrant CCRs and potentially aberrant uncompensated care costs reported on the Worksheet S–10.
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 19419), we finalized a modified new hospital policy for new hospitals that did not have data for the cost reporting period(s) used in the Factor 3 calculation for FY 2020. Generally, new hospitals do not yet have available data to project their eligibility for DSH payments because there is a lag until the SSI ratio and Medicaid ratio become available. However, we noted that there are some hospitals (that is, hospitals with CCNs established after October 1, 2015) that have a preliminary projection of being eligible for DSH payments based on their most recent available disproportionate patient percentages. Under the modified policy adopted for FY 2020, new hospitals that are eligible for Medicare DSH may receive interim empirically justified DSH payments. However, because these hospitals do not have a FY 2015 cost report to use in the Factor 3 calculation and the projection of eligibility for DSH payments is still preliminary, the MAC will make a final determination concerning whether the hospital is eligible to receive Medicare DSH payments at cost report settlement based on its FY 2020 cost report. If the hospital is ultimately determined to be eligible for Medicare DSH payments for FY 2020, the hospital will receive an uncompensated care payment calculated using a Factor 3, where the numerator is the uncompensated care costs reported on Worksheet S–10 of the hospital's FY 2020 cost report, and the denominator is the sum of the uncompensated care costs reported on Worksheet S–10 of the FY 2015 cost reports for all DSH-eligible hospitals. In the FY 2020 IPPS/LTCH PPS final rule, we noted that, given the time period of the data used to calculate Factor 3, any hospitals with a CCN established after October 1, 2015, would be considered new and subject to this policy in FY 2020.
For a discussion of the policy that we finalized for FY 2020 for new Puerto Rico hospitals, we refer readers to the FY 2020 IPPS/LTCH PPS final rule (84 FR 42370 and 42371). In brief, Puerto Rico hospitals that do not have a FY 2013 cost report are considered new hospitals and subject to the new hospital policy, as previously discussed. Specifically, the numerator of the Factor 3 calculation will be the uncompensated care costs reported on Worksheet S–10 of the hospital's FY 2020 cost report and the denominator is the same denominator that is determined prospectively for purposes of determining Factor 3 for all DSH-eligible hospitals. We stated that we believed the discussion in the FY 2020 IPPS/LTCH PPS proposed rule of our intent to determine Factor 3 for these hospitals using their uncompensated care costs gave new Puerto Rico hospitals sufficient time to take the steps necessary to ensure that their uncompensated care costs for FY 2020 are accurately reported on their FY 2020 Worksheet S–10. In addition, we indicated that we expect MACs to review FY 2020 reports from new hospitals, as necessary, which will address past commenters' concerns regarding the need for further review of Puerto Rico hospitals' uncompensated care data before these data are used to determine Factor 3.
In the FY 2020 IPPS/LTCH PPS final rule (83 FR 42371), for Indian Health Service and Tribal hospitals, and subsection (d) Puerto Rico hospitals that have a FY 2013 cost report, we continued the policy we first adopted for FY 2018 of substituting data regarding FY 2013 low-income insured days for the Worksheet S–10 data when determining Factor 3. As we discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38209), the use of data from
Therefore, for FY 2020, we computed Factor 3 for each hospital by—
We amended the regulations at § 412.106 by adding a new paragraph (g)(1)(iii)(C)(
Since the publication of the FY 2020 IPPS/LTCH PPS final rule, we have continued to monitor the reporting of Worksheet S–10 data in order to determine the most appropriate data to use in the calculation of Factor 3 for FY 2021. Audits of FY 2017 cost reports began in June 2019 and those audited reports were available in time for the development of the proposed rule. Feedback from the audits of the FY 2015 reports and lessons learned were incorporated into the audit process for the FY 2017 reports. We again chose to audit 1 year of data (that is, FY 2017) in order to maximize the available audit resources and not spread those audit resources over multiple years, potentially diluting their effectiveness.
Given that the FY 2017 Worksheet S–10 data were submitted under the revised cost reporting instructions that were effective on October 1, 2017, and we have also undertaken provider outreach regarding potentially aberrant data in FY 2017 reports and conducted audits of these data (84 FR 42371), in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32755), we stated that we believe, on balance, that the FY 2017 Worksheet S–10 data are the best available data to use for calculating Factor 3 for FY 2021. For a detailed discussion of the cost reporting instruction changes between the FY 2015 and FY 2017 reports, we refer the reader to the FY 2020 IPPS/LTCH PPS final rule (84 FR 42368 and 42369). For the reasons discussed in the FY 2020 IPPS/LTCH PPS proposed and final rules (84 FR 19419 and 84 FR 42364), we continue to believe that mixing audited and unaudited data for individual hospitals by averaging multiple years of data could potentially lead to a less smooth result. To the extent that the audited FY 2017 data for a hospital are relatively different from its FY 2015 data (whether audited or unaudited) and/or its unaudited FY 2016 data, we potentially would be diluting the effect of the revisions to the cost reporting instructions and our considerable auditing efforts, while introducing unnecessary variability into the calculation if we were to use multiple years of data to calculate Factor 3 for FY 2021. As explained in the FY 2021 IPPS/LTCH proposed rule, we recognize that the FY 2015 reports include audited data for some hospitals, however, the FY 2017 cost reports are the most recent year of audited data and, as previously discussed, reflect the revisions to the Worksheet S–10 cost report instructions that were effective on October 1, 2017.
Accordingly, we proposed to use a single year of Worksheet S–10 data from FY 2017 cost reports to calculate Factor 3 in the FY 2021 methodology for all eligible hospitals with the exception of Indian Health Service (IHS) and Tribal hospitals and Puerto Rico hospitals. As discussed in a later section, we proposed to continue to use the low-income insured days proxy to calculate Factor 3 for these hospitals for one more year. We noted that the uncompensated care payments to hospitals whose FY 2017 Worksheet S–10 data had been audited represented approximately 65 percent of the total uncompensated care payments for FY 2021. For purposes of the FY 2021 proposed rule, we used a HCRIS extract updated through February 19, 2020. We noted that we intended to use the March 2020 update of HCRIS for the FY 2021 final rule and the respective March updates for all future final rules. However, we invited the public to submit comments on this intention regarding the use of the March update of HCRIS, and indicated that we might also consider the use of more recent data that may become available
Regarding commenters' suggestions that we use the February or March HCRIS for all future proposed rules, we note that at this time, we intend to use the most recent data available for the applicable rulemaking, which generally means the respective December HCRIS extract for purposes of Factor 3 calculations in future proposed rules. We expect that the December HCRIS extract would reflect the completed Worksheet S–10 audit results available in time for development of the respective proposed rules and the respective HCRIS extract public use files, which are posted on the CMS website quarterly, would also include the most recent audited cost report information for the applicable fiscal year, and be available for public scrutiny. Furthermore, as noted in the FY 2021 IPPS/LTCH PPS proposed rule, we continue to intend to use the respective March HCRIS for future final rules. We expect the COVID–19 PHE will not have the same impact on future rulemaking as it did for the FY 2021 rulemaking. However, we may revisit this topic of the appropriate HCRIS extract, if necessary, in future rulemaking.
Another commenter asserted that using Worksheet S–10 data to calculate Factor 3 could result in an inequitable distribution because Worksheet S–10 does not “offset hospital UC [uncompensated care] losses with non-Medicare sources of subsidies such as Medicaid DSH and related Medicaid waiver [uncompensated care] pool funds.” Other commenters requested additional standardization in the reporting of uncompensated care. A commenter expressed concern that the data reported by hospitals may not be comparable across all hospitals noting, for example, a difference of opinion among hospitals about characterizing “denied claims as charity care if the hospital's financial assistance policy says the patient is not responsible for payment, even though that is a contractual or government payment requirement.” Another commenter noted a case where discounts for uninsured and underinsured patients required by state mandates were disallowed by a MAC because such mandates were not covered by their charity care policy.
Many commenters expressed opposition to using a single year of Worksheet S–10 data for the calculation of FY 2021 uncompensated care payments and for future years. The primary concern expressed by these stakeholders was the possibility that such an approach would lead to significant variation in year-to-year payments, especially in light of outside factors that may affect a hospital's finances. These commenters pointed to CMS's historical practice of using data from multiple years to determine uncompensated care payments and argued that such an approach would mitigate year-to-year fluctuations and avoid a skewed distribution of uncompensated care payments. To this end, a commenter noted that some hospitals reported extreme changes in uncompensated care costs from FY 2017 to FY 2018 and according to the commenter, in one example, the change was over 500 percent. The commenter added that less than one-third of hospitals reported changes in uncompensated care that were less than ten percent.
The most common alternative proposal among commenters who opposed the use of a single year of FY 2017 data for the calculation of Factor 3 in FY 2021 was the use of three years of historical Worksheet S–10 data. A commenter specifically suggested the use of FY 2015, FY 2016, and FY 2017 Worksheet S–10 data. Another commenter recommended that CMS use FY 2014, FY 2015, and FY 2016 data as a transition policy. Other commenters recommended a blend of FY 2015 and FY 2017 data since both years were subject to audits. Similar to this alternative, another commenter proposed that for the allocation of FY 2021 uncompensated care payments, CMS use a 50/50 blend, derived from the FY 2020 Factor 3 and a Factor 3 calculated using FY 2017 Worksheet S–10 data. There was also a commenter that requested that we maintain total national uncompensated care payments at the same level as in FY 2020.
Some stakeholders offered suggestions regarding the uncompensated care payment calculation that appear outside of the scope of the proposed methodology. Such recommendations included that CMS change the distribution of uncompensated care payments so that the allocation is based not on only uncompensated care costs but also on the disproportionate share percentage (DPP); set a cap on per discharge uncompensated care payments not to exceed 100 percent of DRG amounts; establish a transition period for hospitals facing a significant (5 percent) decrease in uncompensated care payments for a given year; and reevaluate the uncompensated care payment formula to achieve parity between rural and urban payments. In addition, some commenters requested that we consider adjusting uncompensated care costs in this FY 2021 rulemaking to reflect the impact of the COVID–19 PHE, rather than waiting until FY 2024 or FY 2025 when the current year's data (FY 2020) may be used for uncompensated care payment calculations. In relation to this recommendation, a commenter noted that, while the effect of the COVID–19 PHE would vary based upon geographic areas, they would expect a redistributional impact on future uncompensated care payments, and suggested that CMS begin to consider ways to dampen potential downward fluctuations in uncompensated care costs at the hospital level.
We also note that if, for example, a blend of FY 2015, FY 2016, and/or FY 2017 cost report data were to be used, some hospitals in states that expanded Medicaid eligibility during this time period may have experienced significant reductions in uncompensated care costs following the expansion due to increased Medicaid coverage covering many previously uninsured individuals. In this situation, if an average that included pre-expansion uncompensated care cost data were used, the Factor 3 calculated for the hospital may be a less accurate reflection of the relative uncompensated care burden of the hospital. Thus, we believe using only the FY 2017 cost report data will result in a more accurate and more updated reflection of each hospital's proportion of uncompensated care costs. We also agree with those commenters that noted FY 2017 cost reports reflect the first year of data reported under the revised to Worksheet S–10 instructions through Transmittal 11, which further improved the data quality. Accordingly, we are finalizing without modification our proposal to use FY 2017 cost report data, which we believe is the best available data, to calculate Factor 3 for FY 2021.
For the same reasons, we also continue to have confidence that the best available data in future years will be the Worksheet S–10 data for cost reporting years for which audits have been conducted. In addition, we continue to believe that establishing a policy that would apply not only for FY 2021, but also for all subsequent fiscal years would provide greater predictability regarding the basis for determining future uncompensated care payments.
Regarding the commenters' suggestion to adjust uncompensated care costs in this rulemaking to reflect the impact of the COVID–19 PHE, even if such a policy change were appropriate for FY 2021 it is not clear what the methodology would be for determining such an adjustment and what data source could be used. Because the cost reporting data from the COVID–19 PHE time period is not yet available to be analyzed, we believe it would be premature to attempt in this rulemaking to modify the methodology for determining uncompensated care payments for a future year specifically to address the impact of the COVID–19 PHE. We will consider this issue further in future rulemaking, if appropriate.
Regarding commenters' concerns and suggestions that were outside of the scope of the proposed rule's methodology, separate from the cost report years from historical Worksheet S–10 data, we appreciate commenters' input and note that we may consider these and other considerations in future rulemaking.
The following comments relate to the Worksheet S–10 audit process:
Still, many commenters expressed concerns with the Worksheet S–10 audits. Some commenters recommended that CMS implement a comprehensive audit process, similar to the audit process used for the wage index noting that Worksheet S–10 audits should include the same level of scrutiny. Many commenters requested that CMS establish a standardized, streamlined process across auditors, which would include uniform templates for cost report submissions, acceptable documentation regarding audit requirements, and consistent timelines for information submissions. A commenter noted that their hospitals faced significant reporting burden providing auditors with the necessary audit documentation and communicating between MAC auditors, which delayed their Worksheet S–10 audits.
Stakeholders also urged CMS to conduct consistent and equitable audits across providers. Others suggested that CMS set a clear timeframe for communication and revisit the scope of the audits to target specific data elements, which would decrease provider burden. Related to this, another commenter requested that CMS work with the MACs to streamline the audit process and avoid situations where hospitals would have to resubmit data in a different template, which would only add administrative burden on hospitals.
To this end, a commenter proposed that CMS clarify that MACs can only request documentation referenced in hospitals' Financial Assistance Policies (FAP), as well as confirm that the purpose of the Worksheet S–10 audits is to check if hospitals are following their FAP. Additionally, commenters advised CMS to minimize the administrative burden of excessive reporting requirements imposed by the MACs, such as requests for overly detailed information like patients' social security numbers and birth dates, and the solicitation of information not yet generally available in hospitals' financial recordkeeping systems.
Additionally, several commenters suggested that CMS ensure transparency in the audit process by making the audit materials and protocols publicly available. They also urged CMS to develop a transparent timeframe for the audit process, with adequate lead time and communication to providers about expectations. Commenters also requested that CMS disclose the criteria used to identify hospitals subject to audits, and prepare communications regarding expectations for the audit and any audit guidance before the rulemaking cycle. A commenter noted that CMS's “policy of opacity” only results in inconsistent interpretations of audit guidance by the MACs. Other commenters made recommendations regarding the timeliness of the audits, such as following a set annual timeframe similar to the approach used in the wage index audits.
Commenters also expressed discontent regarding the limited time allowed for providers to respond to adverse adjustments, resolve differences, and submit supporting documentation. These commenters urged CMS to begin the audits in a timely manner to avoid situations with short response times. Regarding the audit timeline, a commenter proposed that CMS begin the audit process on an annual basis in February or March, with the end date remaining December 31 of the applicable year. According to this commenter, the proposed timeline would provide MACs sufficient time to work with providers and to schedule Worksheet S–10 audits.
Additionally, commenters urged CMS to consider working with MACs in developing the Worksheet S–10 audit process to further promote clarity and consistency. To this end, a commenter requested that in developing Worksheet S–10 audit protocols, CMS consider using one MAC either to do all of the audits or to develop the audit rules to be employed by all MACs. A different commenter noted that there are hospital systems subject to audits conducted by multiple MACs, and these providers have observed inconsistent audit adjustments to uncompensated care amounts. This commenter noted that these inconsistencies are indicative of MACs not interpreting and following CMS's audit instructions in a standardized way.
Commenters noted the need for a timely review and timely appeals process for any Worksheet S–10 errors or inconsistent audit disallowances. As part of raising their concern regarding the lack of an appeals process for Worksheet S–10 audits, a commenter proposed that disallowed uncompensated care costs be appealed to the Provider Reimbursement Review Board (PRRB), which the commenter asserted would be consistent with the process used to appeal other items from the Medicare cost report. Another commenter asserted that there would not be sufficient time to appeal audit disallowances or adjustments under a normal PRRB process before the data are used by CMS. Some commenters recommended that CMS establish an expedited process for appeal to an appropriate oversight body, which would allow hospitals to obtain reversals of errors by MACs and address any inconsistencies and/or improper disallowances. A commenter suggested the use of an abbreviated appeals process, similar to the process used in the wage index development process.
Commenters also provided additional recommendations for future audits specifically to improve data consistency. They suggested that CMS audit all hospitals and utilize a single auditor, or at least establish and enforce a formal and uniform audit process. Several commenters recommended using a similar approach to the desk review process conducted for the purposes of the wage index. Many commenters expressed concerns that not all providers have had their Worksheet S–10 data audited. For example, a commenter noted that while some hospitals have been audited more than once, other DSH hospitals have not been audited at all. Some commenters urged CMS to complete audits for the remaining hospitals that did not have the Worksheet S–10 from their FY 2017 cost report audited before the FY 2021 rulemaking and others strongly felt that CMS should audit all DSH-eligible hospitals on an ongoing basis. A commenter stated that if CMS cannot audit 100 percent of hospitals, the agency should focus on the biggest recipients of DSH payments.
A commenter requested clarification of whether Sole Community Hospitals (SCHs) that are paid under their hospital-specific rates are subject to the Worksheet S–10 audits. Similarly, a few commenters suggested that SCHs should be excluded from the Worksheet S–10 audits to improve efficiency and reduce
Finally, a few commenters suggested new approaches to auditing and/or reviewing Worksheet S–10 data. A commenter recommended that CMS establish a program of periodic timely data review for the identification of discrepancies and troublesome data. This commenter also proposed that CMS start the process of reviewing FY 2019 cost data as it is reported, and that CMS to engage in FY 2018 data audits during FY 2021 for hospitals that are projected to receive DSH payments, but have not yet been audited. Another commenter recommended that in order to utilize resources more efficiently, CMS could work with the Internal Revenue Service (IRS) as it also audits hospital uncompensated care costs reported on the Form 990 and both agencies have similarly aligned goals. They also suggested that CMS continue Worksheet S–10 audits, but explore ways in which it can more efficiently utilize audit resources, such as, by relying on hospitals' audited financial statements. In addition, this commenter requested that CMS apply the same audit criteria that are used for retrospective audits of empirically justified DSH payments, which use SSI/Medicare and Medicaid eligible days/indigent care days. The commenter also stated that hospitals should have the same protections afforded by the appeal rights for empirically justified DSH payments.
Regarding commenters' recommendations to establish an audit and appeals process for the Worksheet S–10 similar to the process used for the wage index audits, at this point we do not plan on introducing such a process in order to maximize limited audit resources. Attempting to replicate the wage index audit process would exceed our current audit resources and require shifting resources from other audit work, for example potentially negatively impacting the wage index audit itself in the attempt to replicate it. The wage index impacts a far greater proportion of national hospital payments than the proportion impacted by Medicare uncompensated care payments. We appreciate all commenters' input and recommendations on how to improve our audit process and reiterate our commitment to work with the MACs and providers on audit improvements, including changes to increase the efficiency of the audit process, building on the lessons learned in previous audit years.
We also appreciate the different suggestions for a potential audit timeline. We thank the commenters for their suggestions, but at this time, we do not intend to establish fixed start date for audits across MACs so that we can retain the flexibility to use our limited audit resources to address and prioritize audit needs across all CMS programs each year. We note that MACs work closely with providers regarding scheduling dates during the Worksheet S–10 audit process.
Regarding commenters' requests to make public the audit instructions and criteria, as we previously stated in the FY 2020 IPPS/LTCH final rule (84 FR 42368) and prior rules, we do not make review protocols public as CMS desk review and audit protocols are confidential and are for CMS and MAC use only. Additionally, we recognize that a number of commenters suggested we audit all hospitals. We note that limited resources do not allow us to audit all providers. However, as discussed in the FY 2021 IPPS LTCH PPS proposed rule (85 FR 32756), the proposed uncompensated care payments to hospitals whose FY 2017 Worksheet S–10 data have been audited represented approximately 65 percent of the proposed total uncompensated care payments for FY 2021, which is an increase from the FY 2015 audits. Also, we are in the process of auditing FY 2018 Worksheet S–10 data and expect that the number of audits conducted will continue to increase over time, resulting in improved Worksheet S–10 data over the years as more cost report years are audited.
Concerning the suggestions to exclude Sole Community Hospitals (SCHs) from audits of Worksheet S–10 when the hospitals are paid under their hospital-specific rate, we note that all hospitals are required to maintain documentation for cost reporting, including Worksheet S–10. We also note that there may be some uncertainty whether a hospital will ultimately be paid based on its hospital specific rate, since that review occurs during settlement process through the cost report. For example, there may be timing considerations with projecting which SCHs will be paid under the IPPS Federal rate, in addition SCH status may change over time.
Regarding the recommendation that we review FY 2019 data as they are reported, we note that time and audit resources are limited, and as discussed previously, we are currently in the process of reviewing FY 2018 Worksheet S–10 data, which is the most recent year of broadly available cost report data. With respect to the comment recommending that we work with the IRS to utilize audit resources more efficiently, we note that the instructions for the IRS' Form 990 are not the same as for the Worksheet S–10. In addition, we note that the requirement to report on the IRS Form 990 is limited to non-profit hospitals.
Concerning the request to apply the same audit criteria that are used for empirically justified DSH payments, those audit protocols are also confidential and are for CMS and MAC use only, and we continue to believe that audit protocols (
As noted in earlier discussion, after consideration of the comments received we are finalizing without modification our proposal to use Worksheet S–10 data from FY 2017 cost reports to calculate Factor 3 for FY 2021 for all hospitals, with the exception of IHS and
While the number of audited hospitals may change from year to year depending on audit experience and the availability of audit resources, we expect the Worksheet S–10 data for an increasing number of hospitals will be audited in future cost reporting years. As a result, we have confidence that the best available data in future years will be the Worksheet S–10 data for cost reporting years for which audits have been conducted. In addition, we believe that establishing a policy that would apply not only for FY 2021, but also for all subsequent fiscal years would help providers have greater predictability for planning purposes. Therefore, we proposed that for FY 2022 and all subsequent fiscal years, we would use the most recent single year of cost report data that have been audited for a significant number of hospitals receiving substantial Medicare uncompensated care payments to calculate Factor 3 for all eligible hospitals, with the exception of Indian Health Service and Tribal hospitals. In the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32756), we noted that we intended to consider the comments received on this proposal for FY 2022 and subsequent fiscal years, and might revisit it either in the final rule or through future rulemaking.
Consistent with these recommendations, a commenter proposed that for FY 2022 equally weighted blocks of audited FY 2017, FY 2018, and “preliminarily-reviewed” FY 2019 Worksheet S–10 data be used to determine Factor 3 with a rolling three-year average applied moving forward. There was also a handful of commenters that requested a three-year average as a phased approach. For example, a commenter suggested that FY 2017 and FY 2018 Worksheet S–10 data be used for the FY 2022 payments and then a rolling three-year average beginning with FY 2023. Additionally, commenters recommended that CMS monitor payments over time to assure data anomalies are addressed. To this end, a commenter urged CMS to allow for monitoring and review of uncompensated care payment volatility and audits of all hospitals' Worksheet S–10 data, before implementing the use of a single year of Worksheet S–10 data for FY 2022 and subsequent years.
Some commenters acknowledged the efforts CMS has taken to improve the accuracy of Worksheet S–10 data through the FY 2015 and FY 2017 audit process. A commenter provided an analysis that indicated the audits have improved the reliability and accuracy of Worksheet S–10 data. Another commenter indicated their support for the processes implemented by CMS and the MACs to ensure the integrity of Worksheet S–10 data.
Still, several commenters expressed concerns about the accuracy of Worksheet S–10 data. Some commenters recommended CMS implement a fatal cost report edit on Worksheet S–10 to guarantee completeness and consistency in reporting. Another commenter requested that CMS provide a 14-day period for hospitals to submit corrections arising from the mishandling of data by MAC and/or CMS. While this commenter recognized that these situations are uncommon, they urged that a 14-day time period would be sufficient to improve the uncompensated care cost allocation and would be consistent with the 15-day period we proposed to allow for review and correction of merger listings following the publication of this final rule.
We believe using the most recent audited data available before the applicable Federal fiscal year will more accurately reflect a hospital's uncompensated care costs, as opposed to averaging multiple years of data. Consistent with the discussion in the previous section, if a hospital has relatively different data between cost report years, we potentially would be diluting the effect of our considerable auditing efforts and introducing unnecessary variability into the calculation if we were to use multiple years of data to calculate Factor 3. Therefore, we believe using a single year of audited cost report data is an appropriate methodology for FY 2022 and subsequent years.
Concerning the suggestion that implement a fatal edit on Worksheet S–10, we note that we did not propose any additional edits in the FY 2021 IPPS/LTCH PPS proposed rule. Furthermore, we continue to believe that the ongoing MAC reviews of hospitals' Worksheet S–10 data coupled with our efforts to improve reporting through revised instructions, as well as providers' growing experience with reporting uncompensated care costs outweigh the value of any additional edits to the Worksheet S–10 data. Regarding the suggestion that we allow a 14-day time period for hospitals to submit corrections due to data mishandling, we will revisit the issue in future rulemaking as necessary, and further note that providers will have the opportunity to submit comments on the accuracy of the supplemental data files within 15 business days from the public display of this FY 2021 IPPS/LTCH PPS final rule.
Additionally, we recognize that a number of commenters suggested we audit all hospitals. In response to this, we note that the proposed uncompensated care payments to hospitals whose FY 2017 Worksheet S–10 data were audited represented approximately 65 percent of the proposed total uncompensated care payments for FY 2021, which is an increase from FY 2020 rulemaking in which about approximately half of total uncompensated care payments wereexpected to be made to hospitals whose FY 2015 Worksheet S–10 data had been audited. Further, while our
In the FY 2021 IPPS/LTCH PPS proposed rule, we noted that given the unique nature of IHS and Tribal Hospitals and of the patient populations they serve, we believe it may be appropriate to restructure Medicare DSH payments and uncompensated care payments to these hospitals beginning in FY 2022. As discussed in prior rulemaking (for example, 82 FR 38188), the principal mission of the IHS is the provision of health care to American Indians and Alaska Natives throughout the United States. In carrying out that mission, IHS operates under two primary authorizing statutes. The first statute, the Snyder Act, authorizes IHS to expend such moneys as Congress may determine from time to time appropriate for the conservation of the health of American Indians or Alaska Natives. We refer readers to 25 U.S.C. 13 (providing that the Bureau of Indian Affairs (BIA) will expend funds as appropriated for, among other things, the conservation of health of American Indians and Alaska Natives); and 42 U.S.C. 2001(a) (transferring the responsibility for American Indian and Alaska Native health care from BIA to HHS). The second statute, the Indian Health Care Improvement Act (IHCIA), established IHS as an agency within the Public Health Service of HHS and provides authority for numerous programs to address particular health initiatives for American Indians and Alaska Natives, such as alcohol and substance abuse and diabetes (25 U.S.C. 1601
When Congress was considering reductions to the Medicare DSH payments and the creation of the Medicare uncompensated care payments under section 3133 the Affordable Care Act, one significant source of available information was the analysis done by the Medicare Payment Advisory Commission (MedPAC) in its March 2007 Report to the Congress. As discussed in the proposed rule, section 1886(r)(1) of the Act explicitly refers to this March 2007 Report to Congress as the basis for reducing DSH payments to 25 percent of the amount that would otherwise be paid under section 1886(d)(5)(F) of the Act. We have reviewed MedPAC's analysis in the March 2007 Report to Congress and it is not apparent that MedPAC was focused on the unique aspects of IHS and Tribal hospitals described previously when developing its recommendations for possible changes to DSH payments. Rather, it appears that MedPAC's analysis was focused on broader underlying issues and hospitals more generally.
Given the unique nature of IHS and Tribal hospitals, and the fact that we do not believe that the DSH analysis available to Congress at the time section 3133 of the Affordable Care Act was being developed was focused on the specific circumstances of these hospitals, in the FY 2021 IPPS/LTCH PPS proposed rule, we explained our belief that it may be appropriate, beginning in FY 2022, to use our authority under section 1886(d)(5)(I)(i) of the Act to create an exception for IHS and Tribal hospitals from Medicare DSH payments under 1886(d)(5)(F), as amended by section 3133 of the Affordable Care Act. This exception would also have the consequence that IHS and Tribal hospitals would be excluded from the calculation of Medicare uncompensated care payments under 1886(r). Concurrently, we believe it may be appropriate to use our authority under section 1886(d)(5)(I)(i) to adjust payments to IHS and Tribal hospitals through the creation of a new IHS and Tribal hospital Medicare DSH payment. The methodology for determining this IHS and Tribal hospital Medicare DSH payment would mirror the calculation of the Medicare DSH payment under 1886(d)(5)(F) except that the payment would be determined at 100 percent of the calculated amount rather than 25 percent of the calculated amount as required under section 3133 of the Affordable Care Act. We sought comment on this potential restructuring of the Medicare DSH and uncompensated care payments to IHS and Tribal hospitals beginning in FY 2022. We also noted that we intended to consider input received on this issue through consultation with IHS and Tribal hospitals.
Commenters also noted that only two IHS and Tribal hospitals, both of which, have more than 100 beds, would not be subject to the 12 percent cap on DSH payments. The commenters indicated that, in the event uncompensated care payments were to be determined using Worksheet S–10 data, instead of the low income days proxy, these two hospitals would see an increase in their uncompensated care payments, while the remaining 26 facilities would lose $7.5 million. These commenters recommended that CMS mitigate the effect of the cap under the statutory DSH calculation on IHS and Tribal facilities and if this is not possible, a commenter suggested that CMS should work with hospitals on a tailored methodology for the calculation of uncompensated care payments that fits their unique circumstances.
Further a commenter noted that IHS and Tribal Hospitals also face a unique legal standing such that they do not “fit well into the framework that CMS is proposing to adjust for uncompensated care payments.” The commenter also added that their inability to charge any Indian for services, even copays, and the provisions contained within treaties with the Federal Government and judicial rulings, means these hospitals face a very unique way of calculating uncompensated care costs and that the calculation of uncompensated care payments should be done in such a way as to maximize their access to federal resources. The commenter suggested that CMS should work with IHS and Tribal facilities as well as the consortium in providing guidance on how these facilities should report uncompensated care on Worksheet S–10. In this regard, another commenter pointed out that “many tribal health programs invest non-Federal resources in their health care programs to furnish care that could easily be classified as uncompensated care because IHCPs [Indian Healthcare Providers] may not charge beneficiaries to receive care and, thus, typically do not have the
A few commenters also requested the continued use of the low-income days proxy in the calculation of Factor 3 for hospitals located in Puerto Rico. In particular, a commenter noted that they are working through challenges in implementing Worksheet S–10 and requested that CMS continue the use of low-income insured days to determine uncompensated care payments for Puerto Rico hospitals for at least another three years. Another commenter also requested that CMS treat Puerto Rico as it treats other states asserting that “CMS does not include a proper count of low income Medicare beneficiaries that receive services in our hospitals” [Puerto Rico hospitals]. The commenter asserts that CMS only accounts for low income Medicare beneficiaries in the SSI fraction for low income Medicare beneficiaries patients that live on the mainland but travel to Puerto Rico and require hospitalization.
We also appreciate the concerns and input raised by commenters regarding alternative methodologies for the calculation of uncompensated care payments for IHS and Tribal hospitals. We recognize the unique nature of these hospitals and the special circumstances they face, and we reiterate our commitment to continue working with stakeholders, including through tribal consultation, as we revisit the issue of Medicare uncompensated care payments to these hospitals in the FY 2022 rulemaking. As discussed previously, we are not making any changes to the current policy for calculating uncompensated care payments for IHS and Tribal hospitals at this time, and we look forward to continuing to collaborate on methodological approaches in the future.
After consideration of the comments received, we are finalizing the use of low-income insured days proxy to determine Factor 3 for IHS and Tribal hospitals and Puerto Rico hospitals for FY 2021. We are not finalizing a methodology to determine Factor 3 for IHS and Tribal hospitals and Puerto Rico hospitals for FY 2022 and subsequent years at this time because we believe further consideration and review of these hospitals' Worksheet S–10 data is necessary.
We continue to believe that the definition of “uncompensated care” first adopted in FY 2018 when we started to incorporate data from Worksheet S–10 into the determination of Factor 3 and that was used again in both FY 2019 and FY 2020 is appropriate, as it incorporates the most commonly used factors within uncompensated care as reported by stakeholders, namely, charity care costs and bad debt costs, and correlates to Line 30 of Worksheet S–10. Therefore, we proposed that, for purposes of determining uncompensated care costs and calculating Factor 3 for FY 2021 and subsequent fiscal years, “uncompensated care” would continue to be defined as the amount on Line 30 of Worksheet S–10, which is the cost of charity care (Line 23) and the cost of non-Medicare bad debt and non-reimbursable Medicare bad debt (Line 29). We refer readers to the FY 2020 IPPS/LTCH PPS rule (84 FR 42369 and 42370), for a detailed discussion of additional topics related to the definition of uncompensated care.
In the FY 2020 IPPS/LTCH PPS final rule, we stated that, we would attempt to address commenters' concerns regarding the Worksheet S–10 through future cost report clarifications to further improve and refine the information that is reported on Worksheet S–10 in order to support collection of the information necessary to implement section 1886(r)(2) of the Act. (84 FR 42370). In the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32757), we noted that the Paper Reduction Act (PRA) package for Form CMS–2552–10 (OMB Control Number 0938–0050, expiration date March 31, 2022) would offer an additional opportunity to comment on the cost reporting instructions. For further information regarding PRA, we refer the reader to the CMS website at:
In contrast, a commenter noted that the unreimbursed portion of the costs of care furnished under state and local indigent care programs should be
The following comments relate to the Worksheet S–10 instructions:
One common issue raised by commenters was a request that CMS improve the instructions so that non-Medicare bad debt is not multiplied by the cost-to-charge ratio. According to a commenter, applying the cost to charge ratio to non-Medicare bad debt is not mathematically sound nor does it represent a hospital's true cost. Another commenter indicated that such practice is also inconsistent with the way non-reimbursable Medicare bad debt is treated. To address this, commenters suggested that CMS establish separate columns in Worksheet S–10 for insured and uninsured bad debt, where the column for insured bad debt is not multiplied by the CCR and the column for uninsured bad debt is multiplied by the CCR, as is currently done with charity care.
Another suggestion was that CMS insert two new columns before column 2 in the Worksheet S–10 to enable hospitals to separately report charges subject the CCR. According to the commenter, such a structure would be needed for lines 20 and 21 but not for lines 22 and 23; per the commenter's recommendation, CMS would be able to discontinue lines 24 and 25, given that those amounts would be obsolete under the commenter's recommended restructuring of the worksheet. Further, the commenter requested that CMS clarify whether the wording “total facility except physician and other professional services,” in relation to charity care and bad debt write-offs is inclusive of acute inpatient, exempt inpatient, outpatient, and long-term care services. The commenter also sought clarification of the definition of “non-covered” charges related to days exceeding the length of stay limit and with respect to Medicare, Medicaid, Workers' Compensation/No Fault, and commercial plans with which the hospital has a contractual relationship, but is not allowed to pursue patient collections for losses (for example, unpaid claims). In addition, the commenter sought clarification on whether a hospital is permitted to include such losses on Line 20, if it includes them in its financial assistance policy.
Finally, a commenter inquired if there were any templates under review for reporting charity care, uninsured discounts, and/or bad debt listings and, if so, the status of any such templates. The commenter also recommended that CMS should require the total bad debt listing to be submitted and reconciled with Worksheet S–10 line 26.
Additionally, we refer commenters to the updated instructions for Worksheet S–10 that were issued in November 2016 through Transmittal 10, as well as those issued in September 2017 through Transmittal 11, in which we specifically clarified the definitions of and the instructions for reporting uncompensated care, non-Medicare bad debt, non-reimbursed Medicare bad debt, charity care, and modified the calculations relative to uncompensated care costs as well as added edits to improve the integrity of the data reported on Worksheet S–10.
For commenters' reference, additional materials regarding clarifications to the Worksheet S–10 instructions are contained in the MLN article titled “Updates to Medicare's Cost Report Worksheet S–10 to Capture Uncompensated Care Data”, available at
The proposed changes to the methodology for calculating Factor 3 that were discussed in the IPPS/LTCH PPS proposed rule include the following:
In the FY 2015 IPPS/LTCH PPS final rule, we defined a merger as an acquisition where the Medicare provider agreement of one hospital is subsumed into the provider agreement of the surviving provider (79 FR 50020). In that final rule, we adopted a policy for calculating Factor 3 for hospitals that undergo a merger during or after the time period of the data that is used in the Factor 3 calculations, as well as a separate policy for a merger that occurs after the development of the final rule for the applicable fiscal year. Our proposed policy for newly merged hospitals is discussed in the next section. In the FY 2019 IPPS/LTCH PPS final rule, we finalized a policy for determining the uncompensated care costs of hospitals that have multiple cost reporting periods starting in the same fiscal year of using the longest cost report beginning in the applicable fiscal year and annualizing the uncompensated care data if a hospital's cost report does not equal 12 months of data (83 FR 41427). This policy applied for all hospitals, including those involved in a merger. However, taking into consideration past comments regarding mergers, including comments on the FY 2019 IPPS/LTCH PPS proposed rule which suggested that we not annualize the uncompensated care costs data provided in short cost reporting periods for acquired hospitals because their uncompensated care costs for the remaining part of the year are included in the new combined hospital's cost report (83 FR 41427), we proposed to modify the annualization policy that was finalized in FY 2019 with respect to merged hospitals.
We noted that for most mergers, the effective date of the merger coincides with the cost reporting end date for the hospital that is being acquired. In effect, this means that the FY 2015 merger policy of combining uncompensated care costs (UCC) across CCNs results in adding together data reported on the cost report for two different CCNs (the acquired hospital and the surviving hospital) to estimate the merged hospital's post-merger total UCC. For mergers with a recent merger effective date, such as a merger in Federal fiscal year 2019 (that is, a merger after the period of the FY 2017 cost reports we proposed to use for the Factor 3 calculation), we stated that we continue to believe the current policy of annualizing and combining across historical cost reports produces the best available estimate for post-merger total UCC. For example, if the acquired hospital's FY 2017 cost report includes less than 12 months of data, we would annualize the data to reflect a full 12 months of data. Similarly, in this example, if the surviving hospital's cost report includes less than 12 months of data, we would annualize its uncompensated care data. However, as discussed later in this section, we proposed a modification to this policy when the merger effective date occurs partway through the surviving hospital's cost reporting period.
In some mergers, the merger effective date does not coincide with the start date for the surviving hospital's cost reporting period. When the merger effective date does not coincide with the start date of the surviving hospital's cost reporting period, the policy of annualizing the acquired hospital's data before combining data across hospital cost reports could substantially overestimate the acquired hospital's UCC, given that the surviving hospital's cost report reflects the UCC incurred by the acquired hospital during the portion of the year after the merger effective date. In other words, when the merger effective date is partway through the surviving hospital's cost reporting period, annualizing the acquired hospital's data may double-count UCC for the portion of the year that overlaps with the remainder of the surviving hospital's cost reporting period.
Accordingly, to more accurately estimate UCC for the hospitals involved in a merger when the merger effective date occurs partway through the surviving hospital's cost reporting period, we proposed not to annualize the acquired hospital's data. Further, we proposed to use only the portion of the acquired hospital's unannualized UCC data that reflects the UCC incurred prior to the merger effective date, but after the start of the surviving hospital's current cost reporting period. Specifically, we proposed to calculate a multiplier to be applied to an acquired hospital's UCC when the merger effective date occurs partway through the surviving hospital's cost reporting period. This multiplier would represent the portion of the UCC data from the acquired hospital that should be incorporated with the surviving hospital's data to determine UCC for purposes of determining Factor 3 for the surviving hospital. This multiplier is obtained by calculating the number of days between the start of the applicable cost reporting period for the surviving hospital and the merger effective date, and then dividing this result by the total number of days in the reporting period of the acquired hospital. Applying this multiplier to the acquired hospital's unannualized UCC data would determine the final portion of the acquired hospital's UCC that should be added to that of the surviving hospital for purposes of determining Factor 3.
As an example, if the cost reporting period start dates of the acquired and surviving hospitals align and a merger occurs halfway through the surviving hospital's cost reporting period (for example, the hospital's fiscal year), then ultimately, the cost report for the surviving hospital for that fiscal year would already reflect half a year of the acquired hospital's UCC (because the merger occurred halfway through the surviving hospital's cost reporting period and the UCC data reported by the surviving hospital incorporate any UCC incurred by the acquired hospital during the second half of the fiscal year). For illustrative purposes, consider that the cost reporting period start dates of the acquired and surviving hospitals are 10/01/2016; the cost reporting period end date of the acquired hospital is 06/30/2017; and the merger acquisition date is 07/01/2017. Thus, there are 273 days between the start of the cost reporting period of the surviving hospital and the merger effective date, and the cost reporting period of the acquired hospital is 273 days. The multiplier, as previously defined, would be 1 (273 days divided by 273 days) and all of the acquired hospital's unannualized UCC data for the period 10/01/2016 to 06/30/2017 would be added to that of the surviving hospital for purposes of calculating Factor 3 for FY 2021. It is not necessary to annualize the acquired hospital's data from its short cost report, because the UCC incurred by the acquired hospital for the remainder of the surviving hospital's fiscal year post-merger (07/01/2017 to 09/30/2017) are already included in the UCC data reported by the surviving hospital for the cost reporting period ending on 09/30/2017.
As another example, we assumed the merger effective date was the same as the start date for the surviving hospital's cost reporting period and the surviving hospital's cost reporting period is 12 months long. In this example, we explained our belief that it would not be
We proposed to continue to treat hospitals that merge after the development of the final rule for the applicable fiscal year similar to new hospitals. As explained in the FY 2015 IPPS/LTCH PPS final rule, for these newly merged hospitals, we do not have data currently available to calculate a Factor 3 amount that accounts for the merged hospital's uncompensated care burden (79 FR 50021). In the FY 2015 IPPS/LTCH PPS final rule, we finalized a policy under which Factor 3 for hospitals that we do not identify as undergoing a merger until after the public comment period and additional review period following the publication of the final rule or that undergo a merger during the fiscal year would be recalculated similar to new hospitals (79 FR 50021 and 50022).
Consistent with the policy adopted in the FY 2015 IPPS/LTCH PPS final rule, we proposed to treat newly merged hospitals in a similar manner to new hospitals, such that the newly merged hospital's final uncompensated care payment would be determined at cost report settlement where the numerator of the newly merged hospital's Factor 3 would be based on the cost report of only the surviving hospital (that is, the newly merged hospital's cost report) for the current fiscal year. However, if the hospital's cost reporting period includes less than 12 months of data, we proposed that the data from the newly merged hospital's cost report would be annualized for purposes of the Factor 3 calculation. We noted that we were not proposing that the multiplier calculation discussed previously would be used, as that would only be necessary for estimating post-merger data using historical reports. The acquired hospital's uncompensated care payment for the fiscal year during which the merger occurs would be determined using the prospectively determined Factor 3 amount for the acquired hospital and then prorated, if applicable. We referred readers to the detailed discussion in the FY 2015 IPPS/LTCH PPS rule regarding the calculation of pro rata uncompensated care payments (79 FR 50151 through 50153).
Consistent with past policy, we also proposed that the interim uncompensated care payments for the newly merged hospital would be based only on the data for the surviving hospital's CCN available the time of the development of the final rule. In other words, for FY 2021, the eligibility of a newly merged hospital to receive interim uncompensated care payments and the amount of any interim uncompensated care payments, would be based only on the FY 2017 cost report available for the surviving CCN at the time the final rule is developed. However, at cost report settlement, we would determine the newly merged hospital's final uncompensated care payment based on the uncompensated care costs reported on its FY 2021 cost report. That is, we would revise the numerator of Factor 3 for the newly merged hospital to reflect the uncompensated care costs reported on the newly merged hospital's FY 2021 cost report.
We proposed to continue the policy that was finalized in the FY 2018 IPPS/LTCH PPS final rule of annualizing uncompensated care cost data reported on the Worksheet S–10 if a hospital's cost report does not equal 12 months of data, except in the case of mergers, which would be subject to the modified merger policy previously discussed. In addition, we proposed to continue the policies that were finalized in the FY 2019 IPPS/LTCH final rule (83 FR 41415) regarding the use of the longest cost report available within the Federal fiscal year. However, we proposed to modify our current policy for those rare situations where a hospital has a cost report that starts in one fiscal year but spans the entirety of the following fiscal year such that the hospital has no cost report starting in that subsequent fiscal year. Under this proposal, we would use the cost report that spans both fiscal years for purposes of calculating Factor 3 when data for the latter fiscal year is used in the Factor 3 methodology. The current policy for this rare situation includes the criterion that the hospital have multiple cost reports beginning in the same fiscal year. However, we explained that we no longer believe this is a necessary condition, given that we have identified some hospitals that have no FY 2017 cost report, but that only have one FY 2016 cost report, which spans the entire FY 2017 period.
We proposed to continue the new hospital policy that was finalized in the FY 2020 IPPS/LTCH PPS final rule. Specifically, for new hospitals that do not have an FY 2017 cost report to use in the Factor 3 calculation (that is, hospitals with CCNs established on or after October 1, 2017) that may have a preliminary projection of being eligible for DSH payments based on their most recent available disproportionate patient percentage, we proposed that the MAC would make a final determination concerning whether the hospital is eligible to receive Medicare DSH payments at cost report settlement based on its FY 2021 cost report. If the hospital is ultimately determined to be eligible for Medicare DSH payments for
For the reasons discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38209), we continue to recognize that the use of data from Worksheet S–10 to calculate the uncompensated care amount for IHS and Tribal hospitals for FY 2021 may jeopardize these hospitals' payments due to their unique funding structure. Prior to the proposed rulemaking for FY 2021, CMS consulted with IHS and Tribal hospitals regarding Worksheet S–10 uncompensated care reporting as well as any potential barriers under the current cost reporting instructions to reporting by IHS and Tribal hospitals on Worksheet S–10. During the consultation, representatives of some hospitals indicated that it was not clear to them that they could submit Worksheet S–10 data given the historical use of the low-income patient proxy when determining Factor 3 for these hospitals. CMS reiterated that the use of the low-income patient proxy when determining Factor 3 does not preclude the submission of Worksheet S–10 data by these hospitals. CMS explained that IHS and Tribal Hospitals should be aware of and comply with the instructions and requirements for the submission of Worksheet S–10 data. We noted that an o the MLN Matters® Special Edition article “Updates to Medicare's Cost Report Worksheet S–10 to Capture Uncompensated Care Data” that was released on September 29, 2017, provides an overview of the instructions and requirements for reporting on the Worksheet S–10 and is available on the CMS website at
Therefore, for IHS and Tribal hospitals that have a FY 2013 cost report, we proposed to continue the policy first adopted for the FY 2018 rulemaking regarding the low-income patient proxy. Specifically, for FY 2021 we proposed to determine Factor 3 for these hospitals based on Medicaid days for FY 2013 and the most recent update of SSI days. The aggregate amount of uncompensated care that is used in the Factor 3 denominator for these hospitals would continue to be based on the low-income patient proxy; that is, the aggregate amount of uncompensated care determined for all DSH eligible hospitals using the low-income insured days proxy. We explained that we continue to believe this approach is appropriate because the FY 2013 data reflect the most recent available information regarding these hospitals' Medicaid days before any expansion of Medicaid. At the time of development of the proposed rule, for modeling purposes, we computed Factor 3 for these hospitals using FY 2013 Medicaid days from a HCRIS extract updated through February 19, 2020, and the most recent available FY 2018 SSI days.
We refer the reader to the previous section for a discussion regarding comments related to IHS and Tribal hospitals. We are finalizing the above methodology for IHS and Tribal hospitals for FY 2021 as proposed without modification.
In the FY 2021 IPPS/LTCH PPS proposed rule, we explained that we had considered calculating the Factor 3 amounts for Puerto Rico hospitals for FY 2021 using the same methodology we proposed for hospitals other than IHS and Tribal hospitals. However, we concluded that the recent natural disasters in Puerto Rico may negatively impact the ability of these hospitals to engage in the FY 2021 rulemaking on the particular issue of the data to be used to determine Factor 3 for Puerto Rico hospitals, while simultaneously focusing on ensuring that their FY 2018 uncompensated care Worksheet S–10 data is accurately reported and available for use in calculating FY 2022 Medicare uncompensated care payments consistent with our proposed approach for FY 2022 and subsequent fiscal years.
Accordingly, for FY 2021 we proposed to determine Factor 3 for Puerto Rico hospitals that have a FY 2013 cost report based on the low-income patient proxy. We would determine Factor 3 for these hospitals based on Medicaid days for FY 2013 and the most recent update of SSI days. The aggregate amount of uncompensated care that is used in the Factor 3 denominator for these hospitals would continue to be based on the low-income patient proxy; that is, the aggregate amount of uncompensated care determined for all DSH eligible hospitals using the low-income insured days proxy. We continue to believe the use of FY 2013 data in determining the low-income insured days proxy is appropriate because the FY 2013 data reflect the most recent available information regarding these hospitals' Medicaid days before any expansion of Medicaid. At the time of development of the proposed rule, for modeling purposes, we computed Factor 3 for these hospitals using FY 2013 Medicaid days from a recent HCRIS extract and the most recent available FY 2018 SSI days. In addition, because we proposed to continue to use 1 year of insured low-income patient days as a proxy for uncompensated care for Puerto Rico hospitals and residents of Puerto Rico are not eligible for SSI benefits, we proposed to continue to use a proxy for SSI days for Puerto Rico hospitals, consisting of 14 percent of a hospital's Medicaid days, as finalized in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56953 through 56956).
We refer the reader to the previous section for a discussion regarding comments related to Puerto Rico hospitals. We are finalizing the above methodology for Puerto Rico hospitals for FY 2021 as proposed without modification.
In FY 2018 IPPS/LTCH PPS final rule (82 FR 38218), we indicated that we would further explore which trims are appropriate to apply to the CCRs on Line 1 of Worksheet S–10, including whether it is appropriate to apply a unique trim to certain subsets of hospitals, such as all-inclusive rate providers. We noted that all-inclusive rate providers have the ability to compute and enter their appropriate CCR on Worksheet S–10, Line 1, by answering Yes to the question on Worksheet S–2, Part I, Line 115, and not have it computed using information from Worksheet C, Part I. We stated that we would give more consideration to the utilization of statewide averages in substituting outlier CCRs, and that we intended to consider other approaches that would ensure validity of the trim methodology and not penalize hospitals that use alternative methods of cost apportionment in future rulemaking. In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19420), we stated that we had examined the CCRs from the FY 2015 cost reports and believed the risk that all-inclusive rate providers will have aberrant CCRs and, consequently, aberrant uncompensated care data, was mitigated by the proposal to apply the trim methodology for potentially aberrant uncompensated care costs to all hospitals.
In preparation for the FY 2021 rulemaking, we conducted a review of the CCRs from the FY 2017 cost reports from all-inclusive rate providers (AIRPs) and determined that in rare situations they may include a potentially aberrant CCR (Worksheet S–10 line 1) which results in a ratio of total UCC to total operating costs of greater than 50 percent. For FY 2021, we continue to believe that all-inclusive rate providers should be excluded from the CCR trim methodology because all-inclusive rate providers have alternative methods of cost apportionment that are different from those used in the standard CCR calculation. However, in order to ensure that we are able to calculate a reasonable estimate of the hospital's FY 2017 UCC, we proposed to modify the potentially aberrant UCC trim methodology when it is applied to all-inclusive rate providers. Specifically, we proposed that when an AIRP's total UCC are greater than 50 percent of its total operating costs when calculated using the CCR included on its FY 2017 cost report, we would recalculate UCC using the CCR reported on Worksheet S–10, line 1 of the hospital's most recent available prior year cost report that would not result in UCC of over 50 percent of total operating costs. That is, we would apply the CCR from Worksheet S–10 line 1 of that prior cost report to the data reported on Worksheet S–10 of the FY 2017 cost report. For purposes of the proposed rule, we identified a few AIRPs that had UCC in excess of 50 percent of their total operating costs. For these hospitals, we used the CCR from Worksheet S–10, line 1 of their FY 2015 cost report in place of the CCR reported on Worksheet S–10, line 1 of their FY 2017 cost report, in order to re-calculate their UCC. As we explained in the proposed rule, we believe this approach produces a more accurate estimate of the AIRP's UCC for purposes of determining Factor 3, while continuing to reflect the information on uncompensated care included in the AIRP's FY 2017 cost report, which for the reasons discussed previously we believe is the most appropriate data to be used in determining Factor 3 for FY 2021.
The calculation of a hospital's total uncompensated care costs on Worksheet S–10 requires the use of the hospital's cost to charge ratio (CCR). Similar to the process used in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38217 through 38218), the FY 2019 IPPS/LTCH PPS final rule (83 FR 41415 and 41416), and the FY 2020 IPPS/LTCH PPS final rule (84 FR 42372) for trimming CCRs, we proposed the following steps to determine the applicable CCR:
We proposed that after completing the described previously steps, we would re-calculate the hospital's uncompensated care costs (Line 30) using the trimmed CCR (the statewide average CCR (urban or rural, as applicable)).
In the proposed rule, we noted that after applying the CCR trim methodology, there are rare situations where a hospital has potentially aberrant data that are unrelated to its CCR. Therefore, we proposed to continue the trim methodology for potentially aberrant UCC that was finalized in the FY 2019 and FY 2020 IPPS/LTCH PPS final rules. That is, if the hospital's uncompensated care costs for FY 2017 are an extremely high ratio (greater than 50 percent) of its total operating costs, we proposed to determine the ratio of uncompensated care costs to the hospital's total operating costs from another available cost report, and to apply that ratio to the total operating expenses for the potentially aberrant fiscal year to determine an adjusted amount of uncompensated care costs. Specifically, if the FY 2017 cost report is determined to include potentially aberrant data, we proposed that data from the FY 2018 cost report would be used for the ratio calculation. Thus, the hospital's uncompensated care costs for FY 2017 would be trimmed by multiplying its FY 2017 total operating costs by the ratio of uncompensated care costs to total operating costs from the hospital's FY 2018 cost report to calculate an estimate of the hospital's uncompensated care costs for FY 2017 for purposes of determining Factor 3 for FY 2021.
However, because we have audited the FY 2017 Worksheet S–10 data for a number of hospitals, we explained our belief that it is necessary to modify the UCC data trim methodology for hospitals whose FY 2017 cost report has been audited. Because the UCC data for these hospitals have been subject to audit, we believe there is increased confidence that if high uncompensated care costs are reported by these audited hospitals, the information is accurate. Therefore, we stated that we no longer believe it is necessary to apply the trim methodology for these audited hospitals. Accordingly, we proposed to exclude hospitals that were part of the audits from the trim methodology for potentially aberrant UCC. For those hospitals that do not have audited Worksheet S–10 data, we proposed to continue to apply the trim methodology as previously described.
In summary, for FY 2021, we proposed to compute Factor 3 for each hospital using the following steps—
We proposed to amend the regulation at § 412.106 by adding a new paragraph (g)(1)(iii)(C)(
After consideration of the public comments we received, and for the reasons discussed in the proposed rule and in this final rule, for FY 2021, we are finalizing the following methodology to compute Factor 3 for each hospital by—
We also are finalizing without modification the other proposals related to the Factor 3 methodology that are discussed in this section.
For this FY 2021 IPPS/LTCH PPS final rule, we are finalizing a HCRIS cutoff of June 30, 2020, for purposes of calculating Factor 3, except in rare situations where report upload discrepancies by CMS or the MACs have been corrected, as appropriate. We are also finalizing our proposal to amend the regulations at § 412.106(g)(1)(iii)(C) by adding new paragraphs (7) and (8) to reflect the methodology for computing Factor 3 for FY 2021 and for subsequent fiscal years. In brief, the methodology adopted in this final rule for purposes of determining Factor 3 would apply for FY 2022 and subsequent years, using Worksheet S–10 data from the most recent cost reporting year for which audits have been conducted.
Consistent with the policy adopted in FY 2014 and applied in each subsequent fiscal year, we proposed to use a 3-year average of the number of discharges for a hospital to produce an estimate of the amount of the uncompensated care payment per discharge. Specifically, the hospital's total uncompensated care payment amount, is divided by the hospital's historical 3-year average of discharges computed using the most recent available data. The result of that calculation is a per discharge payment amount that will be used to make interim uncompensated care payments to each projected DSH eligible hospital. The interim uncompensated care payments made to the hospital during the fiscal year are reconciled following the end of the year to ensure that the final payment amount is consistent with the hospital's prospectively determined uncompensated care payment for the Federal fiscal year.
In response to our proposal in the FY 2020 IPPS/LTCH PPS proposed rule to continue to determine interim uncompensated care payments using a 3-year average of discharges, we received a comment expressing concern that discharge growth discrepancies create the risk of overpayments of interim uncompensated care payments and unstable cash flows for CMS, hospitals, and MA plans (84 FR 42373). Taking the commenter's concerns into consideration, for FY 2021, we proposed a voluntary process through which a hospital may submit a request to its Medicare Administrative Contractor (MAC) for a lower per discharge interim uncompensated care payment amount, including a reduction to zero, once before the beginning of the Federal fiscal year and/or once during the Federal fiscal year. In conjunction with this request, the hospital would be required to provide supporting documentation demonstrating there would likely be a significant recoupment (for example, 10 percent or more of the hospital's total uncompensated care payment or at least $100,000) at cost report settlement if the per discharge amount were not lowered. For example, a hospital might submit documentation showing a large projected increase in discharges during the fiscal year to support reduction of its
We proposed that the hospital's MAC would evaluate these requests and the supporting documentation before the beginning of the Federal fiscal year and/or with midyear requests when the 3-year average of discharges is lower than hospital's projected FY 2021 discharges. If following review of the request and the supporting documentation, the MAC agrees that there likely would be significant recoupment of the hospital's interim Medicare uncompensated care payments at cost report settlement, the only change that would be made would be to lower the per discharge amount either to the amount requested by the hospital or another amount determined by the MAC to be appropriate to reduce the likelihood of a substantial recoupment at cost report settlement. No change would be made to the total uncompensated care payment amount determined for the hospital on the basis of its Factor 3. In other words, this proposal would not change how the total uncompensated care payment amount will be reconciled at cost report settlement.
In contrast, a commenter stated that it seemed unlikely hospitals would want to request lower or zero per-claim uncompensated care payments because of inherent incentives to maximize their cash flow. The commenter also noted that the current claims average does not consider the growth in Medicare eligibility since 2019 due to the aging of baby boomers. This lack of consideration, according to the commenter, results in the risk of overpayments for uncompensated care and unstable cash flows for hospitals and MA plans. To minimize this risk, the commenter suggested a growth factor, based on the CBO estimate of 64 million Part A fee- for-service beneficiaries in 2021 compared to the 61 million in 2019, be applied to the three-year claims average (that is, a growth factor of 1.05 (64/61)).
The commenter also expressed concern that exorbitant amounts in per-claim uncompensated care payments could result in surprise balance billing if MA beneficiaries use an out-of-network provider, where coinsurance payments could range from 20 percent to 40 percent. To avoid this situation, the commenter recommended that CMS place a cap on per-discharge uncompensated care payments “within the range of $6,232—$12,464, which represents a range of one to two standard deviations of the Estimated Per Claim Amounts for all qualifying hospitals.”
As we have done for every proposed and final rule beginning in FY 2014, in conjunction with this final rule, we will publish on the CMS website a table listing Factor 3 for all hospitals that we estimate will receive empirically justified Medicare DSH payments in FY 2021 (that is, those hospitals that will receive interim uncompensated care payments during the fiscal year), and for the remaining subsection (d) hospitals and subsection (d) Puerto Rico hospitals that have the potential of receiving a Medicare DSH payment in the event that they receive an empirically justified Medicare DSH payment for the fiscal year as determined at cost report settlement. We note that, at the time of development of this final rule, the FY 2018 SSI ratios were available. Accordingly, we computed Factor 3 for Indian Health Service and Tribal hospitals and Puerto Rico hospitals using the most recent available data regarding SSI days from the FY 2018 SSI ratios.
We also will publish a supplemental data file containing a list of the mergers that we are aware of and the computed uncompensated care payment for each merged hospital.
Hospitals had 60 days from the date of public display of the FY 2021 IPPS/LTCH PPS proposed rule to review the table and supplemental data file published on the CMS website in conjunction with the proposed rule and to notify CMS in writing of issues related to mergers and/or to report potential upload discrepancies due to MAC mishandling of the Worksheet S–10 data during the report submission process (for example, report not reflecting audit results due to MAC mishandling or most recent report differs from previously accepted amended report due to MAC mishandling). We stated that comments that are specific to the information included in the table and supplemental data file could be submitted to the CMS inbox at
For FY 2021, we proposed that after the publication of the FY 2021 IPPS/LTCH PPS final rule, hospitals would have 15 business days from the date of public display of the FY 2021 IPPS/LTCH PPS final rule to review and submit comments on the accuracy of the table and supplemental data file published in conjunction with the final rule. We stated that any changes to Factor 3 would be posted on the CMS website prior to October 1, 2020. We acknowledged that this is less time compared to previous years. However, we noted that there is only a limited amount of time for CMS to review the information submitted by the hospitals and to implement the finalized policies before the start of the Federal fiscal year. We explained our belief that hospitals would have sufficient opportunity during the comment period for the proposed rule to provide information about recent and/or pending mergers and/or to report upload discrepancies. We further explained that we expected to use data from the March 2020 HCRIS extract for the FY 2021 final rule, which contributed to our increased confidence that hospitals would be able to comment on mergers and report any upload discrepancies during the comment period following the final rule. However, we also noted that we might consider using more recent data that may become available after March 2020, but before the final rule for purpose of
A commenter also recommended that CMS provide at least a 14-day period for hospitals to submit corrections to their uncompensated care data arising from MAC and/or CMS mishandling of cost report data either related to a Worksheet S–10 audit and/or any other report upload issue, adding that such a policy would be conceptually consistent with the 14-day period to submit corrections in the merger listing.
In regard to the comment requesting a 14-day period to address MAC and/or CMS mishandling of data, we note that we are finalizing our proposal to afford hospitals 15 business days from the public display of the FY 2021 IPPS/LTCH PPS final rule to submit comments on the accuracy of the supplemental data file, including with respect to mergers and/or report upload discrepancies. As noted in the FY 2021 IPPS/LTCH PPS proposed rule, the CMS inbox is not intended for Worksheet S–10 audit process related emails or inquiries, which should be directed to the respective MAC.
As noted in the FY 2021 IPPS/LTCH PPS proposed rule, we intend to revisit the necessity of this additional review period following the publication of the final rule. As discussed in the proposed rule, under usual circumstances the 60-day comment period on the supplemental data file issued with the proposed rule should be sufficient time to provide information about mergers and/or to report upload discrepancies. We note that the December HCRIS extract is usually available in January; thus, stakeholders would be able to perform initial review of that data when it becomes available to confirm their report was properly processed. Therefore, this review could occur before the comment period for the proposed rule. We will take commenters' suggestions into consideration as part of any future rulemaking on the issue of whether a review period following the final rule continues to be needed.
Another commenter pointed out that in the FY 2021 proposed rule's supplemental data file, their hospital is projected to be ineligible for DSH because the data used in the proposed rule was based on a cost reporting year pre-Medicaid expansion. The commenter indicated that while Medicare allows providers to retrospectively settle DSH and uncompensated care payments on their Medicare Cost Reports, MA plans currently do not, resulting in a significant under-reimbursement in FY 2021. According to the commenter, they can only receive DSH payments from MA plans if the uncompensated care rate is loaded into their specific IPPS Pricer File. The commenter requested that CMS consider updating their DSH data to reflect the As Filed 2019 Medicare cost report in the FY 2021 final rule public use file.
In regard to the commenter's concern about the retrospective settlement of DSH uncompensated care payments on their cost report and the impact of any potential delay in establishing their interim DSH eligibility in relation to their contractual relationship with MA plans, we note that this issue is beyond the scope of this rulemaking.
Medicare reimburses allogeneic hematopoietic stem cell transplants provided to Medicare beneficiaries for the treatment of certain diagnoses if such treatment is considered reasonable and necessary. Allogeneic hematopoietic stem cell transplants involve collecting or acquiring stem cells from a healthy donor's bone marrow, peripheral blood, or cord blood for intravenous infusion to the recipient. Currently, acquisition costs associated with allogeneic hematopoietic stem cell transplants are included in the operating costs of inpatient hospital services for subsection (d) hospitals (that is, hospitals paid under the IPPS). In addition, IPPS payments for acquisition services associated with allogeneic hematopoietic stem cell transplants are currently included in the MS–DRG payments for the allogeneic hematopoietic stem cell transplants when the transplants occurred in the inpatient setting.
Section 108 of the Further Consolidated Appropriations Act, 2020 (Pub. L. 116–94; hereafter, “section 108”), provides that, effective for cost reporting periods beginning on or after October 1, 2020, costs related to hematopoietic stem cell acquisition for the purpose of an allogeneic hematopoietic stem cell transplant are not included in the definition of “operating costs of inpatient hospital services” at section 1886(a)(4) of the Act. In addition, section 108 provides that in the case of a subsection (d) hospital that furnishes an allogeneic hematopoietic stem cell transplant, payment to such hospital for hematopoietic stem cell acquisition shall be made on a reasonable cost basis, and that the Secretary shall specify the items included in such hematopoietic stem cell acquisition in rulemaking. Section 108 also requires that, beginning in FY 2021, the payments made based on reasonable cost for the acquisition costs of allogeneic hematopoietic stem cells be made in a budget neutral manner. We discuss each of the amendments under section 108 and our codification and implementation of those amendments, in the sections that follow.
Section 108 amended section 1886(d)(5) of the Act by adding a new paragraph (M)(i) which requires that, for cost reporting periods beginning on or after October 1, 2020, in the case of a subsection (d) hospital that furnishes an allogeneic hematopoietic stem cell transplant to an individual during such a period, payment to such hospital for hematopoietic stem cell acquisition shall be made on a reasonable cost basis. In the proposed rule, we proposed to amend 42 CFR 412.113 to reflect this new statutory requirement by adding a new paragraph (e). We proposed that this new paragraph (e) would state that for cost reporting periods beginning on or after October 1, 2020, in the case of a subsection (d) hospital that furnishes an allogeneic hematopoietic stem cell transplant to an individual, Medicare payment to such hospital for hematopoietic stem cell acquisition costs is made on a reasonable cost basis. We stated in the proposed rule that this is the same way hospitals with approved transplant centers are reimbursed for their acquisition costs for solid organs under 42 CFR 412.113(d).
In the proposed rule, we proposed to add new paragraph (e)(3) to 42 CFR 412.113 to specify that a subsection (d) hospital that furnishes allogeneic hematopoietic stem cell transplants be required to formulate a standard acquisition charge. We stated in the proposed rule that the hospital's standard acquisition charge is based on costs expected to be reasonably and necessarily incurred in the acquisition of hematopoietic stem cells. In the proposed rule we stated that the standard acquisition charge does not represent the cost of acquiring stem cells for an
We proposed to add new paragraph (e)(5) to 42 CFR 412.113 to specify that a subsection (d) hospital maintain an itemized statement that identifies the services furnished in collecting hematopoietic stem cells, the charges, the person receiving the service (donor/recipient, if donor the provider must identify the prospective recipient), and the recipient's health care insurance number.
We proposed to add new paragraph (e)(4) to 42 CFR 412.113 to specify that the hospital's Medicare share of the hematopoietic stem cell acquisition costs is based on the ratio of the number of its allogeneic hematopoietic stem cell transplants furnished to Medicare beneficiaries to the total number of its allogeneic hematopoietic stem cell transplants furnished to all patients, regardless of payer, applied to reasonable cost. We stated in the proposed rule that this is the same methodology used to reimburse transplant hospitals with approved transplant programs for their acquisition costs for solid organs, and will be further discussed in a forthcoming Paperwork Reduction Act (PRA) package as referenced in section IV.H.3. of the preamble of the proposed rule and this final rule.
In addition, we proposed to amend 42 CFR 412.1(a) to reflect the new statutory requirement by revising the parenthetical identifying other costs related to inpatient hospital services that are paid for on a reasonable cost basis to include costs related to hematopoietic stem cell acquisition for the purpose of an allogeneic hematopoietic stem cell transplant. In addition, we proposed to make formatting changes to 42 CFR 412.1(a) to improve the readability of this paragraph. We also proposed to add new paragraph (e)(6) to 42 CFR 412.2 to add the costs of hematopoietic stem cell acquisition for the purpose of an allogeneic hematopoietic stem cell transplant to the list of services which are paid for on a reasonable cost basis.
We summarize in this section the comments we received on these proposals.
A few commenters acknowledged that the proposed billing methodology was the same methodology used for billing solid organ acquisition. However, a commenter noted that because obtaining solid organs frequently involves the use of an Organ Procurement Organization
These commenters suggested that the proposed requirement, if finalized, would require a hospital to renegotiate its contracts among all payers, which would be administratively burdensome and potentially impact hospital reimbursement. A few commenters noted that although the proposed methodology requires Medicare to reconcile the SAC with actual charges at the end of the cost reporting period, commercial payers would be impacted by this approach because no settlement opportunity exists for them.
Several commenters stated that resources and costs associated with acquiring hematopoietic stem cells for an allogeneic hematopoietic stem cell transplant vary significantly among the different types of donor search and stem cell acquisition services (for example, related, unrelated, cord blood, haploidentical, etc.). Commenters suggested that we consider requiring providers to formulate multiple SACs based on the different type of donor search and stem cell acquisition as they stated this more accurately aligns different costs with the charges associated with the types of acquisition. A commenter also expressed concern that requiring an average charge is another form of “cost compression.”
The majority of commenters noted that currently, when a subsection (d) hospital furnished an allogeneic hematopoietic stem cell transplant for a Medicare recipient, the hospital holds all allogeneic hematopoietic stem cell acquisition charges and reports the actual allogeneic hematopoietic stem cell acquisition charges under revenue code 0815 (Allogeneic Stem Cell Acquisition/Donor Services), when the transplant occurs. Some commenters noted that this differs from how commercial contracts are structured. Many commenters requested that we not finalize the proposed requirement and alternatively continue to require a subsection (d) hospital to report its actual stem cell acquisition charges under revenue code 0815 when the transplant occurs, which is the method they are accustomed to. These commenters noted that this approach allows all third-party payers to continue their current billing practices, is the least complicated to implement, and achieves the intent of section 108 which requires reimbursement of hematopoietic stem cell acquisition costs on a reasonable cost basis. A commenter noted that if we adopted a SAC, new condition or value codes recently approved by National Uniform Billing Committee (NUBC) would be affected. This commenter wrote that commercial insurance billing practice would be complicated at best or could not occur at worst if transplant centers are mandated to have one SAC for each transplant recipient. A commenter suggested that we delay the implementation of the SAC policy to allow hospitals adequate time to adopt charging and billing protocols to accommodate this new methodology.
In summary, after consideration of the comments received and for the reasons discussed, we are not finalizing our proposal that subsection (d) hospitals formulate and bill a SAC for allogeneic hematopoietic stem cell acquisition costs. Instead, we are codifying providers' current methodology for billing actual hematopoietic stem cell acquisition charges; that is, that subsection (d) hospitals must continue to hold their actual donor search and hematopoietic stem cell acquisition charges and include them on the Medicare recipient's transplant claim under revenue code 0815. The use of revenue code 0815, as discussed in the hospital OPPS Final Rule, 81 FR 79585–79587, “should include all services required to acquire stem cells from a donor, as previously defined, and should be reported on the same date of service as the transplant procedure in order to be appropriately packaged for payment purposes.” Furthermore, the use of revenue code 0815 was requested by CMS and approved by the NUBC, effective January 1, 2017. For the reasons discussed, we believe this final policy is the least burdensome for providers, is familiar to providers, is the most accurate way of billing charges incurred by a subsection (d) hospital for acquiring allogeneic hematopoietic stem cells for an allogeneic hematopoietic stem cell transplant, and appropriately implements section 108. As such, there is no need for a delayed implementation since providers will not need to adapt their charging and billing protocols to accommodate a new methodology.
Therefore, consistent with this final policy, we are codifying under new paragraph (e)(3) of 42 CFR 412.113, that a subsection (d) hospital that furnishes
These commenters made several recommendations for a temporary methodology to use until cost report data issues are resolved, including providing interim payments to transplant centers using a Provider Statistical and Reimbursement Report summary (PS&R) method, whereby we could use each transplant center's prior year PS&R report's total Medicare charges billed under revenue code 0815, multiply those charges by the individual hospital's cost-to-charge ratio (CCR) and then divide by 26 to develop the initial bi-weekly interim payment amount. Commenters noted that the contractors could update this amount throughout the fiscal year as appropriate, to minimize the amount receivable or payable at cost settlement. Commenters also stated that this option aligns more closely with the way in which CMS handles pass-through payments for solid organs, results in more consistent cash flow for transplant centers, and is familiar to hospital reimbursement staff and to contractors conducting audits.
Alternatively, commenters suggested a claim-based approach using the actual billed charges reported under revenue code 0815 from each submitted transplant recipient's claim multiplied by the hospital's CCR. CMS would then pay this amount on the remittance as a pass-through payment amount in addition to the MS–DRG 014 payment. Commenters noted that this would likely result in a lower incidence of large receivables or payables at cost report settlement as long as CMS allows actual donor charges to be billed. A commenter added that this may better reflect the volume and type of donor/cell acquisition costs involved in hematopoietic stem cell transplants throughout the year.
A few commenters noted that several transplant centers were queried about their preferences, and that either option was acceptable to them; some commenters wrote that both options align with the proposed budget neutrality adjustment in section IV.H.4 of this final rule.
We agree with commenters who suggested that the initial interim payment amount should be based upon their Medicare charges reported on their PS&R for the cost reporting year that immediately precedes the cost reporting period beginning on or after October 1, 2020 and billed under revenue code 0815. These charges should be multiplied by the individual hospital's CCR to arrive at cost, and then divided by 26 to develop the initial bi-weekly interim payment amount. Interim payments after the initial reporting period will follow 42 CFR 413.64(e). The PS&R methodology allows for more consistent cash flow for hospitals, and is familiar to some hospitals as it is similar to the way CMS handles pass-through payments for direct GME, bad debt, and organ acquisition costs. Therefore, we are finalizing our proposal to provide interim payments on a pass-through basis with the clarification that for the initial period, that is, for the hospital's first cost reporting period beginning on or after October 1, 2020, the initial interim “pass-through” payment amount is calculated in accordance with 42 CFR 413.64(c)(3) using each subsection (d) hospital's prior year PS&R report's total Medicare charges billed under revenue code 0815, multiplied by the individual hospital's overall CCR to determine total estimated cost, divided by 26. As already specified in 42 CFR 413.64(c)(4), after the initial interim rate has been set, the provider may at any time request, and be allowed, an appropriate increase in the computed rate, upon presentation of satisfactory evidence to the contractor that costs have increased. Likewise, the contractor may adjust the interim rate of payment if it has evidence that actual costs may fall significantly below the computed rate. We note that since providers set their own cost reporting period dates, these initial interim payments will begin at different times during FY 2021, depending on each hospital's cost reporting period.
The regulations at 42 CFR 413.64(e) specify how interim payments are made after the initial period. In accordance with 42 CFR 413.64(e), interim rates of payment made after the initial period for services will be established on the basis of the cost report filed for the previous year covering Medicare services. Therefore, for the cost reporting periods after the initial period, we are clarifying that interim payments will be determined using the cost report filed for the initial period and each subsequent period. The cost report will contain the actual charges by ancillary cost center billed in aggregate under revenue code 0815 and converted to reasonable cost using the corresponding ancillary cost-to-charge ratios. The total of these ancillary costs would be divided by 26 to determine the subsequent biweekly interim payment amounts.
Similar to what occurs with the interim payment for the initial period, this interim rate of payment may be adjusted by the contractor during an accounting period if the provider submits appropriate evidence that its actual costs are or will be significantly higher than the computed rate. Likewise, the contractor may adjust the interim rate of payment if it has evidence that actual costs may fall significantly below the computed rate.
We are also finalizing our proposal that at the end of the cost reporting period, a settlement determination would be made of the actual cost incurred compared to the interim payments made during the period.
We noted in the proposed rule that section 108 amended section 1886(d)(5) of the Act by adding a new paragraph (M)(ii) which defines the term `allogeneic hematopoietic stem cell transplant' to mean, with respect to an individual, the intravenous infusion of hematopoietic cells derived from bone marrow, peripheral blood stem cells, or cord blood, but not including embryonic stem cells, of a donor to an individual that are or may be used to restore hematopoietic function in such individual having an inherited or acquired deficiency or defect. In the proposed rule, we proposed to codify this definition by adding new paragraph (e)(1) to 42 CFR 412.113.
As noted in the proposed rule, section 108 amended section 1886(d)(5) of the Act by adding a new paragraph (M)(i), which also requires that the Secretary specify the items included as allogeneic hematopoietic stem cell acquisition costs through rulemaking. We stated in the proposed rule that allogeneic hematopoietic stem cell acquisition costs apply only to hematopoietic allogeneic stem cell transplants, for which stem cells are obtained from a donor (other than the recipient himself or herself). In the proposed rule, specifically, we proposed that allogeneic hematopoietic stem cell acquisition costs would include registry fees from a national donor registry described in 42 U.S.C. 274k, if applicable, for stem cells from an unrelated donor; tissue typing of donor and recipient; donor evaluation; physician pre-admission/pre-procedure donor evaluation services; costs associated with the collection procedure such as, general routine and special care
We appreciate the commenter's suggestion regarding transportation costs of allogeneic hematopoietic stem cells and agree that such costs should be included as stem cell acquisition costs when incurred or paid by the recipient hospital and that section 108 provides the authority to include such costs. Therefore, after consideration of the comments received, we are finalizing the proposed list of allogeneic hematopoietic stem cell acquisition costs with modification, to also include transportation costs of stem cells if the recipient hospital incurred or paid such costs. Specifically, we are codifying at new paragraph (e)(2) of 42 CFR 412.113, that allogeneic hematopoietic stem cell acquisition costs would include registry fees from a national donor registry described in 42 U.S.C. 274k, if applicable, for stem cells from an unrelated donor; tissue typing of donor and recipient; donor evaluation; physician pre-admission/pre-procedure donor evaluation services; costs associated with the collection procedure such as, general routine and special care services, procedure/operating room and other ancillary services, apheresis services and transportation costs of stem cells if the recipient hospital incurred or paid such costs; post-operative/post-procedure evaluation of donor; and the preparation and processing of stem cells derived from bone marrow, peripheral blood stem cells, or cord blood (but not including embryonic stem cells).
In the proposed rule we noted that, in the CY 2017 Outpatient Prospective Payment System (OPPS) final rule (81 FR 79587), we finalized the policy to update the Medicare hospital cost report (Form CMS–2552–10, OMB control number 0938–0050, expiration date March 31, 2022) by adding a new standard cost center, line 77 “Allogeneic Stem Cell Acquisition” to Worksheet A (and applicable worksheets) with the standard cost center code of “07700.” The new cost center line was established to record any acquisition costs related to allogeneic stem cell transplants as defined in Section 231.11, Chapter 4, of the Medicare Claims Processing Manual (Pub. 100–04) in order to develop an accurate estimate of allogeneic hematopoietic stem cell donor acquisition costs for future ratesetting. In the proposed rule, we noted there is a similar discussion of allogeneic stem cell acquisition costs when the transplant occurs in the inpatient setting found in the Medicare Claims Processing Manual (Pub 100–04), Chapter 3, Section 90.3.1. We stated in the proposed rule that with the establishment of this line came additional challenges on how to reclassify expenses into the new cost center from routine and ancillary departments. In addition, we stated in the proposed rule that we found inconsistencies in the reporting of costs and charges for allogeneic hematopoietic stem cell acquisition costs.
In the proposed rule we noted that the current cost reporting instructions require providers to report on line 77, the acquisition costs for allogeneic stem cell transplants. Line 77 only allows providers to report direct expenses, and does not provide a method for determining other routine and ancillary costs that are part of the allogeneic stem cell acquisition costs. We stated in the proposed rule that some providers are reclassifying costs from routine and ancillary cost centers to line 77. However, as noted in the proposed rule, this practice does not align costs and charges properly in accordance with the Provider Reimbursement Manual, 15–1, chapter 23, sections 2300, 2302.7 and 2302.8 (available online at:
In the proposed rule, we stated that changes to the forms and instructions will be described in more detail in a forthcoming PRA package, with comment period. We noted in the proposed rule that the forthcoming PRA package will address providers' requests for a standardized format for data collection as referenced in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41681 through 41684) and Worksheet S–10 modifications as referenced in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42375).
We appreciate that commenters concurred with our developing a worksheet to report allogeneic hematopoietic stem cell acquisition costs similar to the worksheet for solid organs. This new worksheet will allow providers to capture Medicare's share of costs from line 77 as well as to report charges by routine and ancillary cost centers and compute the related costs. As stated in the proposed rule, line 77 only allows providers to report direct expenses, and does not provide a method for determining routine and ancillary costs that are part of the allogeneic stem cell acquisition costs. In addition, our changes will include associated updates and clarifications to the cost reporting instructions. Commenters will have an opportunity to comment on the modifications to the Medicare hospital cost report forms and instructions in a forthcoming PRA package.
Section 108 of the Further Consolidated Appropriations Act, 2020 (Pub. L. 116–94) amended section 1886(d)(4)(C)(iii) of the Act to require that beginning with FY 2021, the reasonable cost based payments for allogeneic hematopoietic stem cell acquisition costs be made in a manner that assures that the aggregate IPPS payments for discharges in the fiscal year are not greater or less than those that would have been made without such payments; that is, that the reasonable cost based payments for allogeneic hematopoietic stem cell acquisition costs be made in a budget neutral manner.
To implement this requirement, we proposed to make an adjustment to the standardized amount to ensure the effects of the additional payments for allogeneic hematopoietic stem cell acquisition costs are budget neutral, as required under section 108 of Public Law 116–94. We also proposed to codify this budget neutrality requirement by adding new paragraph (e)(5) to 412.64 to specify that CMS makes an adjustment to the standardized amount to ensure that the reasonable cost based payments for allogeneic hematopoietic stem cell acquisition costs are made in a manner so that aggregate payments to hospitals are not affected.
When the allogeneic stem cell transplant occurs in the inpatient setting, the hospital identifies stem cell acquisition charges for allogeneic hematopoietic stem cell transplants separately using revenue code 0815 on the inpatient hospital bill (see Medicare Claims Processing Manual, CMS Pub. 100–04, Chapter 3, section 90.3.1.B., which is available online at
In the proposed rule, based on the latest data at that time (that is, claims
After consideration of public comments, we are finalizing our proposed approach for estimating the reasonable cost based payments for allogeneic hematopoietic stem cell acquisition costs for FY 2021 for purposes of the budget neutrality requirement of section 108 of Public Law 116–94 without modification, as well as our proposed codification of this budget neutrality requirement at new paragraph § 412.64(e)(5). Consistent with our proposal to use more recent available data for this final rule (claims from the March 2020 update of the FY 2019 MedPAR file and CCRs from the March 2020 update of the PSF), we estimate that reasonable cost based payments for allogeneic hematopoietic stem cell acquisition costs for FY 2021 will be $16,167,790.60. Therefore, the total amount that we are using to make an adjustment to the standardized amounts to ensure the additional payments for allogeneic hematopoietic stem cell acquisition costs are budget neutral is $16,167,790.60. (We refer readers to section II.A.4.f. of the Addendum of this final rule for discussion of the budget neutrality adjustment factor we are applying to the standardized amounts for FY 2021 based on these estimated allogeneic hematopoietic stem cell acquisition costs.)
As discussed in section II.D.2.b. of the preamble of this final rule, we proposed, and are finalizing, the creation of new MS–DRG 018 for cases that include procedures describing CAR T-cell therapies, which are currently reported using ICD–10–PCS procedure codes XW033C3 or XW043C3. As a requestor noted, a large percentage of the total cases that would group to any new MS–DRG for CAR T-cell therapy cases would be clinical trial cases, in which the provider typically does not incur the cost of the drug. By comparison, for non-clinical trial cases involving CAR T-cell therapy, the drug cost is an extremely large portion of the total costs. To address this, as described in section II.E.2.b. of this final rule, we proposed to modify our relative weight methodology for new MS–DRG 018 in order to develop a relative weight that is reflective of the typical costs of providing CAR T-cell therapies relative to other IPPS services. Specifically, in determining the relative weights, we proposed that clinical trial claims, that group to new MS–DRG 018 would not be included when calculating the average cost for new MS–DRG 018 that is used to calculate the relative weight for this MS–DRG, so that the relative weight generally reflects the costs of the CAR T-cell therapy drug. We refer readers to section II.E.2.b. of this final rule for discussion of our finalized modifications to our relative weight methodology relating to clinical trial cases involving CAR–T cell therapy.
Cases involving clinical trials, like non-clinical trial cases, are currently paid using the same relative weight for the MS–DRG to which the case is assigned. However, given that the drug cost is an extremely large portion of the total costs of the non-clinical trial CAR T-cell therapy cases, and that the relative weight for new MS–DRG 018 assumes that the provider has incurred the costs of the CAR T-cell therapy drug, we proposed an adjustment to the payment amount for clinical trial cases that would group to new MS–DRG 018. We proposed to calculate this adjustment using the same methodology that we proposed to use to adjust the case count for purposes of the relative weight calculations:
• Calculate the average cost for cases to be assigned to new MS–DRG 018 that contain ICD–10–CM diagnosis code Z00.6 or contain standardized drug charges of less than $373,000.
• Calculate the average cost for cases to be assigned to new MS–DRG 018 that do not contain ICD–10–CM diagnosis code Z00.6 or standardized drug charges of at least $373,000.
• Calculate an adjustor by dividing the average cost calculated in step 1 by the average cost calculated in step 2.
• Apply this adjustor when calculating payments for clinical trial cases that group to MS–DRG 018 by multiplying the relative weight for MS–DRG 018 by the adjustor.
Consistent with our methodology for calculating the proposed case count adjustment for purposes of the relative weight calculations, for FY 2021, for purposes of calculating this proposed payment adjustment, we identified clinical trial claims to be those historical claims that contain ICD–10–CM diagnosis code Z00.6 (Encounter for examination for normal comparison and control in clinical research program) or contain the proxy of standardized drug charges of less than $373,000.
For FY 2021, based on the claims data from the December 2019 update of the FY 2019 MedPAR files used for the proposed rule, the ratio of the average cost for CAR T-cell therapy cases identified as clinical trial cases to the average cost for non-clinical trial CAR T-cell therapy cases (that is, those cases not identified as being clinical trial cases) was 0.15. Therefore, we proposed that the adjustor that would be applied to CAR T-cell therapy clinical trial claims would be 0.15. For example, if the relative weight for new MS–DRG 018 was 30.00, we proposed we would multiply 30.00 by the adjustor of 0.15 as part of the calculation of the payment for clinical trial claims assigned to new MS–DRG 018.
We stated in the proposed rule that the claims involving CAR T-cell therapy that would be subject to this proposed adjustment would be cases that would group to new MS–DRG 18 and include ICD–10–CM diagnosis code Z00.6 (Encounter for examination for normal comparison and control in clinical research program). ICD–10–CM diagnosis code Z00.6 is required to be included with clinical trial cases and we stated that we expect hospitals to include this code for clinical trial cases that would group to MS–DRG 18 for FY 2021 and all subsequent years. Consistent with our historical practice, we also proposed to update the value of the adjustor based on more recent data for the final rule.
We also proposed to amend our regulations at 42 CFR part 412, subpart F (for operating IPPS payments), and 42
We will provide instructions for identifying these claims in separate guidance. We may consider refinements to our policy in future rulemaking as we gain more experience with this new adjustment.
After consideration of public comments received, we are finalizing our proposal to apply a payment adjustment to claims that group to new MS–DRG 18 and include ICD–10–CM diagnosis code Z00.6, with the modification that when the CAR T-cell therapy product is purchased in the usual manner, but the case involves a clinical trial of a different product, the payment adjustment will not be applied in calculating the payment for the case. We are also finalizing a modification to our proposed policy that when there is expanded access use of immunotherapy, the payment adjustment will be applied in calculating the payment for the case.
We are also finalizing our proposed methodology for calculating this adjustment, which is the same methodology we are finalizing to adjust the case count for purposes of the relative weight calculations, which includes refinements that (a) when the CAR T-cell therapy product is purchased in the usual manner, but the case involves a clinical trial of a different product, the claim will be included when calculating the average cost for cases not determined to be clinical trial cases and (b) when there is expanded access use of immunotherapy, these cases will be included when calculating the average cost for cases determined to be clinical trial cases. To the best of our knowledge there are no claims in the historical data used in the calculation of the adjustment for cases involving a clinical trial of a different product, and to the extent the historical data contain claims for cases involving expanded access use of immunotherapy we believe those claims would have drug charges less than $373,000. We are also finalizing our proposal to update the value of the adjustor based on more recent data for this final rule. As discussed elsewhere in this final rule, based on the claims data from the March 2020 update of the FY 2019 MedPAR files used for this final rule, the ratio of the average cost for CAR T-cell therapy cases determined to be clinical trial or expanded access use immunotherapy cases to the average cost for other CAR T-cell therapy cases (that is, those cases not determined to be clinical trial cases) is 0.17. Therefore, we are finalizing that the adjustor that will be applied to CAR T-cell therapy clinical trial or expanded access use immunotherapy cases for FY 2021 is 0.17. That is, we will multiply the final FY 2021 relative weight for new MS–DRG 018 by the final adjustor of 0.17 as part of the calculation of the payment for claims determined to be applicable clinical trial or expanded use
We are also finalizing our proposed amendments to our regulations at 42 CFR part 412, subpart F (for operating IPPS payments), and 42 CFR 412.312 (for capital IPPS payments) to codify this payment adjustment for claims appropriately containing Z00.6, as described previously, with modification to proposed new 42 CFR 412.85(b) and 412.312(f) to reflect that the adjustment will also be applied for cases involving expanded access use immunotherapy, and that the payment adjustment only applies to applicable clinical trial cases; that is, as discussed previously, the adjustment is not applicable to cases where the CAR T-cell therapy product is purchased in the usual manner, but the case involves a clinical trial of a different product. We are also finalizing our proposed amendments to 42 CFR 412.85(c) with modification to reflect that the adjustment factor will reflect the average cost for cases to be assigned to MS DRG 018 that involve expanded access use of immunotherapy or are part of an applicable clinical trial to the average cost for cases to be assigned to MS–DRG 018 that do not involve expanded access use of immunotherapy and are not part of a clinical trial.
Under § 412.104(a), CMS provides an additional payment to a hospital for inpatient services provided to End Stage Renal Disease (ESRD) beneficiaries who receive a dialysis treatment during a hospital stay, if the hospital has established that ESRD beneficiary discharges, excluding discharges classified into MS–DRG 652 (Kidney Transplant), MS–DRG 682 (Renal Failure with MCC), MS–DRG 683 (Renal Failure with CC), MS–DRG 684 (Renal Failure without CC/MCC) and MS–DRG 685 (Admit for Renal Dialysis), where the beneficiary received dialysis services during the inpatient stay, constitute 10 percent or more of its total Medicare discharges. (We note that in existing § 412.104(a), the title of MS DRG 652 is mistakenly shown as “Renal Failure” instead of “Kidney Transplant”.)
As explained in the proposed rule (85 FR 32765 through 32766), for FY 2021, we proposed to create a new Pre-MDC MS–DRG for cases describing the performance of hemodialysis during an admission where the patient received a simultaneous pancreas/kidney transplant (proposed new MS–DRG 019 (Simultaneous Pancreas/Kidney Transplant with Hemodialysis)). We also proposed to create two new MS–DRGs with a two-way severity level split for cases describing the performance of hemodialysis in an admission where the patient received a kidney transplant in MDC 11 (proposed new MS–DRG 650 (Kidney Transplant with Hemodialysis with MCC) and proposed new MS–DRG 651 (Kidney Transplant with Hemodialysis without MCC)). We also explained that the proposed relative weights for these MS–DRGs reflect the resources related to the provision of inpatient hemodialysis, and accordingly, we believe that discharges classified to these new proposed MS–DRGs should be excluded in determining a hospital's eligibility for the additional payment for hospitals with high percentages of ESRD discharges. Therefore, we proposed to add MS–DRGs 019, 650, and 651 to the list of excluded MS–DRGs set forth in § 412.104(a). We further explained that under the proposed MS–DRG logic for kidney transplants, a case with a hemodialysis procedure reported on the claim would no longer group to MS–DRG 652 (Kidney Transplant). (We note, as discussed in section II.D.8.a. of the preamble of this final rule, that we are finalizing the creation of new MS–DRGs 019, 650 and 651, and the related MS–DRG logic for kidney transplants.) We also noted that MS–DRG 685 (Admit for Renal Dialysis) was deleted effective FY 2019 (83 FR 41201 through 41202). Therefore, we proposed to remove MS–DRGs 652 and 685 from the list of excluded MS–DRGs set forth in § 412.104(a).
We proposed to revise § 412.104(a) to reflect these changes to the MS–DRG logic for kidney transplants and the previous deletion of MS–DRG 685. We also proposed to make formatting changes to this provision to list the MS–DRG exclusions.
After consideration of public comments, we are finalizing our proposal without modification. (As previously noted, and as discussed in section II.D.8.a. of the preamble of this final rule, we are finalizing the creation of new MS–DRGs 019, 650 and 651 which describe the performance of hemodialysis in an admission where the patient received a either a simultaneous pancreas/kidney transplant or a kidney transplant.)
Section 1886(q) of the Act, as amended by section 15002 of the 21st Century Cures Act, establishes the Hospital Readmissions Reduction Program. Under the Hospital Readmissions Reduction Program, Medicare payments under the acute inpatient prospective payment system for discharges from an applicable hospital, as defined under section 1886(d) of the Act, may be reduced to account for certain excess readmissions. Section 15002 of the 21st Century Cures Act requires the Secretary to compare hospitals with respect to the proportion of beneficiaries who are dually eligible for Medicare and full-benefit Medicaid (dual-eligibles) in determining the extent of excess readmissions. We refer readers to the FY 2016 IPPS/LTCH PPS final rule (80 FR 49530 through 49531) and the FY 2018 IPPS/LTCH PPS final rule (82 FR 38221 through 38240) for a detailed discussion of and additional information on the statutory history of the Hospital Readmissions Reduction Program.
We refer readers to the following final rules for detailed discussions of the regulatory background and descriptions of the current policies for the Hospital Readmissions Reduction Program:
• FY 2012 IPPS/LTCH PPS final rule (76 FR 51660 through 51676).
• FY 2013 IPPS/LTCH PPS final rule (77 FR 53374 through 53401).
• FY 2014 IPPS/LTCH PPS final rule (78 FR 50649 through 50676).
• FY 2015 IPPS/LTCH PPS final rule (79 FR 50024 through 50048).
• FY 2016 IPPS/LTCH PPS final rule (80 FR 49530 through 49543).
• FY 2017 IPPS/LTCH PPS final rule (81 FR 56973 through 56979).
• FY 2018 IPPS/LTCH PPS final rule (82 FR 38221 through 38240).
• FY 2019 IPPS/LTCH PPS final rule (83 FR 41431 through 41439).
• FY 2020 IPPS/LTCH PPS final rule (84 FR 42380 through 42390).
These rules describe the general framework for the implementation of the Hospital Readmissions Reduction Program, including: (1) The selection of measures for the applicable conditions/procedures; (2) the measure removal factors policy; (3) the calculation of the excess readmission ratio (ERR), which is used, in part, to calculate the payment adjustment factor; (4) the calculation of the proportion of “dually eligible” Medicare beneficiaries which is used to stratify hospitals into peer groups and establish the peer group median ERRs; (5) the calculation of the payment adjustment factor, specifically addressing the base operating DRG payment amount, aggregate payments for excess readmissions (including calculating the peer group median ERRs), aggregate payments for all discharges, and the neutrality modifier; (6) the opportunity for hospitals to review and submit corrections using a process similar to what is currently used for posting results on
We also have codified certain requirements of the Hospital Readmissions Reduction Program at 42 CFR 412.152 through 412.154. In section IV.K.11. of the preamble of this final rule, we are updating the regulatory text to reflect the policies that we are finalizing in this final rule.
We note that we received public comments on the effectiveness, measures, and methodology of the Hospital Readmissions Reduction Program in response to the FY 2021 IPPS/LTCH PPS proposed rule. We also received public comments related to the social risk adjustment in the Hospital Readmissions Reduction Program and confidential reporting of stratified data for the six readmission measures. While we appreciate the commenters' feedback, because we did not include any proposals related to these topics in the proposed rule, we consider the public comments to be out of the scope of the proposed rule. However, all topics that we consider to be out of scope of the proposed rule will be taken into consideration when developing policies and program requirements for future years.
In the FY 2021 IPPS/LTCH PPS proposed rule, we proposed the automatic adoption of applicable periods beginning with the FY 2023 program year and all subsequent program years, unless otherwise specified by the Secretary. Additionally, we proposed to update the definition of applicable period at 42 CFR 412.152 to align with this proposal. After consideration of the public comments we received, we are finalizing our policies as proposed. We discuss comments on these policies within the respective sections of this final rule.
The Hospital Readmissions Reduction Program currently includes six applicable conditions/procedures: Acute myocardial infarction (AMI); heart failure (HF); pneumonia; elective primary total hip arthroplasty/total knee arthroplasty (THA/TKA); chronic obstructive pulmonary disease (COPD); and coronary artery bypass graft (CABG) surgery.
We refer readers to the FY 2019 IPPS/LTCH PPS final rule (83 FR 41431 through 41439) for more information about how the Hospital Readmissions Reduction Program supports CMS' goal of bringing quality measurement, transparency, and improvement together with value-based purchasing to the hospital inpatient care setting through the Meaningful Measures Initiative. We continue to believe the measures we have adopted adequately meet the goals of the Hospital Readmissions Reduction Program. Therefore, we did not propose to remove or adopt any additional measures at this time.
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38226 through 38229), as part of implementing the 21st Century Cures Act, we finalized the definition of dual-eligible as follows: “[A]n individual would be counted as a full-benefit dual patient if the beneficiary was identified as full-benefit dual status in the State [Medicare Modernization Act] (MMA) files for the month he/she was discharged from the hospital.” In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41437 through 41438), we codified this definition at 42 CFR 412.152 along with other definitions pertinent to dual-eligibility calculations for assigning hospitals into peer groups.
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42384 through 42385), we finalized an update to the definition of “dual-eligible” to specify that, for the payment adjustment factors beginning with the FY 2021 program year, “dual-eligible” is a patient beneficiary who has been identified as having full benefit status in both the Medicare and Medicaid programs in data sourced from the State MMA files for the month the beneficiary was discharged from the hospital, except for those patient beneficiaries who die in the month of discharge, who will be identified using the previous month's data sourced from the State MMA files.
We refer readers to the FY 2020 IPPS/LTCH PPS final rule (84 FR 42384 through 42385) for a more detailed discussion of this topic. We did not propose any updates to our definition of “dual-eligible” beneficiaries in this rule.
We refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51671) and the FY 2013 IPPS/LTCH PPS final rule (77 FR 53375) for discussion of our previously finalized policy for defining applicable periods. In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41434 through 41435) and the FY 2020 IPPS/LTCH PPS final rule (84 FR 42387), we finalized the following “applicable periods” consistent with the definition specified at 42 CFR 412.152, to calculate the readmission payment adjustment factor for FY 2021 and FY 2022, respectively:
• The 3-year time period of July 1, 2016 through June 30, 2019 for FY 2021.
• The 3-year time period of July 1, 2017 through June 30, 2020 for FY 2022.
This is the 3-year period from which CMS uses claims data to calculate ERRs and payment adjustment factors for the fiscal year; this includes aggregate payments for excess readmissions and aggregate payments for all discharges used in the calculation of the payment
In order to provide greater certainty around future applicable periods for the Hospital Readmissions Reduction Program, we proposed the automatic adoption of applicable periods for FY 2023 and all subsequent program years for the Hospital Readmissions Reduction Program. Beginning in FY 2023, the applicable period for the Hospital Readmissions Reduction Program will be the 3-year period beginning one year advanced from previous program fiscal year's start of the applicable period. That is, for FY 2023, the applicable period for the Hospital Readmissions Reduction Program measures and for determining dual eligibility and payment adjustment factors will be the 3-year period from July 1, 2018 through June 30, 2021, which is advanced one year from the applicable period for the FY 2022 Hospital Readmissions Reduction Program. Under this policy, for all subsequent years, we would advance this 3-year period by one year unless otherwise specified by the Secretary, which we would convey through notice and comment rulemaking. Similarly, the applicable period for dual eligibility will continue to correspond to the applicable period for the Hospital Readmissions Reduction Program, unless otherwise specified by the Secretary. We believe that the automatic adoption of the applicable period each year will streamline the process and provide additional clarity and consistency to the Program. We received several public comments on the proposal for automatic adoption of applicable periods.
After consideration of the public comments that we received, we are finalizing our proposal to automatically adopt applicable periods for the Hospital Readmissions Reduction Program beginning with the FY 2023 program year.
When calculating the numerator (aggregate payments for excess readmissions), we determine the base operating DRG payment amount for an individual hospital for the applicable period for each condition/procedure, using Medicare inpatient claims from the MedPAR file with discharge dates that are within the applicable period. Under our established methodology, we use the update of the MedPAR file for each Federal fiscal year, which is updated 6 months after the end of each Federal fiscal year within the applicable period, as our data source.
In identifying discharges for the applicable conditions/procedures to calculate the aggregate payments for excess readmissions, we apply the same exclusions to the claims in the MedPAR file as are applied in the measure methodology for each of the applicable conditions/procedures. For the FY 2021 applicable period, this includes the discharge diagnoses for each applicable condition/procedure based on a list of specific ICD–10–CM and ICD–10–PCS code sets, as applicable, for that condition/procedure, because diagnoses and procedure codes for discharges occurring on or after October 1, 2015 (FY 2016) began reporting under the ICD–10– CM and ICD–10–PCS code sets as opposed to the previous ICD–9CM code set.
We identify Medicare fee-for-service (FFS) claims that meet the criteria previously described for each applicable condition/procedure to calculate the aggregate payments for excess readmissions. This means that claims paid for under Medicare Part C (Medicare Advantage) are not included in this calculation. This policy is consistent with the methodology to calculate ERRs based solely on admissions and readmissions for Medicare FFS patients. Therefore, consistent with our established methodology, for FY 2021, we proposed to continue to exclude admissions for patients enrolled in Medicare Advantage (MA), as identified in the Medicare Enrollment Database.
For FY 2021, we proposed to determine aggregate payments for excess readmissions, and aggregate payments for all discharges using data from MedPAR claims with discharge dates that align with the FY 2021 applicable period. As we stated in FY 2018 IPPS/LTCH PPS final rule (82 FR 38232), we will determine the neutrality modifier using the most recently available full year of MedPAR data. However, we note that, for the purpose of modeling the estimated FY 2021 readmissions payment adjustment factors for this final rule, we used the proportion of dual-eligibles, excess readmission ratios, and aggregate payments for each condition/procedure and all discharges for applicable hospitals from the FY 2021 Hospital Readmissions Reduction Program applicable period. For the FY 2021 program year, applicable hospitals will have the opportunity to review and correct calculations based on the proposed FY 2021 applicable period of July 1, 2016 to June 30, 2019, before they are made public under our policy regarding reporting of hospital-specific information. Again, we reiterate that this period is intended to review the program calculations, and not the underlying data. For more information on the review and correction process, we refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53399 through 53401).
We proposed the continued use of the MedPAR data corresponding to the applicable period for the Hospital Readmissions Reduction Program calculations. We proposed to use the March update of the fiscal year MedPAR to identify discharges within the applicable period during that fiscal year. We received no comments on this proposal, and therefore are finalizing our proposal to use MedPAR data corresponding to the applicable period for the Hospital Readmissions Reduction Program without modification.
As we discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38226), section 1886(q)(3)(D) of the Act requires the Secretary to group hospitals and apply a methodology that allows for separate comparisons of hospitals within peer groups in determining a hospital's adjustment factor for payments applied to discharges beginning in FY 2019. Section 1886(q)(3)(D) also states that this methodology could be replaced through the application of subclause (E)(i), which states that the Secretary may take into account the studies conducted and the recommendations made by the reports required by section 2(d)(1) of the IMPACT Act of 2014 (Pub. L. 113–185; 42 U.S.C. 1395 note) with respect to risk adjustment methodologies. The second Office of the Assistant Secretary for Planning and Evaluation (ASPE) study on social risk and Medicare's value-based purchasing programs came out on June 29, 2020. We will examine these recommendations more closely going forward.
We refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38226 through 38237) for a detailed discussion of the payment adjustment methodology. We did not propose any
Section 1886(q)(3)(A) of the Act defines the payment adjustment factor for an applicable hospital for a fiscal year as “equal to the greater of: (i) The ratio described in subparagraph (B) for the hospital for the applicable period (as defined in paragraph (5)(D)) for such fiscal year; or (ii) the floor adjustment factor specified in subparagraph (C).” Section 1886(q)(3)(B) of the Act, in turn, describes the ratio used to calculate the adjustment factor. Specifically, it states that the ratio is equal to 1 minus the ratio of—(1) the aggregate payments for excess readmissions; and (2) the aggregate payments for all discharges, scaled by the neutrality modifier. The methodology used for the calculation of this ratio is codified at 42 CFR 412.154(c)(1) and the methodology for the calculation of the floor adjustment factor is codified at 42 CFR 412.154(c)(2). Section 1886(q)(3)(C) of the Act specifies the floor adjustment factor at 0.97 for FY 2015 and subsequent fiscal years.
Consistent with section 1886(q)(3) of the Act, codified in our regulations at 42 CFR 412.154(c)(2), for FY 2021, the payment adjustment factor will be either the greater of the ratio or the floor adjustment factor of 0.97. Under our established policy, the ratio is rounded to the fourth decimal place. In other words, for FY 2021, a hospital subject to the Hospital Readmissions Reduction Program would have an adjustment factor that is between 1.0 (no reduction) and 0.9700 (greatest possible reduction).
For additional information on the FY 2021 payment calculation, we refer readers to the Hospital Readmissions Reduction Program information and resources available on our
Consistent with our plans described in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42388 through 42390), we included in confidential hospital-specific reports (HSR) data stratified by patient dual-eligible status for the six readmissions measures included in the Hospital Readmissions Reduction Program in the Spring of 2020. These data included two disparity methodologies designed to illuminate potential disparities within individual hospitals and across hospitals nationally and supplement the measure data currently publicly reported on the
We did not propose any updates to the confidential reporting of stratified data in the proposed rule.
We proposed to revise 42 CFR 412.152 to reflect the proposed policy to automatically adopt applicable periods for the Program as previously discussed in section IV.K.6. of the preamble of this final rule. Specifically, we proposed to revise the definition of “applicable period” and “applicable period for dual eligibility” as follows:
We received several public comments on our proposal to revise 42 CFR 412.152 to reflect the proposed policy to automatically adopt applicable periods for the Program.
After consideration of the public comments that we received, we are finalizing our proposal to update the regulatory text as proposed.
In the CY 2021 OPPS/ASC proposed rule (85 FR 48772 through 49082), we proposed a methodology to calculate the Overall Hospital Quality Star Ratings (Overall Star Ratings). The Overall Star Ratings would utilize data collected on hospital inpatient and outpatient measures that are publicly reported on a CMS website, including data from the Hospital Readmissions Reduction Program. We refer readers to section XVI. of the CY 2021 OPPS/ASC proposed rule for details.
Section 1886(o) of the Act requires the Secretary to establish a hospital value based purchasing program (the Hospital VBP Program) under which value-based incentive payments are made in a fiscal year (FY) to hospitals that meet performance standards established for a performance period for such fiscal year. Both the performance standards and the performance period for a fiscal year are to be established by the Secretary.
For more of the statutory background and descriptions of our current policies for the Hospital VBP Program, we refer readers to the Hospital Inpatient VBP Program final rule (76 FR 26490 through 26547); the FY 2012 IPPS/LTCH PPS final rule (76 FR 51653 through 51660); the CY 2012 OPPS/ASC final rule with comment period (76 FR 74527 through 74547); the FY 2013 IPPS/LTCH PPS final rule (77 FR 53567 through 53614); the FY 2014 IPPS/LTCH PPS final rule
We also have codified certain requirements for the Hospital VBP Program at 42 CFR 412.160 through 412.167.
Section 1886(o)(7)(B) of the Act instructs the Secretary to reduce the base operating DRG payment amount for a hospital for each discharge in a fiscal year by an applicable percent. Under section 1886(o)(7)(A) of the Act, the sum total of these reductions in a fiscal year must equal the total amount available for value-based incentive payments for all eligible hospitals for the fiscal year, as estimated by the Secretary. We finalized details on how we would implement these provisions in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53571 through 53573), and we refer readers to that rule for further details.
Under section 1886(o)(7)(C)(v) of the Act, the applicable percent for the FY 2021 program year is 2 percent. Using the methodology we adopted in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53571 through 53573), we estimate that the total amount available for value-based incentive payments for FY 2021 is approximately $1.9 billion, based on the March 2020 update of the FY 2019 MedPAR file.
As finalized in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53573 through 53576), we will utilize a linear exchange function to translate this estimated amount available into a value-based incentive payment percentage for each hospital, based on its Total Performance Score (TPS). We will then calculate a value-based incentive payment adjustment factor that will be applied to the base operating DRG payment amount for each discharge occurring in FY 2021, on a per-claim basis. We published proxy value-based incentive payment adjustment factors in Table 16 associated with the FY 2021 IPPS/LTCH PPS proposed rule (which is available via the internet on the CMS website at
After hospitals have been given an opportunity to review and correct their actual TPSs for FY 2021, we will post Table 16B associated with the final rule (which will be available via the internet on the CMS website) to display the actual value-based incentive payment adjustment factors, exchange function slope, and estimated amount available for the FY 2021 program year. We expect Table 16B will be posted on the CMS website in the Fall of 2020.
In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53592), we finalized a policy to retain measures from prior program years for each successive program year, unless otherwise proposed and finalized. In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41440 through 41441), we finalized a revision to our regulations at 42 CFR 412.164(a) to clarify that once we have complied with the statutory prerequisites for adopting a measure for the Hospital VBP Program (that is, we have selected the measure from the Hospital IQR Program measure set and included data on that measure on
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41441 through 41446), in alignment with the Hospital IQR Program, we finalized measure removal factors for the Hospital VBP Program, and we refer readers to that final rule for details. We did not propose any changes to these policies.
We refer readers to the FY 2020 IPPS/LTCH PPS final rule (84 FR 42392 through 42393) for summaries of previously adopted measures for the FY 2022 and FY 2023 program years, and to the tables in this section showing summaries of previously adopted measures for the FY 2023 and FY 2024 program years. We note that in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32769 through 32771), we did not propose to add new measures or remove measures from the Hospital VBP Program.
Section 1886(o)(4) of the Act requires the Secretary to establish a performance period for the Hospital VBP Program that begins and ends prior to the beginning of such fiscal year. We refer readers to the FY 2017 IPPS/LTCH PPS final rule (81 FR 56998 through 57003) for baseline and performance periods that we have adopted for the FY 2020, FY 2021, and FY 2022 program years. In the same final rule, we finalized a schedule for all future baseline and performance periods for previously adopted measures. We refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38256 through 38261), the FY 2019 IPPS/LTCH PPS final rule (83 FR 41466 through 41469), and the FY 2020 IPPS/LTCH PPS final rule (84 FR 42393 through 42395) for additional baseline and performance periods that we have adopted for the FY 2022, FY 2023, and subsequent program years.
We note that on March 22, 2020,
Since the FY 2015 program year, we have adopted a 12-month baseline period and a 12-month performance period for measures in the Person and Community Engagement domain (previously referred to as the Patient- and Caregiver-Centered Experience of Care/Care Coordination domain) (77 FR 53598; 78 FR 50692; 79 FR 50072; 80 FR 49561). In the FY 2017 IPPS/LTCH PPS final rule (81 FR 56998), we finalized our proposal to adopt a 12-month performance period for the Person and Community Engagement domain that runs on the calendar year 2 years prior to the applicable program year and a 12-month baseline period that runs on the calendar year 4 years prior to the applicable program year, for the FY 2019 program year and subsequent years.
We did not propose any changes to these policies.
For the FY 2020 and FY 2021 program years, we adopted a 36-month baseline period and a 36-month performance period for measures in the Clinical Outcomes domain (previously referred to as the Clinical Care domain) (79 FR 50073; 80 FR 49563 through 49564). In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57001), we also adopted a 22-month performance period and a 36-month baseline period specifically for the MORT–30–PN (updated cohort) measure for the FY 2021 program year.
In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57000), we adopted a 36-month performance period and a 36-month baseline period for the FY 2022 program year for each of the previously finalized measures in the Clinical Outcomes domain—that is, the MORT–30–AMI, MORT–30–HF, MORT–30–COPD, COMP–HIP–KNEE, and MORT–30–CABG measures. In the same final rule (81 FR 57001), we adopted a 34-month performance period and a 36-month baseline period for the MORT–30–PN (updated cohort) measure for the FY 2022 program year.
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38259), we adopted a 36-month performance period and a 36-month baseline period for the MORT–30–AMI, MORT–30–HF, MORT–30–COPD, MORT–30–CABG, MORT–30–PN (updated cohort), and COMP–HIP–KNEE measures for the FY 2023 program year and subsequent years. Specifically, for the mortality measures (MORT–30–AMI, MORT–30–HF, MORT–30–COPD, MORT–30–CABG, and MORT–30–PN (updated cohort)), the performance period runs for 36 months from July 1, 5 years prior to the applicable fiscal program year, to June 30, 2 years prior to the applicable fiscal program year, and the baseline period runs for 36 months from July 1, 10 years prior to the applicable fiscal program year, to June 30, 7 years prior to the applicable fiscal program year. For the COMP–HIP–KNEE measure, the performance period runs for 36 months from April 1, 5 years prior to the applicable fiscal program year, to March 31, 2 years prior to the applicable fiscal program year, and the baseline period runs for 36 months from April 1, 10 years prior to the applicable fiscal program year, to March 31, 7 years prior to the applicable fiscal program year.
We did not propose any changes to the length of these performance or baseline periods.
In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57000), we finalized our proposal to adopt a performance period for all measures in the Safety domain—with the exception of the CMS Patient Safety and Adverse Events Composite (CMS PSI 90) measure—that runs on the calendar year 2 years prior to the applicable program year and a baseline period that runs on the calendar year 4 years prior to the applicable program year for the FY 2019 program year and subsequent program years.
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38258), for the FY 2023 program year, we adopted a 21-month baseline period (October 1, 2015 to June 30, 2017) and a 24-month performance period (July 1, 2019 to June 30, 2021) for the CMS PSI 90 measure. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38258 through 38259), we adopted a 24-month performance period and a 24-month baseline period for the CMS PSI 90 measure for the FY 2024 program year and subsequent years. Specifically, the performance period runs from July 1, 4 years prior to the applicable fiscal program year, to June 30, 2 years prior to the applicable fiscal program year, and the baseline period runs from July 1, 8 years prior to the applicable fiscal program year, to June 30, 6 years prior to the applicable fiscal program year.
We did not propose any changes to these policies.
Since the FY 2016 program year, we have adopted a 12-month baseline period and a 12-month performance period for the MSPB measure in the Efficiency and Cost Reduction domain (78 FR 50692; 79 FR 50072; 80 FR 49562). In the FY 2017 IPPS/LTCH PPS final rule (81 FR 56998), we finalized our proposal to adopt a 12-month performance period for the MSPB measure that runs on the calendar year 2 years prior to the applicable program year and a 12-month baseline period that runs on the calendar year 4 years prior to the applicable program year for the FY 2019 program year and subsequent years.
We did not propose any changes to these policies.
These tables summarize the baseline and performance periods that we have previously adopted.
Section 1886(o)(3)(A) of the Act requires the Secretary to establish performance standards for the measures selected under the Hospital VBP Program for a performance period for the applicable fiscal year. The performance standards must include levels of achievement and improvement, as required by section 1886(o)(3)(B) of the Act, and must be established no later than 60 days before the beginning of the performance period for the fiscal year involved, as required by section 1886(o)(3)(C) of the Act. We refer readers to the Hospital Inpatient VBP Program final rule (76 FR 26511 through 26513) for further discussion of achievement and improvement standards under the Hospital VBP Program.
In addition, when establishing the performance standards, section 1886(o)(3)(D) of the Act requires the Secretary to consider appropriate factors, such as: (1) Practical experience with the measures involved, including whether a significant proportion of hospitals failed to meet the performance standard during previous performance periods; (2) historical performance standards; (3) improvement rates; and (4) the opportunity for continued improvement.
We refer readers to the FY 2013, FY 2014, and FY 2015 IPPS/LTCH PPS final rules (77 FR 53599 through 53605; 78 FR 50694 through 50699; and 79 FR 50077 through 50081, respectively) for a more detailed discussion of the general scoring methodology used in the Hospital VBP Program. We refer readers to the FY 2020 IPPS/LTCH PPS final rule (84 FR 42396) for previously established performance standards for the FY 2022 program year.
We note that the performance standards for all of the following measures are calculated with lower values representing better performance:
• CDC NHSN HAI measures (CLABSI, CAUTI, CDI, MRSA Bacteremia, and Colon and Abdominal Hysterectomy SSI).
• CMS PSI 90 measure.
• COMP–HIP–KNEE measure.
• MSPB measure.
This distinction is made in contrast to other measures—HCAHPS and the mortality measures, which use survival rates rather than mortality rates—for which higher values indicate better performance. As discussed further in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50684), the performance standards for the Colon and Abdominal Hysterectomy SSI measure are computed separately for each procedure stratum, and we first award achievement and improvement points to each stratum separately, and then compute a weighted average of the points awarded to each stratum by predicted infections.
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38264 through 38265), we established performance standards for the FY 2023 program year for the Clinical Outcomes domain measures (MORT–30–AMI, MORT–30–HF, MORT–30–PN (updated cohort), MORT–30–COPD, MORT–30–CABG, and COMP–HIP–KNEE) and for the Efficiency and Cost Reduction domain measure (MSPB). In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41471 through 41472), we established, for the FY 2023 program year, the performance standards for the Safety domain measure, CMS PSI 90. We note that the performance standards for the MSPB measure are based on performance period data. Therefore, we are unable to provide numerical equivalents for the standards at this time.
In the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32775 through 32777), in accordance with our methodology for calculating performance standards discussed more fully in the Hospital Inpatient VBP Program final rule (76 FR 26511 through 26513) and codified at 42 CFR 412.160, we estimated additional performance standards for the FY 2023 program year. In the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32775), we noted that the numerical values for the performance standards for the Safety and Person and Community Engagement domains for the FY 2023 program year were estimates based on the most recently available data, and that we intended to update the numerical values in the FY 2021 IPPS/LTCH PPS final rule.
The previously established and newly established performance standards for the measures in the FY 2023 program year are set out in these tables.
The eight dimensions of the HCAHPS measure are calculated to generate the HCAHPS Base Score. For each of the eight dimensions, Achievement Points (0–10 points) and Improvement Points (0–9 points) are calculated, the larger of which is then summed across the eight dimensions to create the HCAHPS Base Score (80 points). Each of the eight dimensions is of equal weight; therefore, the HCAHPS Base Score ranges from 0 to 80 points. HCAHPS Consistency Points are then calculated, which range from 0 to 20 points. The Consistency Points take into consideration the scores of all eight Person and Community Engagement dimensions. The final element of the scoring formula is the summation of the HCAHPS Base Score and the HCAHPS Consistency Points, which results in the Person and Community Engagement Domain score that ranges from 0 to 100 points.
We have adopted certain measures for the Safety domain, Clinical Outcomes domain, and Efficiency and Cost Reduction domain for future program years in order to ensure that we can adopt baseline and performance periods of sufficient length for performance scoring purposes. In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41472), we established performance standards for the FY 2024 program year for the Clinical Outcomes domain measures (MORT–30–AMI, MORT–30–HF, MORT–30–PN (updated cohort), MORT–30–COPD, MORT–30–CABG, and COMP–HIP–KNEE) and the Efficiency and Cost Reduction domain measure (MSPB). In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42395 through 42398), we established, for the FY 2024 program year, the performance standards for the Safety domain measure, CMS PSI 90. We note that the performance standards for the MSPB measure are based on performance period data. Therefore, we are unable to provide numerical equivalents for the standards at this time. The previously established performance standards for these measures are set out in this table.
We have adopted certain measures for the Safety domain, Clinical Outcomes domain, and the Efficiency and Cost Reduction domain for future program years in order to ensure that we can adopt baseline and performance periods of sufficient length for performance scoring purposes. In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42398 through 42399), we established performance standards for the FY 2025 program year for the Clinical Outcomes domain measures (MORT–30–AMI, MORT–30–HF, MORT–30–PN (updated cohort), MORT–30–COPD, MORT–30–CABG, and COMP–HIP–KNEE) and the Efficiency and Cost Reduction domain measure (MSPB). We note that the performance standards for the MSPB measure are based on performance
In accordance with our methodology for calculating performance standards discussed more fully in the Hospital Inpatient VBP Program final rule (76 FR 26511 through 26513) and codified at 42 CFR 412.160, we are establishing performance standards for the CMS PSI 90 measure for the FY 2025 program year. The previously established and newly established performance standards for these measures are set out in this table.
As previously discussed, we have adopted certain measures for the Clinical Outcomes domain (MORT–30–AMI, MORT–30–HF, MORT–30–PN (updated cohort), MORT–30–COPD, MORT–30–CABG, and COMP–HIP–KNEE) and the Efficiency and Cost Reduction domain (MSPB) for future program years in order to ensure that we can adopt baseline and performance periods of sufficient length for performance scoring purposes. In accordance with our methodology for calculating performance standards discussed more fully in the Hospital Inpatient VBP Program final rule (76 FR 26511 through 26513), and our performance standards definitions codified at 42 CFR 412.160, we are establishing the following performance standards for the FY 2026 program year for the Clinical Outcomes domain and the Efficiency and Cost Reduction domain. We note that the performance standards for the MSPB measure are based on performance period data. Therefore, we are unable to provide numerical equivalents for the standards at this time. The newly established performance standards for these measures are set out in this table.
We received several public comments on our newly established performance periods for FY 2024 through FY 2026.
After consideration of the public comments that we received, we are establishing the performance standards for the FY 2023 through FY 2026 program years as previously discussed.
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38266), we adopted a policy to retain the equal weight of 25 percent for each of the four domains in the Hospital VBP Program for the FY 2020 program year and subsequent years for hospitals that receive a score in all domains. We did not propose any changes to these domain weights.
In the FY 2015 IPPS/LTCH PPS final rule (79 FR 50084 through 50085), for the FY 2017 program year and subsequent years, we adopted a policy that hospitals must receive domain scores on at least three of four quality domains in order to receive a TPS, and hospitals with sufficient data on only three domains will have their TPSs proportionately reweighted. We did not propose any changes to these domain weights.
Based on our previously finalized policies (82 FR 38266), for a hospital to receive domain scores:
• A hospital must report a minimum number of 100 completed HCAHPS surveys for a hospital to receive a Person and Community Engagement domain score.
• A hospital must receive a minimum of two measure scores within the Clinical Outcomes domain to receive a Clinical Outcomes domain score.
• A hospital must receive a minimum of two measure scores within the Safety domain to receive a Safety domain score.
• A hospital must receive a minimum of one measure score within the Efficiency and Cost Reduction domain to receive an Efficiency and Cost Reduction domain score.
We did not propose any changes to these policies.
Section 1886(o)(1)(C)(ii)(IV) of the Act requires the Secretary to exclude for the fiscal year hospitals that do not report a minimum number (as determined by the Secretary) of cases for the measures that apply to the hospital for the performance period for the fiscal year. For additional discussion of the previously finalized minimum numbers of cases for measures under the Hospital VBP Program, we refer readers to the Hospital Inpatient VBP Program final rule (76 FR 26527 through 26531); the CY 2012 OPPS/ASC final rule (76 FR 74532 through 74534); the FY 2013 IPPS/LTCH PPS final rule (77 FR 53608 through 53610); the FY 2015 IPPS/LTCH PPS final rule (79 FR 50085 through 50086); the FY 2016 IPPS/LTCH PPS final rule (80 FR 49570); the FY 2017 IPPS/LTCH PPS final rule (81 FR 57011); the FY 2018 IPPS/LTCH PPS final rule (82 FR 38266 through 38267); the FY 2019 IPPS/LTCH PPS final rule (83 FR 41465 through 41466); and the FY 2020 IPPS/LTCH PPS final rule (84 FR 42399 through 42400). We did not propose any changes to these policies.
The previously adopted minimum numbers of cases for these measures are set forth in this table.
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42400 through 42402), we finalized our proposal for the Hospital VBP Program to use the same data to calculate the CDC NHSN HAI measures that the HAC Reduction Program uses for purposes of calculating the measures under that program, beginning on January 1, 2020
We refer readers to section IV.M. of the preamble of this final rule for additional information about HAC Reduction Program refinements to validation policies for the CDC NHSN HAI measures.
In the CY 2021 OPPS/ASC proposed rule (85 FR 48996 through 49027), we proposed 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 VBP Program. We refer readers to section XVI of the CY 2021 OPPS/ASC proposed rule for details.
We refer readers to the FY 2014 IPPS/LTCH PPS final rule (78 FR 50707 through 50708) for a general overview of the HAC Reduction Program and to the same final rule (78 FR 50708 through 50709) for a detailed discussion of the statutory basis for the Program. For additional descriptions of our previously finalized policies for the HAC Reduction Program, we also refer readers to the following final rules:
• The FY 2014 IPPS/LTCH PPS final rule (78 FR 50707 through 50729).
• The FY 2015 IPPS/LTCH PPS final rule (79 FR 50087 through 50104).
• The FY 2016 IPPS/LTCH PPS final rule (80 FR 49570 through 49581).
• The FY 2017 IPPS/LTCH PPS final rule (81 FR 57011 through 57026).
• The FY 2018 IPPS/LTCH PPS final rule (82 FR 38269 through 38278).
• The FY 2019 IPPS/LTCH PPS final rule (83 FR 41472 through 41492).
• The FY 2020 IPPS/LTCH PPS final rule (84 FR 42402 through 42411).
These rules describe the general framework for the HAC Reduction Program's implementation, including: (1) The relevant definitions applicable to the program; (2) the payment adjustment under the program; (3) the measure selection process and conditions for the program, including a risk adjustment and scoring methodology; (4) performance scoring; (5) data collection; (6) validation; (7) measure removal factors policy; (8) the process for making hospital-specific performance information available to the public, including the opportunity for a hospital to review the information and submit corrections; (9) the extraordinary circumstances exception policy; and (10) limitation of administrative and judicial review. We remind readers that data collection and validation policies (items (5) and (6)) were finalized in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41472 through 41492) and further clarified in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42402 through 42411).
We have also codified certain requirements of the HAC Reduction Program at 42 CFR 412.170 through 412.172.
In section IV.M.4. of the preamble of this final rule, we discuss the automatic adoption of applicable periods beginning with the FY 2023 program year and all subsequent program years, unless otherwise specified by the Secretary. In section IV.M.6. of the preamble of this final rule, we discuss
The HAC Reduction Program has adopted six measures to date. In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50717), we finalized the use of five CDC NHSN HAI measures: (1) CAUTI; (2) CDI; (3) CLABSI; (4) Colon and Abdominal Hysterectomy SSI; and (5) MRSA bacteremia. In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57014), we also finalized the use of the CMS PSI 90 measure. These previously finalized measures, with their full measure names, are shown in this table.
Technical specifications for the CMS PSI 90 measure can be found on the
In this final rule, we note that we did not propose to adopt or remove any measures.
We refer readers to the FY 2019 IPPS/LTCH PPS final rule (83 FR 41472 through 41474) for more information about how the HAC Reduction Program supports CMS' goal of bringing quality measurement, transparency, and improvement together with value-based purchasing to the hospital inpatient care setting through the Meaningful Measures Initiative. We also refer readers to the FY 2020 IPPS/LTCH PPS final rule (84 FR 42404 through 42406) for information about our measure removal and retention factors for the HAC Reduction Program. In this final rule, we note that we did not propose any measure removal and retention factor policy changes.
As we stated in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50717), we believe that using 24-month data collection periods for the CMS PSI 90 and CDC NHSN HAI measures for the HAC Reduction Program provides hospitals and the general public the most current data available. The 24-month data period also allows time to complete the complex calculation process for these measures, to perform comprehensive quality assurance to enhance the accuracy of measure results, and to disseminate confidential reports on hospital-level results to individual hospitals. Though we had truncated the applicable period to shorter than a 24-month data collection period for the CMS PSI 90 to accommodate the transition to the ICD–10 classification system for FY 2018 and 2019, we returned to using the full 24-month data collection period as soon as the ICD–10 transition was complete. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38271), for FY 2020, we finalized the applicable period for the CMS PSI 90 as the 24-month period from July 1, 2016 through June 30, 2018. Additionally, we finalized the applicable period for the CDC NHSN HAI measures (CLABSI, CAUTI, Colon and Abdominal Hysterectomy SSI, MRSA Bacteremia, and CDI), as the 24-month period from January 1, 2017 through December 31, 2018. We have finalized the 24-month applicable
In order to provide greater certainty around future applicable periods for the HAC Reduction Program, we proposed the automatic adoption of applicable periods for the FY 2023 program year and all subsequent program years for the HAC Reduction Program. Beginning in FY 2023, the applicable period for both the CMS PSI 90 and CDC NHSN HAI measures will be the 24-month period beginning 1 year advanced from the previous program year's start of the applicable period. That is, for FY 2023, the applicable period for the CMS PSI 90 would be the 24-month period from July 1, 2019 through June 30, 2021, and the applicable period for CDC NHSN HAI measures would be the 24-month period from January 1, 2020 through December 31, 2021, which is advanced 1 year from the applicable period for the FY 2022 HAC Reduction Program.
We invited public comment on our proposal to automatically adopt applicable periods for the Program beginning with the FY 2023 program year. We received several public comments on our proposal for the automatic adoption of applicable periods for the HAC Reduction Program.
After consideration of the public comments that we received, we are finalizing our proposal to automatically adopt applicable periods for the HAC Reduction Program beginning with the FY 2023 program year.
In FY 2019 IPPS/LTCH PPS final rule (83 FR 41484 through 41489), we adopted the Equal Measure Weights approach to scoring and clarified the “Scoring Calculations Review and Correction Period” (83 FR 41484). Hospitals must register for a QualityNet Secure Portal account in order to access their annual hospital-specific reports. We will continue using this scoring methodology and the “Scoring Calculations Review and Correction Period” process in FY 2021 and for subsequent years. In this final rule, we note that we did not propose any changes to the HAC Reduction Program scoring methodology or Scoring Calculations Review and Correction Period.
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41478 through 41484), we adopted processes to validate the CDC NHSN HAI measure data used in the HAC Reduction Program, because the Hospital IQR Program finalized its proposals to remove the CDC NHSN HAI measures from its program. In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42406 through 42410), we provided additional clarification to the validation selection and scoring methodology. We also refer readers to the
In the FY 2019 IPPS/LTCH PPS final rule, we finalized our policy that the FY 2023 HAC Reduction Program will begin validation with Q3 2020 discharges, which must be reported by February 2021 using the following validation schedule.
We also
We proposed several changes to the process for validation of HAC Reduction Program measure data to align this program with the proposed changes to the Hospital IQR Program measure validation process. Specifically, we will align the hospital selection and submission quarters beginning with FY 2024 Hospital IQR and HAC Reduction Programs' validation so that we only require one pool of hospitals to submit data for validation. We believe that this would reduce burden and streamline processes. Our specific proposals to update the HAC Reduction Program validation process are described later in this section. For more information on the finalized updates to the Hospital IQR Program measure validation process, see section VIII.A. of the preamble of this final rule.
To support the transition to an aligned validation process for the HAC Reduction Program and the Hospital IQR Program, we proposed to change the quarters of data used for HAC Reduction Program measure validation. Under the existing validation structure, hospitals selected for validation for the FY 2023 program year would be required to submit HAC Reduction Program measure data from the third and fourth quarters of 2020 and the first and second quarters of 2021 (as depicted in the table in section IV.M.6.a. of the preamble of this final rule).
In order to align the quarters used for HAC Reduction Program and Hospital IQR validation, we proposed to only use measure data from the third and fourth quarters of 2020 for the FY 2023 program year (illustrated in this table). We will use measure data from only these quarters for both the random and targeted validation pools.
For the FY 2024 program year and subsequent years, we proposed to use measure data from all of CY 2021 for both the HAC Reduction Program and the Hospital IQR Program. Under this approach, the data submission deadlines for chart-abstracted measures will be in the middle of the month, the fifth month following the end of the reporting quarter.
We invited public comment on our proposed revision to the validation period for the FY 2023 program year and alignment of the quarters of data used for validation with the Hospital IQR Program beginning with validation for the FY 2024 program year. We received several public comments on the proposals to align the quarters of validation for the HAC Reduction Program and Hospital IQR Program.
After consideration of the public comments we received, we are finalizing our proposals to revise the validation period for the FY 2023 HAC Reduction Program to Q3 2020 and Q4 2020, and to align the quarters used for validation with the Hospital IQR Program beginning with validation of data from the first quarter of 2021 for the FY 2024 program year.
Currently, a total of up to 600 hospitals may be selected for validation under the HAC Reduction Program. This is achieved by the HAC Reduction Program taking an annual sample of up to 400 randomly selected hospitals and selecting up to 200 hospitals using targeting criteria. We did not propose any changes to the hospital selection for validation for the FY 2023 program year. However, we proposed to update the policies to reduce the total validation pool from up to 600 hospitals to up to 400 hospitals, effective beginning with validation for the FY 2024 program year. This would align with proposed changes for by the Hospital IQR Program as described in section VIII.A. of the preamble of this final rule. To achieve this reduction, we proposed reducing the randomly selected hospital pool from up to 400 hospitals to up to 200 hospitals for validation for the FY 2024 program year and subsequent years. We note that these will be the same hospitals as those selected for validation under the Hospital IQR Program to the extent that the Hospital IQR Program has measures for those hospitals; therefore, we will be selecting a total of up to 400 hospitals across both the HAC Reduction Program and the Hospital IQR Program. This would reduce the total number of hospitals selected for validation across both programs by approximately one third each year. We believe reducing the total number of hospitals randomly selected for chart-abstracted measure validation to up to 200 will maintain a sufficient sample size for a statistically meaningful estimate of hospitals' reporting accuracy and help streamline the process for both programs.
We invited public comment on our proposed revision to align hospital selection for validation with the Hospital IQR Program beginning with validation for the FY 2024 program year. We received several public comments on reducing the number of hospitals selected for chart-abstracted validation under the HAC Reduction and Hospital IQR Programs from up to 600 to up to 400.
After consideration of the public comments we received, we are finalizing our proposal to reduce the total number of hospitals selected for validation under the HAC Reduction Program from up to 600 to up to 400 beginning with the FY 2024 program year, that is, for data beginning with calendar year 2021.
We proposed to require hospitals to submit digital files when submitting medical records for validation of HAC Reduction Program measures, for the FY 2024 program year and subsequent years. Currently, hospitals may choose to submit paper copies of medical records for chart-abstracted measure validation or they may submit patient charts for validation by securely transmitting electronic versions of medical information (83 FR 41478 through 41484). Currently, submission via secure transmission can either entail downloading or copying the digital image of the patient chart onto CD, DVD, or flash drive, or submission of PDFs using a CMS-approved secured file transfer system.
In the FY 2021 IPPS/LTCH PPS proposed rule, in alignment with proposals made for the Hospital IQR Program in the same proposed rule, we proposed to discontinue the option of sending CD, DVD, or flash drives containing digital images of patient charts, beginning with Q1 2021 for FY 2024 program year validation. Under this approach, hospitals would be required to submit PDF copies of medical records using direct electronic files submission via a CMS-approved secure file transmission process. We would continue to reimburse hospitals at $3.00 per chart, consistent with current reimbursement for electronic submissions of charts.
We discussed in the proposed rule that we strive to provide the public with accurate quality data while maintaining alignment with hospital recordkeeping practices. We appreciate that hospitals have rapidly adopted EHR systems as their primary source of information about patient care, which can facilitate the process of producing electronic copies of medical records (78 FR 50834).
We invited public comment on this proposed requirement to electronically submit medical records for validation. We received several public comments related to the requirement of electronic submissions of medical records for validation beginning with data submissions of Q1 2021 discharges for FY 2024 program year validation.
After consideration of the public comments we received, we are finalizing our proposal to require the electronic submission of PDF copies of medical records to the CDAC for validation purposes for the HAC Reduction Program beginning with Q1 2021 discharge data for the FY 2024 program year.
We proposed to amend the definition of
We invited public comment on our proposal to amend the definition of
We did not receive any public comments on the update to the definition of
In the CY 2021 OPPS/ASC proposed rule (85 FR 48772through 49082), we proposed a methodology to calculate the Overall Hospital Quality Star Ratings (Overall Star Ratings). The Overall Star Ratings would utilize data collected on hospital inpatient and outpatient measures that are publicly reported on a CMS website, including data from the HAC Reduction Program. We refer readers to section XVI of the CY 2021 OPPS/ASC proposed rule for details.
The Medicare program makes payments to teaching hospitals to account for two types of costs, the direct costs (direct GME) and the indirect costs (IME) of a hospital's graduate medical education program. Direct GME payments represent the direct costs of training residents (for example, resident salaries, fringe benefits, and teaching physician costs associated with an approved GME program) and generally are calculated by determining the product of the Medicare patient load (that is, the percentage of the hospital's Medicare inpatient days), the hospital's per resident payment amount, and the weighted number of FTE residents training at the hospital during the cost reporting period.
The IME adjustment is made to teaching hospitals for the additional indirect patient care costs attributable to teaching activities. For example, teaching hospitals typically offer more technologically advanced treatments to their patients, and therefore, patients who are sicker and need more sophisticated treatment are more likely to go to teaching hospitals. Furthermore, there are additional costs related to the presence of inefficiencies associated with teaching residents resulting from the additional tests or procedures ordered by residents and the demands put on physicians who supervise, and staff who support, the residents. IME payments are made for each inpatient discharge as a percentage add-on adjustment to the Hospital Inpatient Prospective Payment System (IPPS) payment, and are calculated based on the hospital's ratio of FTE residents to available beds as defined at § 412.105(b). The statutory formula for calculating the IME adjustment is: c × [(1 + r)
The amount of IME payment a hospital receives for a particular discharge is dependent upon the number of FTE residents the hospital trains, the hospital's number of available beds, the current level of the statutory IME multiplier, and the per discharge IPPS payment. Sections 1886(d)(5)(B)(v) and 1886(h)(4)(F) of the Act established hospital-specific limits (that is, caps) for purposes of calculating indirect and direct GME payments, respectively with regard to the number of allopathic and osteopathic FTE residents that hospitals may count.
The regulations at 42 CFR 413.79(h) for direct GME, and 42 CFR 412.105(f)(1)(ix) for IME, provide for a hospital that is closing or closing its residency program(s) to volunteer to temporarily transfer a portion of its hospital-specific direct GME and IME FTE resident caps to other hospitals that are willing to accept and train the displaced resident(s) for the duration of the resident's training program. CMS first implemented regulations regarding residents displaced by teaching hospital closure in the July 30, 1999 IPPS final rule (64 FR 41522). We made the change to allow a receiving hospital to receive temporary IME and direct GME cap adjustments in limited circumstances for assuming the training of displaced residents due to hospital closure, because of a reluctance on the part of receiving hospitals to assume such displaced residents without receiving increases to their IME and direct GME FTE resident caps to ensure receipt of Medicare funding. We define “closure of a hospital” at 42 CFR 413.79(h)(1)(i) as a situation in which the hospital terminates its Medicare agreement under the provisions of § 489.52 of this chapter. At 42 CFR 413.79(h)(2), our regulations state that a hospital may receive a temporary adjustment to its FTE cap to reflect residents added because of another hospital's closure if the hospital meets the following conditions: The hospital is training additional residents from a hospital that closed on or after July 1, 1996, and no later than 60 days after the hospital begins to train the residents, the hospital submits a request to its contractor for a temporary adjustment to its FTE cap, documents that the hospital is eligible for this temporary adjustment by identifying the residents who have come from the closed hospital and have caused the hospital to exceed its cap, and specifies the length of time the adjustment is needed.
Subsequently, in the August 1, 2001 IPPS final rule (66 FR 39899), we further added to the regulations at 42 CFR 413.79(h) to also allow a receiving hospital to receive temporary IME and direct GME cap adjustments due to closure of a residency program (although the hospital itself would remain open) for assuming the training of displaced residents, due to similar reluctance on the part of receiving hospitals to accept these displaced residents without obtaining increases to their IME and direct GME FTE resident caps to ensure receipt of Medicare funding. We define “closure of a hospital residency training program” at 42 CFR 413.79(h)(1)(ii) to mean the hospital ceases to offer training for residents in a particular approved medical residency training program. However, because the hospital with the closing program itself remains open in the case of program closure, it retains its full IME and direct GME FTE resident caps. In order to prevent the situation of double payment for the same FTE resident cap slots, where the originating hospital closes a program and fills its vacated slots with residents from a different specialty, while the receiving hospital also receives payment for training the displaced resident, we stated in regulation that a receiving hospital could only receive the temporary FTE resident cap adjustment if the originating hospital with the closed program voluntarily agreed to temporarily reduce its FTE resident caps for the duration of the displaced residents' training at the receiving hospital (see 66 FR 39900 August 1, 2001). We revised the regulations at 42 CFR 413.79(h)(3) to specify the responsibilities of the closing hospital or program and the receiving hospital.
When teaching hospitals have closed, we receive many inquiries from concerned stakeholders about whether Medicare IME and direct GME funding could be seamlessly maintained for the medical residents that would have to find alternate training hospitals to complete their training. However, although not explicitly stated in regulations text, our current policy is that the definition of a displaced resident is one that is physically present at the hospital training on the day prior to or the day of hospital or program closure. This longstanding policy derived from the fact that in both the regulations text under hospital closure and program closure, there is a requirement that the receiving hospital identifies the residents “who have come from the closed hospital,” or “identifies the residents who were in training at the time of the program's closure” (see 42 CFR 413.79(h)(2)(ii) and (h)(3)(ii)(B)). We considered the residents who were physically present at the hospital to be those residents who were “training at the time of the program or hospital closure,” thereby granting them the status of “displaced residents.” However, stakeholders have voiced their concern that by limiting the “displaced residents” to only those physically present at the time of closure, it becomes much more administratively challenging for the following groups of residents at closing hospitals/programs to have their residencies continue to be funded by Medicare: (1) Residents who leave the program after the closure is publicly announced to continue training at another hospital, but before the actual closure; (2) residents assigned to and training at planned rotations at other hospitals who will be unable to return to their rotations at the closing hospital or program; and (3) individuals (such as medical students or would-be fellows) who matched into GME programs at the closing hospital or program but have not yet started training at the closing hospital or program. Other groups of residents who, under current policy, are already considered “displaced residents” include— (1) residents who are physically training in the hospital on the day prior to or day of program or hospital closure; and (2) residents who would have been at the closing hospital/program on the day prior to or of closure, but for the fact that they were on approved leave at that time, and will be unable to return to their training at the closing hospital/program.
We proposed to amend the Medicare policy with regard to closing teaching hospitals and closing residency programs to address the needs of residents attempting to find alternative hospitals in which to complete their training and the incentives of originating and receiving hospitals with regard to seamless Medicare IME and direct GME funding. We proposed to change two aspects of the current Medicare policy. First, rather than link the Medicare temporary funding for the affected residents to the day prior to or the day of program or hospital closure, we proposed that the key day would be the day that the closure was publicly announced (for example, via a press release or a formal notice to the Accreditation Council on Graduate Medical Education (ACGME)). This would provide greater flexibility for the residents to transfer while the hospital
Thus, we proposed to revise our policy with regard to which residents can be considered “displaced” for Medicare temporary FTE resident cap transfer purposes in the situation where a hospital announces publicly that it is closing, and/or that it is closing a residency program(s). Specifically, we proposed to add the definition of “displaced resident” in new 42 CFR 413.79(h)(1)(iii) to read as set out in the regulatory text of this document.
Current IME regulations at 42 CFR 412.105(f)(1)(ix) link to the direct GME regulations at 42 CFR 413.79(h), so this regulation change would apply to the IME FTE cap transfers for displaced residents as well. In order to fully coordinate these IME regulations with the new definition of “displaced resident,” we proposed to slightly modify the regulations at 42 CFR 412.105(f)(1)(ix) to add the word “displaced” to describe residents added by a receiving hospital due to a hospital or program closure. In addition, we proposed to change another detail of the policy specific to the requirements for the receiving hospital. To apply for the temporary increase in the Medicare resident cap, the receiving hospital would have to submit a letter to its Medicare Administrative Contractor within 60 days after beginning to train the displaced residents. In the July 30, 1999 IPPS final rule (64 FR 41523), we stated that this letter must include the names and social security numbers of the displaced residents, the hospital and programs in which the residents were training previously, and the amount of the cap increase needed for each resident (based on how much the receiving hospital is in excess of its caps and the length of time for which the adjustments are needed (42 CFR 413.79(h)(2)(ii)). To reduce the amount of personally identifiable information (PII) included in these agreements, we proposed to no longer require the full social security number for each resident. However, in order to still provide enough information for the hospitals and MACs to be able to differentiate among many residents, some which may have similar names, we proposed to require the receiving hospital to include the names and the last four digits of each displaced resident's social security number.
We also noted that as under current policy, the maximum number of FTE resident cap slots that could be transferred to all receiving hospitals is the number of IME and direct GME FTE resident cap slots belonging to the hospital that has the closed program, or that is closing. Therefore, if the originating hospital is training residents in excess of its caps, then being a displaced resident does not guarantee that a cap slot will be transferred along with that resident. A closure situation does not grant the Medicare program the authority to fund additional residency slots in excess of the cap amounts at the originating hospital. If there are more displaced residents than available cap slots, the slots may be apportioned, according to the closing hospital's discretion. The decision to transfer a cap slot if one is available is voluntary and made at the sole discretion of the originating hospital (42 CFR 413.79(h)(3)(ii)). However, if the originating hospital decides to do so, then it is the originating hospital's and/or sponsor's responsibility to determine how much of an available cap slot goes with a particular resident (if any). (Also note that only to the extent a receiving hospital would exceed its FTE cap by training displaced residents would it be eligible for the temporary adjustment (66 FR 39899, § 413.79(h)(3)(i)(B)). A receiving hospital is paid for the displaced resident using its own direct GME and IME factors, that is, the same rates as those used for residents in its own programs (see 66 FR 39901 August 1, 2001).
• Notice by the training hospital, intending to file for bankruptcy within 30 days, to all residents and fellows primarily associated with the training hospital, as well as those contractually matched at that training institution who may not yet have matriculated, of its intention to close, along with provision of reasonable and appropriate procedures to assist current and matched residents and fellows to find and obtain alternative training positions that minimize undue financial and professional consequences, including but not limited to maintenance of specialty choice, length of training, initial expected time of graduation, location and reallocation of funding, and coverage of tail medical malpractice insurance that would have been offered had the program or hospital not closed; and
• Protections against discrimination among displaced residents and fellows on the basis of sex, age, race, creed, national origin, gender identity, or sexual orientation.
We are finalizing our proposed policy with slight modification with regard to which residents can be considered “displaced” for Medicare temporary FTE resident cap transfer purposes in the situation where a hospital announces publicly that it is closing, and/or that it is closing a residency program(s). Specifically, we are finalizing the addition of the definition of “displaced resident” in new 42 CFR 413.79(h)(1)(iii) to read as set out in the regulatory text of this document, but at 42 CFR 413.79(h)(1)(iii)(C), we are removing the word “match” and instead stating a resident who “is accepted into a GME program at the closing hospital or program but has not yet started training at the closing hospital or program.” In addition, we are finalizing our proposal with modification that to apply for the temporary increase in the IME and DGME FTE resident caps, the receiving hospital would have to submit a letter to its Medicare Administrative Contractor no later than 60 days after beginning to train the displaced residents, and must include in the letter either— (1) the last 4 digits of the social security number of the displaced resident; or (2) the NPI of the displaced resident.
Current IME regulations at 42 CFR 412.105(f)(1)(ix) link to the direct GME regulations at 42 CFR 413.79(h), so this regulation change would apply to the IME FTE cap transfers for displaced residents as well. In order to fully coordinate these IME regulations with the new definition of “displaced resident,” we are finalizing our proposal to slightly modify the regulations at 42 CFR 412.105(f)(1)(ix) to add the word “displaced” to describe residents added by a receiving hospital due to a hospital or program closure.
The Rural Community Hospital Demonstration was originally authorized for a 5-year period by section 410A of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108–173), and extended for another 5-year period by sections 3123 and 10313 of the Affordable Care Act (Pub. L. 111–148). Subsequently, section 15003 of the 21st Century Cures Act (Pub. L. 114–255), enacted December 13, 2016, amended section 410A of Public Law 108–173 to require a 10-year extension period (in place of the 5-year extension required by the Affordable Care Act, as further discussed in this final rule). Section 15003 also required that, no later than 120 days after enactment of Public Law 114–255, the Secretary had to issue a solicitation for applications to select additional hospitals to participate in the demonstration program for the second 5 years of the 10-year extension period, so long as the maximum number of 30 hospitals stipulated by Public Law 114–148 was not exceeded. In this final rule, we are providing a description of the provisions of section 15003 of Public Law 114–255, our final policies for implementation, and the finalized budget neutrality methodology for the extension period authorized by section 15003 of Public Law 114–255. We note that the periods of participation for a number of the hospitals selected prior to the extension period authorized by Public Law 114–255 will have ended by the close of FY 2021, and that the budget neutrality methodology for this upcoming fiscal year will take into account the schedule of end dates.
Section 410A(a) of Public Law 108–173 required the Secretary to establish a demonstration program to test the feasibility and advisability of establishing rural community hospitals to furnish covered inpatient hospital services to Medicare beneficiaries. The demonstration pays rural community hospitals under a reasonable cost-based methodology for Medicare payment purposes for covered inpatient hospital services furnished to Medicare beneficiaries. A rural community hospital, as defined in section 410A(f)(1), is a hospital that—
• Is located in a rural area (as defined in section 1886(d)(2)(D) of the Act) or is treated as being located in a rural area under section 1886(d)(8)(E) of the Act;
• Has fewer than 51 beds (excluding beds in a distinct part psychiatric or rehabilitation unit) as reported in its most recent cost report;
• Provides 24-hour emergency care services; and
• Is not designated or eligible for designation as a CAH under section 1820 of the Act.
Section 410A of Public Law 108–173 required a 5-year period of performance. Subsequently, sections 3123 and 10313 of Public Law 111–148 required the Secretary to conduct the demonstration program for an additional 5-year period, to begin on the date immediately following the last day of the initial 5-year period. Public Law 111–148 required the Secretary to provide for the continued participation of rural community hospitals in the demonstration program during the 5-year extension period, in the case of a rural community hospital participating in the demonstration program as of the last day of the initial 5-year period, unless the hospital made an election to discontinue participation. In addition, Public Law 111–148 limited the number of hospitals participating to no more than 30. We refer readers to previous final rules for a summary of the selection and participation of these hospitals. Starting from December 2014 and extending through December 2016, the 21 hospitals that were still participating in the demonstration ended their scheduled periods of performance on a rolling basis, respectively, according to the end dates of the hospitals' cost report periods.
As stated earlier, section 15003 of Public Law 114–255 further amended section 410A of Public Law 108–173 to require the Secretary to conduct the Rural Community Hospital Demonstration for a 10-year extension period (in place of the 5-year extension period required by Public Law 111–148), beginning on the date immediately following the last day of the initial 5-year period under section 410A(a)(5) of Public Law 108–173. Thus, the Secretary is required to conduct the demonstration for an additional 5-year period. Specifically, section 15003 of Public Law 114–255 amended section 410A(g)(4) of Public Law 108–173 to require that, for hospitals participating in the demonstration as of the last day of the initial 5-year period, the Secretary shall provide for continued participation of such rural community hospitals in the demonstration during the 10-year extension period, unless the hospital makes an election, in such form and manner as the Secretary may specify, to discontinue participation. Furthermore, section 15003 of Public Law 114–255 added subsection (g)(5) to section 410A of Public Law 108–173 to require that, during the second 5 years of the 10-year extension period, the Secretary shall apply the provisions of section 410A(g)(4) of Public Law 108–173 to rural community hospitals that are not described in subsection (g)(4) but that were participating in the demonstration as of December 30, 2014,
In addition, section 15003 of Public Law 114–255 amended section 410A of Public Law 108–173 to add paragraph (g)(6)(A) which requires that the Secretary issue a solicitation for applications no later than 120 days after enactment of paragraph (g)(6) to select additional rural community hospitals located in any State to participate in the demonstration program for the second 5 years of the 10-year extension period, without exceeding the maximum number of hospitals (that is, 30) permitted under section 410A(g)(3) of Public Law 108–173 (as amended by Pub. L. 111–148). Section 410A(g)(6)(B) of the Act provides that, in determining which hospitals submitting an application pursuant to this solicitation are to be selected for participation in the demonstration, the Secretary must give priority to rural community hospitals located in one of the 20 States with the lowest population densities, as determined using the 2015 Statistical Abstract of the United States. The Secretary may also consider closures of hospitals located in rural areas in the State in which an applicant hospital is located during the 5-year period immediately preceding the date of enactment of Public Law 114–255 (December 13, 2016), as well as the population density of the State in which the rural community hospital is located.
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38280), we finalized our policy with regard to the effective date for the application of the reasonable cost-based payment methodology under the demonstration for those previously participating hospitals choosing to participate in the second 5-year extension period. According to our finalized policy, each previously participating hospital began the second 5 years of the 10-year extension period and payment for services provided under the cost-based payment methodology under section 410A of Public Law 108–173 (as amended by section 15003 of Public Law 114–255) on the date immediately after the period of performance ended under the first 5-year extension period.
Seventeen of the 21 hospitals that completed their periods of participation under the extension period authorized by Public Law 111–148 elected to continue in the second 5-year extension period for the full second 5-year extension period. (Of the four hospitals that did not elect to continue participating, three hospitals converted to CAH status during the time period of the second 5-year extension period). Therefore, the 5-year period of performance for each of these hospitals started on dates beginning May 1, 2015 and extending through January 1, 2017. On November 20, 2017, we announced that, as a result of the solicitation issued earlier in the year responding to the requirement in Public Law 114–255, 13 additional hospitals were selected to participate in the demonstration in addition to these 17 hospitals continuing participation from the first 5-year extension period. (Hereafter, these two groups are referred to as “newly participating” and “previously participating” hospitals, respectively.) We announced that each of these newly participating hospitals would begin its 5-year period of participation effective with the start of the first cost-reporting period on or after October 1, 2017. One of the hospitals selected from the solicitation in 2017 withdrew from the demonstration program prior to beginning participation in the demonstration on July 1, 2018. In addition, one of the previously participating hospitals closed effective January 2019, and another withdrew effective October 1, 2019. Therefore, 27 hospitals were participating in the demonstration as of this date—15 previously participating and 12 newly participating. For four of the previously participating hospitals, this 5-year period of participation will end during FY 2020; while one of the previously participating hospitals, scheduled to end in 2021, chose in February of this past year to withdraw effective September 2019. Therefore, the budget neutrality calculations in this final rule are based on 22 hospitals. For seven of the remaining 10 hospitals among the original group, participation will end during FY 2021, with participation ending for the other three on December 31, 2021. The newly participating hospitals are all scheduled to end their participation either at the end of FY 2022 or during FY 2023.
Section 410A(c)(2) of Public Law 108–173 requires that, in conducting the demonstration program under this section, the Secretary shall ensure that the aggregate payments made by the Secretary do not exceed the amount which the Secretary would have paid if the demonstration program under this section was not implemented. This requirement is commonly referred to as “budget neutrality.” Generally, when we implement a demonstration program on a budget neutral basis, the demonstration program is budget neutral on its own terms; in other words, the aggregate payments to the participating hospitals do not exceed the amount that would be paid to those same hospitals in the absence of the demonstration program. Typically, this form of budget neutrality is viable when, by changing payments or aligning incentives to improve overall efficiency, or both, a demonstration program may reduce the use of some services or eliminate the need for others, resulting in reduced expenditures for the demonstration program's participants. These reduced expenditures offset increased payments elsewhere under the demonstration program, thus ensuring that the demonstration program as a whole is budget neutral or yields savings. However, the small scale of this demonstration program, in conjunction with the payment methodology, made it extremely unlikely that this demonstration program could be held to budget neutrality under the methodology normally used to calculate it—that is, cost-based payments to participating small rural hospitals were likely to increase Medicare outlays without producing any offsetting reduction in Medicare expenditures elsewhere. In addition, a rural community hospital's participation in this demonstration program would be unlikely to yield benefits to the participants if budget neutrality were to be implemented by reducing other payments for these same hospitals. Therefore, in the 12 IPPS final rules spanning the period from FY 2005 through FY 2016, we adjusted the national inpatient PPS rates by an amount sufficient to account for the added costs of this demonstration program, thus applying budget neutrality across the payment system as a whole rather than merely across the participants in the demonstration program. (A different methodology was applied for FY 2017.) As we discussed in the FYs 2005 through 2017 IPPS/LTCH PPS final rules (69 FR 49183; 70 FR 47462; 71 FR 48100; 72 FR 47392; 73 FR 48670; 74 FR 43922, 75 FR 50343, 76 FR 51698, 77 FR 53449, 78 FR 50740, 77 FR 50145; 80 FR 49585; and 81 FR 57034, respectively), we believe that the language of the statutory budget neutrality requirements permits the agency to implement the budget neutrality provision in this manner.
We have generally incorporated two components into the budget neutrality offset amounts identified in the final IPPS rules in previous years. First, we have estimated the costs of the demonstration for the upcoming fiscal year, generally determined from historical, “as submitted” cost reports for the hospitals participating in that year. Update factors representing nationwide trends in cost and volume increases have been incorporated into these estimates, as specified in the methodology described in the final rule for each fiscal year. Second, as finalized cost reports became available, we determined the amount by which the actual costs of the demonstration for an earlier, given year, differed from the estimated costs for the demonstration set forth in the final IPPS rule for the corresponding fiscal year, and incorporated that amount into the budget neutrality offset amount for the upcoming fiscal year. If the actual costs for the demonstration for the earlier fiscal year exceeded the estimated costs of the demonstration identified in the final rule for that year, this difference was added to the estimated costs of the demonstration for the upcoming fiscal year when determining the budget neutrality adjustment for the upcoming fiscal year. Conversely, if the estimated costs of the demonstration set forth in the final rule for a prior fiscal year exceeded the actual costs of the demonstration for that year, this difference was subtracted from the estimated cost of the demonstration for the upcoming fiscal year when determining the budget neutrality adjustment for the upcoming fiscal year. We note that we have calculated this difference for FYs 2005 through 2015 between the actual costs of the demonstration as determined from finalized cost reports once available, and estimated costs of the demonstration as identified in the applicable IPPS final rules for these years.
We finalized our budget neutrality methodology for periods of participation under the second 5 years of the 10-year extension period in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38285 through 38287). Similar to previous years, we stated in this rule, as well as in the FY 2019 and FY 2020 IPPS/LTCH PPS proposed and final rules (83 FR 20444 and 41503, and 84 FR19452 and 42421, respectively) that we would incorporate an estimate of the costs of the demonstration, generally determined from historical, “as submitted” cost reports for the participating hospitals and appropriate update factors, into a budget neutrality offset amount to be applied to the national IPPS rates for the upcoming fiscal year. In addition, we stated that we would continue to apply our general policy from previous years of including, as a second component to the budget neutrality offset amount, the amount by which the actual costs of the demonstration for an earlier, given year (as determined from finalized cost reports when available) differed from the estimated costs for the demonstration set forth in the final IPPS rule for the corresponding fiscal year.
In these proposed and final rules, we described several distinct components to the budget neutrality offset amount for the specific fiscal years of the extension period authorized by Public Law 114–255.
• We included a component to our overall methodology similar to previous years, according to which an estimate of the costs of the demonstration for both previously and newly participating hospitals for the upcoming fiscal year is incorporated into a budget neutrality offset amount to be applied to the national IPPS rates for the upcoming fiscal year. In the FY 2019 IPPS final rule (83 FR 41506), we included such an estimate of the costs of the demonstration for each of FYs 2018 and 2019 into the budget neutrality offset amount for FY 2019. In the FY 2020 IPPS final rule, we included an estimate of the costs of the demonstration for FY 2020 for 28 hospitals.
• Similar to previous years, we continued to implement the policy of determining the difference between the actual costs of the demonstration as determined from finalized cost reports for a given fiscal year and the estimated costs indicated in the corresponding year's final rule, and including that difference as a positive or negative adjustment in the upcoming year's final rule. (For each previously participating hospital that decided to participate in the second 5 years of the 10-year extension period, the cost-based payment methodology under the demonstration began on the date immediately following the end date of its period of performance for the first 5-year extension period. In addition, for previously participating hospitals that converted to CAH status during the time period of the second 5-year extension period, the demonstration payment methodology was applied to the date following the end date of its period of performance for the first extension period to the date of conversion). In the FY 2020 final rule, we included the difference between the amount determined for the cost of the demonstration in each of FYs 2014 and 2015 and the estimated amount included in the budget neutrality offset in the final rule for each of these respective fiscal years. For FY 2016 and subsequent years we will use finalized cost reports when available that detail the actual costs of the demonstration for each of these fiscal years and incorporate these amounts into the budget neutrality calculation.
We are using a methodology similar to previous years, according to which an estimate of the costs of the demonstration for the upcoming fiscal year is incorporated into a budget neutrality offset amount to be applied to the national IPPS rates for the upcoming fiscal year, that is, FY 2021. Noting again that four of the previously participating hospitals will end their participation during FY 2020, we are conducting this estimate for FY 2021 on the basis of the 22 hospitals that will participate during that fiscal year. The methodology for calculating this amount for FY 2021 proceeds according to the following steps:
Then, we multiply this amount by the FYs 2019, 2020 and 2021 IPPS market basket percentage increases, which are formulated by the CMS Office of the Actuary. (We are using the final market basket percentage increase for FY 2021, which can be found at section IV.B. of the preamble to this final rule). The result for the 22 participating hospitals is the general estimated reasonable cost amount for covered inpatient hospital services for FY 2021.
Consistent with our methods in previous years for formulating this estimate, we are applying the IPPS market basket percentage increases for FYs 2019 through 2021 to the applicable estimated reasonable cost amount (previously described) in order to model the estimated FY 2021 reasonable cost amount under the demonstration. We believe that the IPPS market basket percentage increases appropriately indicate the trend of increase in inpatient hospital operating costs under the reasonable cost methodology for the years involved.
For this final rule, the resulting amount is $39,825,670, which we are incorporating into the budget neutrality offset adjustment for FY 2021. This estimated amount is based on the specific assumptions regarding the data sources used, that is, recently available “as submitted” cost reports and historical update factors for cost and payment. We noted in the proposed rule that if updated data become available prior to the final rule, we would use them as appropriate to estimate the costs for the demonstration program for FY 2021 in accordance with our methodology for determining the budget neutrality estimate). Accordingly, we have revised the update factors from the proposed rule to indicate those presently finalized; and, in addition, accounted for the withdrawal of one hospital.
(3) Reconciling Actual and Estimated Costs of the Demonstration for Previous Years
As described earlier, we have calculated the difference for FYs 2005 through 2015 between the actual costs of the demonstration, as determined from finalized cost reports once available, and estimated costs of the demonstration as identified in the applicable IPPS final rules for these years.
In the proposed rule, we stated that if finalized cost reports for the entire set of hospitals that completed cost report periods under the demonstration payment methodology beginning in FY 2016 were available, we would include in the final budget neutrality offset amount for FY 2021 the difference between the actual cost as determined from these cost reports and the estimated amount identified in the final rule for FY 2016 At this point, however, not all cost reports have been finalized for the 18 hospitals that completed cost report periods under the demonstration payment methodology beginning in FY 2016. Therefore, we will not be able to incorporate this amount in this final rule, but, instead, plan to address accordingly in the FY 2022 IPPS/LTCH PPS proposed and final rules.
Therefore, for this FY 2021 IPPS/LTCH PPS final rule, the budget neutrality offset amount for FY 2021 is based on the amount determined under section X.4.c.(2). of the preamble of this final rule, representing the difference applicable to FY 2021 between the sum of the estimated reasonable cost amounts that would be paid under the demonstration to the 22 hospitals participating in the fiscal year for covered inpatient hospital services and the sum of the estimated amounts that would generally be paid if the demonstration had not been implemented. This estimated amount is $39,825,670.
As discussed in the FY 2021 IPPS/LTCH PPS proposed rule, on October 12, 2017, President Trump issued Executive Order (E.O.) 13813 on
As a result of E.O. 13813, the Secretary published a report entitled, “Reforming America's Healthcare System Through Choice and Competition,” which recognized the importance of price transparency in bringing down the cost of healthcare (for more information regarding this report, we refer readers to:
There are three broad types of hospital rates, depending on the patient and payer: (1) Medicaid and Medicare fee for service (FFS) rates; (2) negotiated rates with private issuers or health plans; and (3) uninsured or self-pay, as discussed in the Hospital Price Transparency final rule (84 FR 65538).
Medicaid FFS rates are dictated by each State and tend to be at the lower end of market rates. Medicare FFS rates are determined by CMS and those rates tend to be higher than Medicaid rates within a state. Privately negotiated rates vary with the competitive structure of the geographic market and usually tend to be somewhat higher than Medicare rates, but in some areas of the country the two sets of rates tend to converge. Uninsured or self-pay patient rates are often the same as chargemaster
Under the old hospital reimbursement system, the more services a hospital provided and longer a patient's stay, the greater the reimbursement. Congress, recognizing that the reimbursement system created disincentives to provide efficient care, enacted in 1983 a prospective payment system. The primary objective of the prospective payment system is to create incentives for hospitals to operate efficiently and minimize unnecessary costs while at the same time ensuring that payments are sufficient to adequately compensate hospitals for their legitimate costs in delivering necessary care to Medicare beneficiaries.
To partly compensate hospitals for certain overly costly hospitalizations, hospitals may receive an “outlier” payment which is based on the hospital's billed charges, adjusted to cost, in comparison to the payment that would otherwise be received and an outlier threshold (see 42 CFR 412.84). To determine whether an individual case would qualify for an outlier payment, the hospital's cost-to-charge ratio (CCR) is applied to the covered charges to estimate the costs of the case. In the late 1990s, many hospitals began manipulating or gaming that ratio to make it easier to qualify for outlier payments. The larger the charges, the smaller the ratio, but it takes time for the ratio to be updated (unless the hospital directly updated their cost-to-charge ratio with the MAC). Thus, by way of example, if a hospital had a cost-to-charge ratio 1 to 5, or 20 percent, then a pill which cost the hospital $1 to purchase might be billed to a patient at $5. However, if the hospital doubled the charge to the patient to $10, the corresponding change in its ratio would take time to be updated. Its costs might look like $2 instead of $1 in the interim. Rule changes such as those made in the IPPS/LTCH PPS Change in Methodology for Determining Payment for Extraordinarily High-Cost Cases (Cost Outliers) Final Rule (June 9, 2003; 68 FR 34497 through 34504), we established policies related to updating CCRs and the reconciliation of outlier payments, which reduced such manipulation (for more information regarding these changes we refer readers to:
Recognizing that chargemaster (gross) rates rarely reflect the true market costs, we believe that by reducing our reliance on the hospital chargemaster, we can adjust Medicare payment rates so that they reflect the relative market value for inpatient items and services. Additionally, we have received public feedback that the Medicare program's use of hospital gross charges for some payments in ratesetting has served as the most significant barrier to hospitals' efforts to rebase their chargemasters. These stakeholders argued that this Medicare payment process serves as a barrier for rebasing changes, because any reduction in charges requires coordination with Medicare, Medicaid and commercial health plans so that any changes occur in a revenue-neutral manner to the hospital. We continue to believe that our existing administrative mechanisms for hospitals to voluntarily lower their charges adequately address these commenters' concerns. Specifically, if a hospital is planning on voluntarily lowering its charges, it can request a CCR change pursuant to 42 CFR 412.84(i)(1) and as also discussed in prior rulemaking (84 FR 42630). Nevertheless, we agree in general that a decreased reliance on hospital chargemasters in Medicare payment would be desirable, if an appropriate alternative mechanism exists and is permitted by statute.
Furthermore, the goal of reducing the Medicare program's reliance on the chargemaster and adopting payment strategies that are more reflective of the commercial insurance market was showcased within E.O. 13890 on
In order to reduce the Medicare program's reliance on the hospital chargemaster, thereby advancing the critical goals of EOs 13813 and 13890, and to support the development of a market-based approach to payment under the Medicare FFS system, we proposed that hospitals would be required to report certain market-based payment rate information on their Medicare cost report for cost reporting periods ending on or after January 1, 2021, to be used in a potential change to the methodology for calculating the IPPS MS–DRG relative weights to reflect relative market-based pricing.
As described further in section IV.P.2.c. of the preamble of this final rule, we specifically proposed that hospitals would report on the Medicare cost report two median payer-specific negotiated charges “by MS–DRG.” For a third party payer that uses the same MS–DRG patient classification system used by Medicare, the payer-specific negotiated charges that the hospital uses to calculate the median by MS–DRG would be the payer-specific negotiated charges the hospital negotiated with that third party payer for the MS–DRG to which the patient discharge was classified. However, we recognize that not all third party payers use the MS–DRG patient classification system. For those third party payers that do not, the payer-specific negotiated charges they negotiate with hospitals would be based on the system used by that third party payer, such as per diem rates or APR–DRGs. In that case, the hospital would determine and report the median payer-specific negotiated charges by MS–DRG using its payer-specific negotiated charges for the same or similar package of services that can be crosswalked to an MS–DRG. For simplicity, we refer to this data collection herein as collecting the median payer-specific negotiated charge by MS–DRG. We believed that the use of these data in the MS–DRG relative weight setting methodology would represent a significant and important step in reducing the Medicare program's reliance on hospital chargemasters, and would better reflect relative market-based pricing in Medicare FFS inpatient reimbursements.
Specifically, we proposed that hospitals would report on the Medicare cost report: (1) The median payer-specific negotiated charge that the hospital has negotiated with all of its Medicare Advantage (MA) organizations (also referred to as MA organizations) payers, by MS–DRG; and (2) the median payer-specific negotiated charge the hospital has negotiated with all of its third party payers, which would include MA organizations, by MS–DRG. The market-based rate information we proposed to collect on the Medicare cost report would be the median of the payer-specific negotiated charges by MS–DRG, as described previously, for a hospital's MA organization payers and all of its third party payers. The payer-specific negotiated charges used by hospitals to calculate these medians would be the payer-specific negotiated charges for service packages that hospitals are required to make public under the requirements we finalized in the Hospital Price Transparency final rule (84 FR 65524) that can be crosswalked to an MS–DRG. We stated that if we finalized this market-based data collection proposal, hospitals would use the payer-specific negotiated charge data that they would be required to make public, as a result of the Hospital Price Transparency final rule, to then calculate the median payer-specific negotiated charges (as described further in section IV.P.2.c. of this final rule) to report on the Medicare cost report. We believed that because hospitals are already required to publicly report payer-specific negotiated charges, in accordance with the Hospital Price Transparency final rule, that the additional calculation and reporting of the median payer-specific negotiated charge will be less burdensome for hospitals.
We also sought comment on a potential change to the methodology for calculating the IPPS MS–DRG relative weights to incorporate this market-based rate information, beginning in FY 2024, which we stated that we may consider adopting in the FY 2021 IPPS/LTCH PPS final rule. As described in greater detail in section IV.P.d. of the preamble of this final rule, this methodology would involve using hospitals' reported median payer-specific negotiated charges to develop market-based IPPS payments to reflect the relative hospital resources used to provide inpatient services to patients. The use of payer-specific negotiated charges would replace the current use of gross charges that are reflected on a hospital's chargemaster and cost information from Medicare cost reports for the development of the IPPS MS–DRG relative weights. CMS requested comment on the use of hospitals' reported median payer-specific negotiated charge data, which would be calculated using a subset of the payer-specific negotiated charges that, starting January 1, 2021, hospitals are required to make public under 45 CFR part 180. As proposed, the median payer-specific negotiated charges calculated and submitted by hospitals for each MS–DRG would be limited to charges hospitals have negotiated with: (1) MA organizations; and (2) third party payers, including MA organizations. As noted previously, we believed the use of payer-specific negotiated charge data in the MS–DRG relative weight setting methodology would help reduce the Medicare program's reliance on hospital chargemasters, and would reflect relative market-based pricing in Medicare FFS inpatient reimbursements.
Section 1886(d)(4)(A) of the Act states that the Secretary shall establish a classification of inpatient hospital discharges by diagnosis-related groups and a methodology for classifying specific hospital discharges within these groups. Section 1886(d)(4)(B) of the Act states that for each such diagnosis-related group the Secretary shall assign an appropriate weighting factor which reflects the relative hospital resources used with respect to discharges classified within that group compared to discharges classified within other groups. For the reasons discussed, we believed the use of market-based data, to be collected on the Medicare cost report, may support the development of an appropriate market-based approach to payment under the Medicare FFS system by incorporating such data into the estimation of the relative hospital resources used with respect to discharges classified within a single MS–DRG compared to discharges
As stated in the proposed rule, we currently use a cost-based methodology to estimate an appropriate weight for each MS–DRG. These weights reflect the relative hospital resources used with respect to discharges classified within that MS–DRG compared to discharges classified within other MS–DRGs. The current cost-based methodology primarily uses hospital charges from the MedPAR claims data and cost report data from the Healthcare Cost Report Information System (HCRIS) to establish the MS–DRG relative weights (the collection of cost report data is authorized under OMB 0938–0050, which is used to produce both files). (We refer readers to section II.E. of this final rule for the discussion of the finalized methodology used to recalibrate the FY 2021 MS–DRG cost-based relative weights.) This cost-based methodology was originally proposed and finalized with revisions in the FY 2007 IPPS rulemaking (71 FR 24006 through 24011 and 71 FR 47881 through 47898); it has since been modified in subsequent IPPS rulemaking. Prior to the FY 2007 IPPS rulemaking, we used a charge-based DRG relative weight methodology.
Hospitals are already required to make their payer-specific negotiated charge data for service packages publicly available under the Hospital Price Transparency final rule (45 CFR 180.20). As discussed in the proposed rule, consistent with the desire to reduce the Medicare program's reliance on the hospital chargemaster, as well as to inject market pricing into Medicare FFS reimbursement, we believe it is again appropriate to reconsider our current approach to calculating the MS–DRG relative weights. For these reasons, we have reexamined the need to continue to use the charges on IPPS hospital claims, in conjunction with charge and cost data on hospital cost reports, to estimate the MS–DRG relative weights. In particular, we stated that we were considering whether the payer-specific negotiated charges by MS–DRG for MA organizations, or alternatively the payer-specific negotiated charges by MS–DRG for all third party payers (we note that this would include MA organization data), or some other approach that would reflect relative market-based charges by MS–DRG, could provide an appropriate basis for estimating the relative hospital resources used with respect to discharges classified within a single MS–DRG compared to discharges classified within other MS–DRGs, as required by statute.
As an initial matter, as discussed in the proposed rule, we focused on the charges negotiated between hospitals and MA organizations given that MA plans are often paying for the same units and types of services as fee-for-service (FFS) Medicare. As part of our consideration of this issue, we looked to existing public research on the relationship between Medicare FFS inpatient payment rates and the payment rates negotiated between hospitals and MA organizations. Berenson et al.
We next researched empirically based comparisons of Medicare FFS rates, MA organization rates, and rates of other commercial payers. Baker et al.
Maeda and Nelson
In their study, Maeda and Nelson also examined whether the ratio of MA prices to FFS prices varied across DRGs to assess whether there were certain DRGs for which MA plans tended to pay more or less than FFS. They ranked the ratio of MA prices to FFS prices and adjusted for outlier payments. The authors state that they found that, “there were some DRGs where the average MA price was much higher than FFS and there were some DRGs where the average MA price was a bit lower than FFS.” For example, for the time period in question, on average, MA plans paid 129 percent more than FFS for rehabilitation stays (DRG 945), 33 percent more for depressive neuroses (DRG 881), and 27 percent more for stays related to psychoses (DRG 885). But MA plans paid an average of 9 percent less than FFS for stays related to pathological fractures (DRG 542) and wound debridement and skin graft (DRG 464) (see Online Appendix Table 5 from their study). The authors state these results suggest that there may be certain services where MA plans pay more than FFS possibly because the FFS rates for
Taken as a whole, we continue to believe this body of research suggests that payer-specific charges negotiated between hospitals and MA organizations are generally well-correlated with Medicare IPPS payment rates, and payer-specific charges negotiated between hospitals and other commercial payers are generally not as well-correlated with Medicare IPPS payment rates. With respect to either type of payer-specific negotiated charges, there may be instances where those negotiated charges may reflect the relative hospital resources used within an MS–DRG differently than our current cost-based methodology.
Considering the public availability of payer-specific negotiated charges starting in CY 2021 and the desire to reduce the Medicare program's reliance on the hospital chargemaster, we believed we could adjust the methodology for calculating the MS–DRG relative weights to reflect a more market-based approach under our authority under sections 1886(d)(4)(A), 1886(d)(4)(B) and 1886(d)(4)(C) of the Act.
For the reasons discussed, in order to support the development of a relative market-based payment methodology under the IPPS, as well as satisfy E.O.s 13813 and E.O. 13890 by reducing our reliance on the hospital chargemaster, we proposed to collect market-based payment rate information on Medicare cost reports beginning with cost reporting periods ending on or after January 1, 2021. Sections 1815(a) and 1833(e) of the Act provide that no Medicare payments will be made to a provider unless it has furnished the information, as may be requested by the Secretary, to determine the amount of payments due the provider under the Medicare program. We require that providers follow reasonable cost principles under section 1861(v)(1)(A) of the Act when completing the Medicare cost report. Under the regulations at 42 CFR 413.20 and 413.24, we define adequate cost data and require cost reports from providers on an annual basis. As previously discussed, the collection of this market-based data on the Medicare cost report would allow for the adoption of market-based strategies in determining Medicare FFS payments and would reduce our reliance on the hospital chargemaster for ratesetting purposes, in particular for purposes of estimating the appropriate weighting factor to reflect the relative hospital resources used with respect to hospital discharges, as required under sections 1886(d)(4)(B) and 1886(d)(4)(C) of the Act.
First, we proposed to collect on the Medicare cost report the median payer-specific negotiated charge that the hospital has negotiated with all of its MA organization payers, by MS–DRG. Second, we proposed to collect on the Medicare cost report the median payer-specific negotiated charge the hospital has negotiated with all of its third party payers, which would include MA organizations, by MS–DRG. We proposed to collect the median of the hospital payer-specific negotiated charges, because the median is a common measure of central tendency that is less influenced by outlier values. As described in more detail later in this section, we proposed to collect the hospital's median payer-specific negotiated charges by MS–DRG, which would be calculated using the payer-specific negotiated charge data for service packages that hospitals are required to make public under the Hospital Price Transparency final rule that can be cross-walked to an MS–DRG.
Medicare certified providers, such as Medicare certified hospitals, are required to submit an annual cost report to their Medicare Administrative Contractor (MAC). The Medicare cost report contains provider information such as facility characteristics, cost and charges by cost center, in total and for Medicare, Medicare settlement data, and financial statement data. The cost report must be submitted in a standard (ASCII) electronic cost report (ECR) format. CMS maintains the cost report data in the HCRIS dataset. The HCRIS data supports our reimbursement policymaking, congressional studies, legislative health care reimbursement initiatives, Medicare profit margin analysis, and relative weight updates. As such, every data point from hospital cost reports beginning on or after May 1, 2010 is reflected on the HCRIS dataset, and available for public access and use.
We stated in the proposed rule that accordingly, if we were to finalize this proposal to collect the proposed market-based information (specifically, the median payer-specific negotiated charges negotiated between a hospital and all its MA organization payers, by MS–DRG and the median payer-specific negotiated charges negotiated between a hospital and all its third party payers, by MS–DRG) on the cost report, that this data would become publicly accessible on the HCRIS dataset in a de-identified manner and would be usable for analysis by third parties. The data would, by definition, be de-identified since we proposed that the hospital calculate the median rate (that is, the specific rate that is negotiated between a hospital and a specific third party payer for an MS–DRG would not be reported and need to be de-identified). For more information or to obtain HCRIS data we refer readers to:
A payer-specific negotiated charge is the charge that a hospital has negotiated with a third party payer for an item or service provided by the hospital. We noted that the definition of third party payer, for the purposes of this rule and data collection proposal, includes MA organizations. As described later in this section, we proposed that the two median payer-specific negotiated charges by MS–DRG that hospitals would be required to report on the Medicare cost report for cost reporting periods ending on or after January 1, 2021, would be calculated using the payer-specific negotiated charges for service packages that hospitals are required to make publicly available under the Hospital Price Transparency final rule that can be cross-walked to a MS–DRG.
The Hospital Price Transparency final rule required that hospitals make publicly available via the internet their standard charges (including, as applicable, gross charges, payer-specific negotiated charges, de-identified minimum negotiated charges, de-identified maximum negotiated charges, and discounted cash prices) in two different ways: (1) A single machine-readable file containing a list of standard charges for all items and services provided by the hospital that complies with requirements described in 45 CFR 180.50; and (2) a consumer-friendly list of standard charges for as many of the 70 CMS-specified shoppable services that are provided by the hospital, and as many additional hospital-selected shoppable services as is necessary for a combined total of at least 300 shoppable services, that complies with requirements described in 45 CFR 180.60. For purposes of this rule and data collection proposal, we proposed that hospitals would calculate the median payer-specific negotiated charge by MS–DRG using the payer-specific negotiated charge data by MS–DRG from the single machine-readable file for all items and services (as required by the Hospital Price Transparency final rule) and not the
We proposed the following methodology for how each hospital would calculate its median payer-specific negotiated charge for MA organizations by MS–DRG and its median payer-specific negotiated charge for all third party payers by MS–DRG. We proposed to collect this data for purposes of incorporating market-based rate information into the IPPS payment methodologies. We stated that the median payer-specific negotiated charge data would be reported by MS–DRG for consistency with the grouping system that we currently use to classify inpatient hospital discharges under section 1886(d)(4)(A) of the Act. Therefore, as referenced previously, hospitals would report the payer-specific negotiated charges by MS–DRG and not by another DRG classification system.
To determine the median payer-specific negotiated charge for MA organizations for a given MS–DRG, a hospital would list, by MS–DRG, each discharge in its cost reporting period that was paid for by an MA organization, and the corresponding payer-specific negotiated charge that was negotiated as payment for items and services provided for that discharge. The median payer-specific negotiated charge for payers that are MA organizations, for that MS–DRG, would be the median payer-specific negotiated charge in that list of discharges.
A simplified example for the purpose of illustrating this process is as follows. Hospital A has negotiated four different payer-specific charges with four MA organizations for hypothetical MS–DRG 123. The four payer-specific negotiated charges are $7,300, $7,400, $7,600, and $7,700. In its cost reporting period, Hospital A had 3 discharges for which $7,300 was the basis for payment for the items and services provided for that discharge, 2 discharges for which $7,400 was the basis for payment for the items and services provided for that discharge, 1 discharge for which $7,600 was the basis for payment for the items and services provided for that discharge, and 1 discharge for which $7,700 was the basis for payment for the items and services provided for that discharge. Therefore, for Hospital A, the payer-specific negotiated charges for its list of discharges paid for by MA organizations in its cost reporting period for MS–DRG 123 is $7,300, $7,300, $7,300, $7,400, $7,400, $7,600, and $7,700. The median of this list is $7,400. Hospital A's median payer-specific negotiated charge for MS–DRG 123 for payers that are MA organizations would be $7,400.
The methodology we proposed for how each hospital would calculate its median payer-specific negotiated charge for a given MS–DRG for all third party payers, including MA organizations, is the same as the process outlined previously.
For purposes of this calculation, we proposed to define the term, “payer-specific negotiated charge” as the charge that a hospital has negotiated with a third party payer for an item or service. We proposed to use this definition of the payer-specific negotiated charge, because it would capture the charges that are negotiated between hospitals and third party payers, including MA organizations, and can provide the data needed to evaluate the use of market-based information for payment purposes within the MS–DRG relative weight calculation. For consistency, the definition of payer-specific negotiated charge that we proposed to use for purposes of this proposal is the same definition of “payer-specific negotiated charge” that we finalized for purposes of our requirements for hospitals to make their standard charges available to the public under the Hospital Price Transparency final rule. We also proposed to define, “items and services” as all items and services, including individual items and services and service packages, that could be provided by a hospital to a patient in connection with an inpatient admission for which the hospital has established a standard charge. An MS–DRG, as established by CMS under the MS–DRG classification system, is a type of service package consisting of items and services based on patient diagnosis and other characteristics. We proposed this definition of items and services, because we believed it captured the types of items and services, including service packages, that a hospital would use to calculate and report the median payer-specific negotiated charge for each MS–DRG to support the use of market-based rate information by MS–DRG within the MS–DRG relative weight calculation. This proposed definition is also the same definition of items and services that we finalized for purposes of our requirements for hospitals to make their standard charges available to the public under the Hospital Price Transparency final rule, except that we have omitted the reference to outpatient department visits, because we would not require hospitals to calculate the median of their payer-specific negotiated charges for items and services provided in the hospital outpatient setting under our proposal.
For purposes of this calculation, an MA organization is defined in 42 CFR 422.2; namely, an MA organization means a public or private entity organized and licensed by a State as a risk-bearing entity (with the exception of provider-sponsored organizations receiving waivers) that is certified by CMS as meeting the MA contract requirements.
For purposes of this calculation, we proposed to define third party payer as an entity that is, by statute, contract, or agreement, legally responsible for payment of a claim for a healthcare item or service. As the reference to “third party” suggests, this definition excludes an individual who pays for a healthcare item or service that he or she receives (such as self-pay patients). We proposed to use this definition of third party payer, because these are the types of entities that contract with hospitals to reimburse for services on behalf of patients. This definition is also the definition of third party payer finalized in the Hospital Price Transparency final rule.
We invited public comment on the proposed definitions of payer-specific negotiated charge, items and services, and third party payer. As discussed previously, we recognized that hospitals may negotiate rates in several ways and under different circumstances. For example, hospitals may negotiate rates with third party payers as a percent discount off chargemaster rates, on a per diem basis, or by MS–DRG or other similar DRG system. We also recognized that there may be hospitals that do not negotiate charges for service packages by MS–DRG or for service packages that may be crosswalked to an MS–DRG. Therefore, we sought comment on whether hospitals' median payer-specific negotiated charges across all types of payment methodologies should be included in the determination of the median payer-specific negotiated charge for the conditions and procedures that are classified under the MS–DRG system and if so, how the proposed definitions should be modified to encompass these other types of negotiation strategies or methodologies. We also sought comment on the appropriateness of using MS–DRGs or MS–DRG equivalents for this methodology, as well as whether we should potentially collect this information for payers that use MS–DRGs separately from payers that use other DRG systems. Furthermore, we sought comment on alternatives that would capture market-based information for the potential use in Medicare FFS payments. We also
In order to address some of the issues noted previously, as an alternative, we considered requiring hospitals to submit a median negotiated reimbursement amount across all MA organizations and across all third party payers (including MA organizations) by MS–DRG (or by an MS–DRG equivalent, such as APR–DRG). Under this alternative approach, we stated we would define the “negotiated reimbursement amount” as the amount the hospital received as payment for the services rendered for a patient discharge, as classified under the MS–DRG system, and for which the hospital negotiated payment with a third party payer, including a MA organization, for hospital cost reporting periods ending on or after January 1, 2021. Hospitals would be required to determine and submit the median negotiated reimbursement amount for—(1) MA organizations; and (2) all third party payers, which includes MA organizations.
For example, a hospital may negotiate a case rate (that is, a payer-specific negotiated charge) of $30,000 with Payer A for a major joint replacement paid under the APR–DRG system (equivalent to MS–DRG 470). The hospital and payer have agreed to a stop loss threshold of $150,000 and that the hospital will be reimbursed at 50 percent off the gross (chargemaster) rate for each dollar charged over the stop-loss amount. Additionally, the hospital would be reimbursed for 60 percent of the cost of the implanted hardware, an amount that, in some cases, may be variable depending on the type or style of hardware implanted. In this example, we stated that the hospital's payer-specific negotiated charge for a major joint replacement (MS–DRG 470 equivalent) is $30,000. However, we stated that the resulting payment per discharge would vary, depending upon factors such as whether the patient's course of treatment exceeded the agreed-upon stop loss amount and the cost of the hardware implant.
We considered this alternative, because the median of the “negotiated reimbursement amount” is an amount that may take into consideration the actual and final payment amounts received by hospitals from third party payers, and MA organizations, for care of individuals, as compared to a standard charge negotiated for a particular service package identified by MS–DRG. We requested comment on this alternative approach, which we believed may also provide a reasonable market-based estimate of the relative resources used to provide services for an MS–DRG, and may take into account the several ways that hospitals and third party payers negotiate charges.
We also sought comment on the relative burden of calculating and submitting a median negotiated reimbursement amount for MA organizations and for all other third party payers as compared to calculating and submitting the median payer-specific negotiated charge for MA organizations and median payer-specific negotiated charge for third party payers by MS–DRG payment system.
We proposed that subsection (d) hospitals in the 50 states and DC, as defined at section 1886(d)(1)(B) of the Act, and subsection (d) Puerto Rico hospitals, as defined under section 1886(d)(9)(A) of the Act, would be required to report the median payer-specific negotiated charge information. We noted that hospitals that do not negotiate payment rates and only receive non-negotiated payments for service would be exempted from this proposed data collection. We recognized that Critical Access Hospitals (CAHs) may, in some instances, negotiate payment rates; however, because CAHs are not subsection (d) hospitals and are not paid on the basis of MS–DRGs, CAHs would be excluded from this proposed data collection requirement. We proposed that hospitals in Maryland, which are currently paid under the Maryland Total Cost of Care Model, would be exempted from this data collection requirement during the performance period of the Model. Examples of subsection (d) hospitals that only receive non-negotiated payment rates include hospitals operated by an Indian Health Program as defined in section 4(12) of the Indian Health Care Improvement Act or federally owned and operated facilities. We noted that this proposed data collection requirement would apply to a smaller subset of hospitals as compared to the public reporting requirements under the Hospital Price Transparency final rule.
We proposed that for cost reporting periods ending on or after January 1, 2021, a hospital would report on its cost report the median payer-specific negotiated charge for each MS–DRG for payers that are MA organizations, and the median payer-specific negotiated charge for each MS–DRG for all third party payers, which includes MA organizations. We stated that the required cost report reporting changes to accomplish this would be in more detail in the Information Collection Request approved under OMB No. 0938–0050.
We also proposed to amend 42 CFR 413.20(d)(3) to reflect this proposed requirement. Specifically, we proposed to amend 42 CFR 413.20(d)(3) to require hospitals to report the median payer-specific negotiated charge by MS–DRG for payers that are MA organizations and for all third party payers on the Medicare cost report. We proposed to capture this proposed data collection requirement in regulation at the new paragraph 42 CFR 413.20(d)(3)(i)(B). This proposed requirement would be effective for cost reporting periods ending on or after January 1, 2021.
As described previously, we proposed to require hospitals to report on the Medicare cost report both the hospital's median payer specific negotiated charge by MS–DRG for all MA organizations and the hospital's median payer-specific negotiated charge by MS–DRG for all third party payers, which includes MA organizations, for cost reporting periods ending on or after January 1, 2021. We noted that we may also consider finalizing the collection of alternative market-based data, such as the median negotiated reimbursement amount as explained previously, or any refinements to the definition of median payer-specific negotiated charge, based on review of public comments. We stated that we were also considering a modification to the market based data collection proposal, to require only the reporting of the median payer-specific negotiated charge for MA organizations on the Medicare cost report. We invited public comments on our proposed data collection, as well as on these or other alternative data collections of payer-specific negotiated charges or other market-based information on the Medicare cost report, which we stated that we may consider finalizing in the FY 2021 IPPS/LTCH PPS final rule for cost reporting periods ending on or after January 1, 2021, after consideration of the comments received.
We also requested comments on a potential new market-based methodology for estimating the MS–DRG relative weights, beginning in FY 2024, which we stated we may consider adopting in the FY 2021 IPPS/LTCH PPS final rule. We described this potential new market-based methodology as based on the proposed median payer-specific negotiated charge information collected on the Medicare cost report. We stated that by implementing this potential new
We also considered alternatives to this approach, such as the use of the median payer-specific negotiated charge for all third party payers (instead of the median payer-specific negotiated charge for all MA organizations), or other alternative collections of payer-specific negotiated charges or other market-based information such as a median negotiated reimbursement amount that a hospital negotiates with its MA organizations or third party payers (as described further in section IV.P.2.c of the preamble of this final rule), within the MS–DRG relative weight methodology. We also noted in the proposed rule that the same relative weight calculation described in this section would be used if an alternative to the median payer-specific negotiated charge was finalized to be collected on the Medicare cost report, as described in section IV.P.2.c. of the preamble of the proposed final rule.
We stated that the same relative weight calculation described in this section would be used if an alternative to the median payer-specific negotiated charge was finalized to be collected on the Medicare cost report, as described in section IV.P.2.c of the preamble of the proposed rule. We also invited public comment on this potential change to the relative weight methodology beginning in FY 2024 to use the median payer-specific negotiated charge for MA organizations, as well as the other potential alternative data collections as described in section IV.P.2.c of the preamble of this final rule, which we stated we may consider finalizing in the FY 2021 IPPS/LTCH PPS final rule. We also stated that if we were to finalize a change in the IPPS FY 2021 rulemaking to incorporate payer-specific negotiated charges within the MS–DRG relative weight methodology, effective for FY 2024, we were open to adjusting any finalized policy, through future rulemaking, prior to the FY 2024 effective date. We also stated that should we finalize our data collection proposal, we would conduct further analysis based on the data received and provide an opportunity for public comment on that analysis, prior to the finalized effective date of any MS–DRG relative weight methodology change.
Below is a description of the steps for a MS–DRG relative weight methodology change using the payer-specific negotiated charge data, as described in IV.P.2.c of the proposed rule.
In order to make the median MA organization payer-specific negotiated charges from the cost reports more comparable among hospitals, we stated that we would standardize the median payer-specific negotiated charges by removing the effects of differences in area wage levels, and cost-of living adjustments for hospital claims from Alaska and Hawaii, in the same manner as under the current MS–DRG relative weight calculation for those effects. We sought comment on the appropriate standardization for the median MA organization payer-specific negotiated charges, and any differences that should be taken into account in standardizing the median payer-specific negotiated charges for all third party payers.
For each MS–DRG, we stated we would create a single weighted average across hospitals of the standardized median payer-specific negotiated charges. We stated we would weight the standardized payer-specific negotiated charge for each MS–DRG for each hospital using that hospital's Medicare transfer-adjusted case count for that MS–DRG, with transfer adjusted case counts calculated exactly the same way as under the current MS–DRG relative weight methodology (84 FR 42621). We believed that using the Medicare transfer-adjusted case counts would be a reasonable approach to combining the data across hospitals because it would reflect relative volume and transfer activity (that is, larger hospitals responsible for more discharges would be weighted more heavily in the calculation, hospitals that transfer more often would be weighted less heavily), however, we noted in the proposed rule that we may also consider alternative approaches, such as using the unadjusted Medicare case counts, or other alternative approaches based on the review of public comments. We sought comment on the most appropriate weighting factor for purposes of calculating a single weighted average standardized median MA organization payer-specific negotiated charge across hospitals.
We stated that we would create a single national weighted average across MS–DRGs of the results of Step Two, where the weights were the national Medicare transfer adjusted case counts by MS–DRG. We noted that if we used an alternative weighting factor to the Medicare transfer adjusted case counts in Step Two, as described previously, we would use that same alternative weighting factor here in Step Three.
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For each MS–DRG, we stated that the market-based relative weight would be calculated as the ratio of the single weighted average standardized median MA organization payer-specific negotiated charge for that MS–DRG across hospitals from Step Two to the single national weighted average standardized median MA organization payer-specific negotiated charge across all MS–DRGs from Step Three.
We noted in the proposed rule that as under the current cost-based MS–DRG relative weight methodology, the market-based relative weights would be normalized by an adjustment factor so that the average case weight after recalibration would be equal to the average case weight before recalibration. We stated that as under the current cost-based relative weight estimation methodology, the normalization adjustment is intended to help ensure that recalibration by itself neither increases nor decreases total payments under the IPPS, as required by section 1886(d)(4)(C)(iii) of the Act.
We requested comments on this potential new market-based methodology for estimating the MS–DRG relative weights beginning in FY 2024, including comments on any suggested refinements to this potential methodology or alternative approaches,
In the FY 2021 IPPS/LTCH proposed rule we noted that some stakeholders requested that we take a measured approach to any changes to adopting any market-based payment method for establishing Medicare IPPS reimbursements. We stated that we were therefore also interested in comments, on whether, if we were to adopt some form of a market-based approach to the MS–DRG relative weight calculation, we should, for some period of time, continue to estimate and publicly provide the MS–DRG relative weights as calculated using our current cost-based estimation methodology. We also expressed an interest in comments on whether we should provide a transition to any new market-based MS–DRG methodology, and, if so, on the appropriate design of any such transition. We described in the FY 2021 IPPS/LTCH proposed rule that when we adopted the cost-based MS–DRG methodology for FY 2007 IPPS payments, we provided a 3-year transition from the charge-based MS–DRG relative weight calculation to the cost-based MS–DRG relative weight calculation (71 FR 47898). We recapped that for the first year of the 3-year transition of the relative weights, the relative weights were based on a blend of 33 percent of the cost-based weights and 67 percent of the charge weights. In the second year of the transition, the relative weights were based on a blend of 33 percent of the charge weights and 67 percent of the cost-based weights. In the third year of the transition, we noted that the relative weights were based on 100 percent of the cost-based weights. We requested comments, in the FY 2021 IPPS/LTCH proposed rule, on whether we should provide a similar type of transition from a cost-based weight methodology to a market-based weight methodology.
Lastly, we noted in the FY 2021 IPPS/LTCH proposed rule that in future rulemaking, we may consider ways to further reduce the role of hospital chargemasters in Medicare IPPS payments and further reflect market-based approaches in Medicare FFS payments. In particular, we requested comments on alternatives to the current use of hospital charges in determining other inpatient hospital payments, including outlier payments and new technology add-on payments, to the extent permitted by law.
As described further in the following sections, we are finalizing that hospitals would report on their Medicare cost report the median payer-specific negotiated charge that the hospital has negotiated with all of its Medicare Advantage (MA) organizations (also referred to as MA organizations) payers, by MS–DRG, for cost reporting periods ending on or after January 1, 2021. At this time, we are not finalizing the requirement that hospitals would report on their Medicare cost report the median payer-specific negotiated charge the hospital has negotiated with all of its third party payers by MS–DRG, as proposed. Additionally, we are finalizing the adoption of a market-based MS–DRG relative weight methodology for calculating the MS–DRG relative weights, beginning in FY 2024, as described in the proposed rule, and which we indicated we may consider finalizing in this FY 2021 final rule. The market-based MS–DRG relative weight methodology would utilize the median payer-specific negotiated charge data negotiated between hospitals and MA organizations.
We are finalizing the requirement that hospitals would report on their Medicare cost report the median payer-specific negotiated charge that the hospital has negotiated with all of its MA organization payers, and not finalizing the requirement with respect to all of its third-party payers, for two primary reasons. These reasons take into account commenters' feedback on the relationship between MA organization rates and Medicare FFS rates, which was also supported by our literature review, feedback on the potential challenges in comparing data across all third party payers based on the variety of ways hospitals and other third party payers negotiate charges, and concerns expressed regarding Medicare payment impacts. First, we agree that there may be potential challenges in comparing data across all third party payers based on the variety of ways hospitals and other third party payers negotiate charges. It may take additional time to adequately address these challenges. We believe based on the closer relationship between MA organization rates and Medicare FFS rates that these challenges are mitigated, and therefore the collection and use of the median payer-specific negotiated charge that the hospital has negotiated with all of its MA organization payers allows the incorporation of market-based pricing calculations within our Medicare payment calculations sooner. Second, we believe that based on the closer relationship between MA organization rates and Medicare FFS rates that using the MA organization data will provide a more moderate impact on the MS–DRG relative weights calculated under a market-based MS–DRG relative weight methodology.
We will make our analysis of this market-based data available for public review prior to the effective date of this policy in FY 2024. As described in the proposed rule, we remain open to adjusting this finalized policy, through future rulemaking, prior to the FY 2024 effective date. We are not finalizing, at this time, a transition period to this market-based MS–DRG relative weight methodology, but may consider this in future rulemaking prior to FY 2024. We expect that, for some period of time, as discussed in the proposed rule, we would continue to estimate and publicly provide the MS–DRG relative weights calculated using the cost-based estimation methodology for informational purposes after implementation of the new market-based methodology.
In this section, we summarize and respond to the public comments received. Commenters included individuals, consumer and patient advocacy organizations, hospitals and health systems, hospital and state hospital associations, medical associations, health benefits consultants, health information technology (IT) organizations, and academic institutions, among others. We note that some commenters raised concerns with the Hospital Price Transparency final rule requirements (84 FR 39571), which we consider out of scope as they discussed policies previously finalized under a separate notice and comment rulemaking.
A commenter speculated that over time, the MS–DRG system could become obsolete and fail to be reflective of new technologies and the relative hospital resources needed to provide state of the art, cost-effective care. Another commenter believed rates should reflect resource intensity, and that lower reimbursement without reference to resources would result in employment cuts and ultimately a reduction in access to care, including service line and hospital closures. A few commenters stated the adoption of a national market-based payment methodology would cripple the ability for sole community hospitals and rural hospitals to continue to provide care at the current levels the communities depend on and would result in closures of hospitals. Another commenter believed that the proposal may redistribute payments across services based on the relativity of payments for different patient populations, but that it would not increase competition. A commenter believed that the proposal would only change a single factor of determining an IPPS payment, the relative weight, but nothing else.
General economic principles indicate that a firm would not operate at a loss in the long-run, otherwise it would face a shutdown.
We disagree that this market-based data would not provide an appropriate basis for estimating the relative hospital resources used with respect to discharges classified within a single MS–DRG compared to discharges classified within other MS–DRGs. We believe that it is important that the MS–DRG relative weights reflect true market costs and resource utilization, as discussed in the FY 2021 IPPS/LTCH PPS proposed rule. This concept was supported by commenters that stated chargemaster (gross) rates rarely reflect true market costs. We believe that by reducing our reliance on the hospital chargemaster that we can adjust Medicare payment rates so that they further reflect other factors that may change the relative use of hospital resources, as permitted and required by section 1886(d)(4)(C)(i) of the Act. We disagree with the commenter that argued we already use market-based information within our current MS–DRG relative weight methodology, given other commenters' statements about how chargemaster (gross) rates rarely reflect true market costs.
We remain committed to engaging with commenters regarding the concerns they raised with the potential for payments to be redistributed based on different patient populations. We also intend to provide our analysis of the market-based data for public review, prior to the implementation of the new MS–DRG relative weight methodology in FY 2024.
We were persuaded by commenters' requests that we take a more measured approach when adopting a market-based MS–DRG relative weight methodology. As discussed previously, we believe there will be minimal impacts to the relative weights calculated under the new market based MS–DRG relative weight methodology (which would utilize the median payer-specific negotiated charge data negotiated between hospitals and their MA organization payers) beginning in FY 2024, given the relationship between the MA organization rates and Medicare FFS rates (as evidenced by feedback from commenters and the results of our literature review). We refer readers to the Appendix A of this rule for further description of the impact analysis.
Many commenters expressed concern about the comparability of charges negotiated for Medicare Advantage, Medicare FFS and third party payers, and questioned CMS's capability to account for different negotiation tactics. Commenters suggested that Medicare Advantage patients may be healthier and have lower risk than Medicare FFS patients, while generally the Medicare population may be older and have more comorbidities compared to the beneficiary population served by commercial payers. Commenters also discussed that some commercial payers may cover certain services that are not covered by Medicare, and that there may be certain types of payment structures that are singular to the Medicare program that do not translate to commercial insurance practices. A few commenters suggested that commercial rates may be negotiated using different tactics to account for different risk arrangements, such as: Episodes of care, separately negotiated outlier payments, stop loss provisions, quality payment, capitated payments, claw-back provisions or acquisition costs that would not easily be comparable, and that CMS should describe how the median payer-specific negotiated charge calculation will account for these arrangements. Without accounting for these arrangements, a few comments suggested that utilizing this market-based data for Medicare FFS payments could shift costs to the private sector.
A commenter suggested that hospitals are required to be paid Medicare FFS rates by MA organizations with which they do not contract, so the reported charges might not reflect negotiated charges. Several commenters expressed concern that those rates were affected by matters outside of the costs of care and may reflect market dynamics and broader issues associated with negotiating a large number of healthcare services.
We recognize, based on the literature review we conducted and feedback from commenters, that MA rates and Medicare FFS rates are often similar and/or are highly reliant on one another. However, MA rates to MA contracted inpatient hospitals are not required to be the same as (or based on) Medicare FFS rates; the Medicare statute only requires MA organizations to pay FFS rates to a health care provider for services furnished to an MA enrollee when the MA organization does not have a contract with the health care provider. We believe that if market based data (median payer-specific negotiated charges for MA organizations) are incorporated into the calculation of the MS–DRG relative weights, initially there may be limited impact on the relative weights given the highly reliant nature between MA organization and Medicare FFS rates, but that over time markets will adjust to this policy and further influence the Medicare FFS payments. We also appreciate the additional feedback from commenters regarding the characteristics of beneficiaries that choose an MA plan. Our review and analysis of the market-based data collected, as discussed previously, may allow us to explore those relationships further.
While commenters suggested CMS clarify the reporting instructions to hospitals and also describe how we planned to take into account several factors when standardizing the market-based data once it was collected, commenters did not provide examples or recommendations for how to specifically adjust or account for these factors. We note that, as described previously, the market-based MS–DRG relative weight methodology, as finalized in this final rule, would standardize the market based data collected under section IV.P.2.d. of this final rule for area wage levels and cost-of-living adjustments for hospital claims from Alaska and Hawaii, in the same manner as under the cost-based MS–DRG methodology (Step One of the market based MS–DRG relative weight methodology). We believe this action would adjust for geographic factors referenced by commenters. As noted in the proposed rule, under Step Two of the market based MS–DRG methodology, we would standardize the median payer-specific negotiated charge data by the hospital's Medicare transfer-adjusted case count for that MS–DRG, with transfer adjusted case counts calculated the same way as under the current cost-based MS–DRG relative weight methodology (84 FR 42621). We note that quality payment adjustments are not accounted for within the existing MS–DRG relative weight process. We remain open to adjusting any finalized policy, through future rulemaking, prior to the FY 2024 effective date.
Several commenters opposed the alternative of reporting of a median negotiated reimbursement amount across all MA organizations and across all third-party payers by MS–DRG. These commenters primarily expressed concern over the technical challenge and burden of calculating this data suggesting that matching negotiated rates to an MS–DRG is not straightforward and would require significant time and labor by hospitals because reimbursement methodologies vary significantly by payer. A commenter suggested that this would require more work as the calculation could not be derived from the files created under the requirements of the Hospital Price Transparency rule.
Commenters also asserted reporting of payer-specific negotiated charges violates the Takings Clause by forcing the disclosure of trade secret information (that is, confidential negotiated rates between hospitals and issuers). Additionally, commenters argued that requiring providers to report payer-specific negotiated rates crosses into infringement of antitrust laws and places hospitals in an untenable position of having to choose between violating their contractual obligations for confidentiality and violating the new rule. Commenters argued that compliance with this data collection requirement may put hospitals in legal jeopardy under contractual confidentiality provisions or under state trade secrets laws.
We also question whether our collection of data via the cost report raises a First Amendment issue. Federal agencies routinely require regulated entities to disclose data to the government. To the extent that our rule is deemed to implicate First Amendment concerns, it satisfies applicable requirements. Under the approach articulated in
As detailed in the proposed rule, we are specifically requiring that hospitals report the median, which is a summary measure. We proposed to collect the median of the hospital payer-specific negotiated charges by MS–DRG, because the median is a common measure of central tendency that is less influenced by outlier values; however, we note that in the event a hospital has listed an even number of payer-specific negotiated charges by discharges for that specific MS–DRG, the hospital, in its calculation of the median, would use the average of the two remaining payer-specific negotiated charges in order to calculate the median; this will further de-identify the payer-specific negotiated charge data required under this policy.
A few commenters noted that negotiations are based on multiple factors, of which cost is one factor, and that the current cost-based relative weight methodology adequately captures hospital relative resource use. A commenter argued that after reviewing the proposal with the statutory language contained in sections 1815(a) and 1833(e), they were concerned that CMS may be citing baseless authorities, and that CMS should also comply with section 1861(v)(1)(A) of the Act. The commenter stated that all other complexity added after this provision, whether it is the determination of cost-computing methods or the distillation of cost into specific metrics or units, does not negate the foundational requirement that hospitals must “incur” something in order to report it. The commenter urged CMS to explain the discrepancy between the proposed rule and the plain language of statutory authorities before finalizing. Commenters further argued that CMS did not adequately explain why market prices, rather than costs, are a better measure of hospital resources and, therefore, the proposed rule constitutes an arbitrary and capricious rulemaking, violating the Administrative Procedure Act.
CMS also has authority to assign and update MS–DRG weighting factors to reflect relative resource use. As previously discussed, section 1886(d)(4)(A) of the Act states that the Secretary shall establish a classification of inpatient hospital discharges by diagnosis-related groups and a methodology for classifying specific hospital discharges within these groups. Section 1886(d)(4)(B) of the Act states that for each such diagnosis-related group the Secretary shall assign an appropriate weighting factor which reflects the relative hospital resources used with respect to discharges classified within that group compared to discharges classified within other groups. Section 1886(d)(4)(C)(i) of the Act states that the Secretary shall adjust the weighting factors at least annually to reflect changes in treatment patterns, technology, and other factors which may change the relative use of hospital resources. As noted by commenters, relative resources are accounted for when hospitals establish the cost of services, and costs of services are considered when negotiating with payers. Because of this, we believe that relative resources are one of the factors considered when negotiating amounts between hospitals and payers, and therefore the payer-specific negotiated charge would reflect relative resources used. We believe that relative resources are accounted for when hospitals and payers negotiate payments and would be captured within payer-specific negotiated charge data reported on the Medicare cost report by MS–DRG, as previously described.
Commenters noted that hospitals may negotiate based on the market share, cost of services, risk of certain services,
We also believe that these data can be used in determining the relative resource use for an MS–DRG. The market-based MS–DRG relative weight methodology, which we are finalizing with a FY 2024 effective date, would create the relative weight by calculating the ratio of the single weighted average standardized median MA organization payer specific negotiated charge for
To the commenter's specific point that rather than the authority we cite, CMS should focus on section 1861(v)(1)(A) of the Act, we note that we did include a reference to the requirement that providers follow reasonable cost principles under Section 1861(v)(1)(A) of the Act when completing Medicare cost reports. We further note that Section 1861(v)(1)(A) of the Act requires reporting of data elements beyond just cost, including non-cost items and items used to determine the cost of services.
Commenters recommended that CMS should not proceed with this proposal, or at a minimum it should wait until the legality of the Hospital Price Transparency final rule is settled by the Courts.
Several commenters cautioned CMS to consider the downstream effects of potentially adopting a market-based MS–DRG relative weight methodology and requested that CMS adopt a more moderate approach, should CMS adopt this market-based methodology. Specifically, commenters were concerned about the incorporation of quality-based payments and recommended CMS engage stakeholders to determine how this policy aligns with the adoption of value-based contracting arrangements. Commenters noted that establishing a policy that ignores value-based arrangements stymies the progression to value-based arrangements. Another commenter argued that many value-based bundled payment models require reconciliation well after the time of the patient encounter. Other commenters noted that certain payment arrangements may result in the final negotiated amount differing from the “base” negotiated rate, such as in capitated arrangements. If CMS adopted a market-based MS–DRG relative weight methodology that utilized payer-specific negotiated charge data, commenters requested that CMS publish this information so commenters could replicate and review the calculation of the MS–DRG relative weights under this market-based methodology, as commenters argued is CMS's current practice under the cost-based MS–DRG relative weight methodology.
Some commenters recommended that CMS task a multi-stakeholder group of subject matter experts to gather the necessary data, conduct a thorough and transparent analysis of the reliability of the data, and evaluate a range of methodologies with the sole purpose of identifying mechanisms to make payments more value-based and reflective of the actual true relative hospital resources used to deliver care. Other commenters recommended that CMS, limit the scope of this data reporting requirement to a small representative sample of hospitals and use that data to evaluate the impact it would have more broadly, consider phasing-in this methodology over time, and establish guardrails that would limit the year-to-year change on MS–DRG relative weights to a certain percentage. A few commenters recommended that CMS delay implementation until the agency has adequately explained the basis for concluding that payer-specific negotiated charges by MS–DRG reflect resources used and stakeholders have had another opportunity to comment on the proposal. A few commenters
Additionally, we responded to many of these same comments in the Hospital Price Transparency final rule; we refer readers to the Hospital Price Transparency final rule (84 FR 65541) for the discussion regarding “standard charges”.
A commenter urged CMS to revise the proposed regulation so that it clearly limits these new reporting requirements to short term acute care hospitals paid under the IPPS. Another commenter strongly opposed any attempt to expand data collection to LTCHs. A commenter requested sole community hospitals be exempt from this regulation. While other commenters requested that CMS clarify whether non subsection (d) hospitals would be exempted from this data collection proposal.
We are finalizing, as proposed, that subsection (d) hospitals in the 50 states and DC, as defined at section 1886(d)(1)(B) of the Act, and subsection (d) Puerto Rico hospitals, as defined under section 1886(d)(9)(A) of the Act, would be required to report the median payer-specific negotiated charge information. We note that hospitals that are not categorized under the above sections of the Act, and hospitals that do not negotiate payments for services would be exempted from this data collection requirement. We refer readers to the proposed rule (85 FR 32795) for a full discussion of this policy. We further note that we are open to adjusting any finalized policy through future rulemaking. We therefore believe that there would be additional opportunities for the public to provide feedback on our finalized policies.
Additionally, the majority of Medicare certified hospitals have cost reporting periods that end between July and September of each year. Hospitals also have a 5-month period after their cost reporting periods end to submit the Medicare cost report. This means that the majority of hospitals will not submit their Medicare cost report until, at the earliest, November 2021. We will also conduct further analysis based on the market-based data received and provide an opportunity for public comment on that analysis, which may include consideration of any unknown impacts of the COVID–19 PHE on this data.
A few commenters provided a range of estimates for complying with the requirements of this final rule. A commenter estimated that initial compliance with the Hospital Price Transparency final rule would require a minimum of 120 hours of work, or a cost of approximately $10,000 for hospitals that have the internal technical expertise. This commenter further stated that hospitals without technical expertise would require a consultant, at the cost of $20,000 or more. This commenter argued that compliance with the policies CMS proposed would require significant effort beyond those initial requirements. Another commenter estimated it would cost around $50,000 and require a team of professionals from multiple departments to fulfill the reporting requirements. Another commenter stated the reporting requirements would entail a substantial investment of hospitals' time and resources and estimated a minimum of more than 6,000 hours per year of additional work to engage in this coding at a cost of at least $210,000. Another commenter recommended that CMS should work closely with hospitals and with the relevant financial software vendors to, at least, understand the enormity of these functions and develop a more reasonable determination of the time and cost required for a provider to comply.
A few commenters suggested that health plans, including MA plans, should instead report this data for utilization within the MS–DRG relative weight calculation and be responsible for providing consumers with pricing information. Finally, a commenter incorrectly stated that the proposal requires hospitals to post rates for outpatient surgical services, arguing that there would be a further need to post independent outpatient codes separately for items contracted individually on a FFS basis within the same grouped contracts.
We appreciate that different hospitals may face different constraints when estimating their burden and resources required. We also acknowledge that some hospitals may require more time and resources than others to gather the relevant data, prepare for its electronic reporting, and update that information.
In the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32887), we estimated a total annual burden to hospitals of 15 hours per hospital: 5 hours for recordkeeping, including hours for bookkeeping, accounting and auditing clerks; and 10 hours for reporting, including accounting and audit professionals' activities. We estimated an initial annual burden of 47,835 annual burden hours for 3,189 hospitals, at cost of $971.10 per hospital, or $3,096,838 across all hospitals. After consideration of the comments received, we agree that the burden estimate should be revised to reflect an increased number of hours. A few commenters provided estimates based on both their unique experiences, as well as experiences from a variety of health financial management experts and members. While commenters did not provide a range of estimated hours, the commenters that did provide dollar estimates noted the estimates fell within a range of a minimum of $20,000 per hospital to $210,000 per hospital.
We believe the estimates that commenters provided are not reasonable given the fact that hospitals are already required to publicly report the payer-specific negotiated charge information, which they will use to calculate these medians, in accordance with the Hospital Price Transparency final rule at the time that this data collection requirement goes into effect. We continue to believe that the additional calculation and reporting of the median payer-specific negotiated charge will be less burdensome for hospitals since hospitals are already required to have this information compiled and the burden associated with that compilation is already assumed.
We note that commenters did not provide a breakdown of the tasks and hours associated with the estimates that they provided. However, we are increasing the burden estimate after consideration of comments stating that additional effort would be necessary to crosswalk discharges to an MS–DRG, specifically if a hospital is not familiar with the MS–DRG classification system, for use in calculating the median payer-specific negotiated charges. As such, we have increased the initial estimate of 10 hours associated with reporting the median payer-specific negotiated charge to 15 hours, in order to account for this additional effort that commenters described.
Therefore, given the policies that we are finalizing in this final rule, we believe an estimate of 20 hours per hospital represents a broad industry view that takes into account the range of hospital readiness and ability to comply with these requirements. We are maintaining our estimate for the hours associated with recordkeeping at 5 and are increasing the estimate of hours associated with reporting from 10 to 15, which equals 20 hours of annual burden per hospital and 63,780 hours of estimated annual burden across all 3,189 hospitals. This equals a cost of $1,353.40 per hospital, or $4,315,993 across all hospitals.
New technology add-on payment methodologies are not addressed in this policy and hospital ambulatory settings within provider-based arrangements are not included within the definition of “items and services.”
In regards to additional guidance on these remaining issues raised by commenters on high cost implantable devices and information blocking, we do not fully understand the commenters' concerns in the context of our proposed or final policies. Nevertheless, we remain open to continued conversations with commenters, and adjusting any finalized policy, through future rulemaking, prior to the FY 2024 effective date and may provide additional reporting guidance as appropriate or as determined necessary. However, absent additional reporting guidance, we believe that hospitals have the capability to report this market based data to account for relative resource use by MS–DRG, for cost reporting periods ending on or after January 1, 2021.
For example, with respect to high cost implantable devices, if the commenter is requesting additional clarity on how negotiated charges for high-cost implantable devices should be accounted for within the median payer-specific negotiated charges by MS–DRG, as described earlier, since hospitals assign the underlying ICD–10–CM principal diagnosis, and any other secondary diagnosis codes and ICD–10–PCS procedure codes, which determine how patients are assigned to an MS–DRG, that hospitals are able to associate those items and services to MS–DRGs for each discharge. Additionally, hospitals that are not as familiar with MS–DRGs have access to the most current publically available version of the CMS Grouper used to group ICD–10 codes to MS–DRGs, and are able to use this software to uniformly group inpatient items and services to MS–DRGs, either initially by proactively using the same Grouper version used by CMS, or retrospectively after an inpatient hospital stay, but prior to submitting this information on the hospital cost report.
We are finalizing our proposed amendment to the regulations to specify this data collection requirement at 42 CFR 413.20(d)(3), with modification, to require the collection of only the median payer-specific negotiated charge by MS–DRG for payers that are MA organizations. This data collection requirement is effective for cost reporting periods ending on or after January 1, 2021. As stated in the
We are also finalizing the adoption of a market-based MS–DRG relative weight methodology effective for FY 2024. We are finalizing the market-based MS–DRG relative weight methodology, as described within the FY 2021 IPPS/LTCH PPS proposed rule, without modification. Specifically, we will begin using the median payer-specific negotiated charge by MS–DRG for MA organizations in the market-based MS–DRG relative weight methodology beginning with the relative weights calculated for FY 2024. We also remain open, as described in the proposed rule, to making modifications and refinements to this market-based methodology, through rulemaking prior to the FY 2024 effective date. We are not finalizing, at this time, a transition period to this market-based MS–DRG relative weight methodology, but may consider this in future rulemaking prior to FY 2024. We expect, for some period of time, following implementation of this market-based MS–DRG relative weight methodology, as discussed in the proposed rule, to continue to estimate and publicly provide the MS–DRG relative weights calculated using the cost-based estimation methodology for informational purposes.
We will continue to consider ways to reduce the role of hospital chargemasters in Medicare IPPS payments, as we described in the proposed rule, to further reflect market-based approaches in Medicare FFS payments, to the extent permitted by law.
Section 1886(g) of the Act requires the Secretary to pay for the capital-related costs of inpatient acute hospital services in accordance with a prospective payment system established by the Secretary. Under the statute, the Secretary has broad authority in establishing and implementing the IPPS for acute care hospital inpatient capital-related costs. We initially implemented the IPPS for capital-related costs in the FY 1992 IPPS final rule (56 FR 43358). In that final rule, we established a 10-year transition period to change the payment methodology for Medicare hospital inpatient capital-related costs from a reasonable cost-based payment methodology to a prospective payment methodology (based fully on the Federal rate).
FY 2001 was the last year of the 10-year transition period that was established to phase in the IPPS for hospital inpatient capital-related costs. For cost reporting periods beginning in FY 2002, capital IPPS payments are based solely on the Federal rate for almost all acute care hospitals (other than hospitals receiving certain exception payments and certain new hospitals). (We refer readers to the FY 2002 IPPS final rule (66 FR 39910 through 39914) for additional information on the methodology used to determine capital IPPS payments to hospitals both during and after the transition period.)
The basic methodology for determining capital prospective payments using the Federal rate is set forth in the regulations at 42 CFR 412.312. For the purpose of calculating capital payments for each discharge, the standard Federal rate is adjusted as follows:
(Standard Federal Rate) × (DRG Weight) × (Geographic Adjustment Factor (GAF)) × (COLA for hospitals located in Alaska and Hawaii) × (1 + Capital DSH Adjustment Factor + Capital IME Adjustment Factor, if applicable).
In addition, under § 412.312(c), hospitals also may receive outlier payments under the capital IPPS for extraordinarily high-cost cases that qualify under the thresholds established for each fiscal year.
The regulations at 42 CFR 412.348 provide for certain exception payments under the capital IPPS. The regular exception payments provided under § 412.348(b) through (e) were available only during the 10-year transition period. For a certain period after the transition period, eligible hospitals may have received additional payments under the special exceptions provisions at § 412.348(g). However, FY 2012 was the final year hospitals could receive special exceptions payments. For additional details regarding these exceptions policies, we refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51725).
Under § 412.348(f), a hospital may request an additional payment if the hospital incurs unanticipated capital expenditures in excess of $5 million due to extraordinary circumstances beyond the hospital's control. Additional information on the exception payment for extraordinary circumstances in § 412.348(f) can be found in the FY 2005 IPPS final rule (69 FR 49185 and 49186).
Under the capital IPPS, the regulations at 42 CFR 412.300(b) define a new hospital as a hospital that has operated (under previous or current ownership) for less than 2 years and lists examples of hospitals that are not considered new hospitals. In accordance with § 412.304(c)(2), under the capital IPPS, a new hospital is paid 85 percent of its allowable Medicare inpatient hospital capital-related costs through its first 2 years of operation, unless the new hospital elects to receive full prospective payment based on 100 percent of the Federal rate. We refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51725) for additional information on payments to new hospitals under the capital IPPS.
In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57061), we revised the regulations at 42 CFR 412.374 relating to the calculation of capital IPPS payments to hospitals located in Puerto Rico beginning in FY 2017 to parallel the change in the statutory calculation of operating IPPS payments to hospitals located in Puerto Rico, for discharges occurring on or after January 1, 2016, made by section 601 of the Consolidated Appropriations Act, 2016 (Pub. L. 114–113). Section 601 of Public Law 114–113 increased the applicable Federal percentage of the operating IPPS payment for hospitals located in Puerto Rico from 75 percent to 100 percent and decreased the applicable Puerto Rico percentage of the operating IPPS payments for hospitals located in Puerto Rico from 25 percent to zero percent, applicable to discharges occurring on or after January 1, 2016. As such, under revised § 412.374, for discharges occurring on or after October 1, 2016, capital IPPS payments to hospitals located in Puerto Rico are based on 100 percent of the capital Federal rate.
The annual update to the national capital Federal rate, as provided for in
In section II.D. of the preamble of this FY 2021 IPPS/LTCH PPS final rule, we present a discussion of the MS–DRG documentation and coding adjustment, including previously finalized policies and historical adjustments, as well as the adjustment to the standardized amount under section 1886(d) of the Act that we are making for FY 2021, in accordance with the amendments made to section 7(b)(1)(B) of Public Law 110–90 by section 414 of the MACRA. Because these provisions require us to make an adjustment only to the operating IPPS standardized amount, we are not making a similar adjustment to the national capital Federal rate (or to the hospital-specific rates).
We also note that in section II.D.2.b. of the preamble of this final rule, we are finalizing new MS–DRG 018 for cases that include procedures describing CAR T-cell therapies, and in section II.E.2.b. of this final rule, we are finalizing a modification to our relative weight methodology for new MS–DRG 018 in order to develop a relative weight that is reflective of the typical costs of providing CAR T-cell therapies relative to other IPPS services. In addition, in section IV.I. of the preamble of this final rule, we discuss our finalized adjustment to the payment amount for clinical trial cases or expanded access use immunotherapy that will group to new MS–DRG 018 for both operating IPPS payments and capital IPPS payments. We refer readers to section IV.I. of this preamble for additional details on the payment adjustment for these cases.
Certain hospitals excluded from a prospective payment system, including children's hospitals, 11 cancer hospitals, and hospitals located outside the 50 States, the District of Columbia, and Puerto Rico (that is, hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa) receive payment for inpatient hospital services they furnish on the basis of reasonable costs, subject to a rate-of-increase ceiling. A per discharge limit (the target amount, as defined in § 413.40(a) of the regulations) is set for each hospital based on the hospital's own cost experience in its base year, and updated annually by a rate-of-increase percentage. For each cost reporting period, the updated target amount is multiplied by total Medicare discharges during that period and applied as an aggregate upper limit (the ceiling as defined in § 413.40(a)) of Medicare reimbursement for total inpatient operating costs for a hospital's cost reporting period. In accordance with § 403.752(a) of the regulations, religious nonmedical health care institutions (RNHCIs) also are subject to the rate-of-increase limits established under § 413.40 of the regulations discussed previously. Furthermore, in accordance with § 412.526(c)(3) of the regulations, extended neoplastic disease care hospitals also are subject to the rate-of-increase limits established under § 413.40 of the regulations discussed previously.
As explained in the FY 2006 IPPS final rule (70 FR 47396 through 47398), beginning with FY 2006, we have used the percentage increase in the IPPS operating market basket to update the target amounts for children's hospitals, the 11 cancer hospitals, and RNHCIs. Consistent with the regulations at §§ 412.23(g) and 413.40(a)(2)(ii)(A) and (c)(3)(viii), we also have used the percentage increase in the IPPS operating market basket to update target amounts for short-term acute care hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa. In the FYs 2014 and 2015 IPPS/LTCH PPS final rules (78 FR 50747 through 50748 and 79 FR 50156 through 50157, respectively), we adopted a policy of using the percentage increase in the FY 2010-based IPPS operating market basket to update the target amounts for FY 2014 and subsequent fiscal years for children's hospitals, cancer hospitals, RNHCIs, and short-term acute care hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa. However, in the FY 2018 IPPS/LTCH PPS final rule, we rebased and revised the IPPS operating basket to a 2014 base year, effective for FY 2018 and subsequent years (82 FR 38158 through 38175), and finalized the use of the percentage increase in the 2014-based IPPS operating market basket to update the target amounts for children's hospitals, the 11 cancer hospitals, RNHCIs, and short-term acute care hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa for FY 2018 and subsequent years. Accordingly, for FY 2021, the rate-of-increase percentage to be applied to the target amount for these hospitals would be the FY 2021 percentage increase in the 2014-based IPPS operating market basket.
For the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32798), based on IGI's 2019 fourth quarter forecast, we estimated that the 2014-based IPPS operating market basket update for FY 2021 would be 3.0 percent (that is, the estimate of the market basket rate-of-increase). Based on this estimate, we stated that the FY 2021 rate-of-increase percentage that would be applied to the FY 2020 target amounts in order to calculate the FY 2021 target amounts for children's hospitals, the 11 cancer hospitals, RNCHIs, and short-term acute care hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa would be 3.0 percent, in accordance with the applicable regulations at 42 CFR 413.40. However, we proposed that if more recent data became available for the final rule, we would use such data, if appropriate, to calculate the final IPPS operating market basket update for FY 2021. For this FY 2021 IPPS/LTCH PPS final rule, based on IGI's 2020 second quarter forecast, the 2014-based IPPS operating market basket update for FY 2021 is 2.4 percent (that is, the estimate of the market basket rate-of-increase). Therefore, the FY 2021 rate-of-increase percentage that will be applied to the FY 2020 target amounts in order to calculate the FY 2021 target amounts for children's hospitals, the 11 cancer hospitals, RNCHIs, and short-term acute care hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa is 2.4 percent, in accordance with the applicable regulations at 42 CFR 413.40.
In addition, payment for inpatient operating costs for hospitals classified under section 1886(d)(1)(B)(vi) of the Act (which we refer to as “extended neoplastic disease care hospitals”) for cost reporting periods beginning on or after January 1, 2015, is to be made as described in 42 CFR 412.526(c)(3), and payment for capital costs for these hospitals is to be made as described in 42 CFR 412.526(c)(4). (For additional information on these payment regulations, we refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38321 through 38322).) Section 412.526(c)(3) provides that the hospital's Medicare allowable net inpatient operating costs for that period are paid on a reasonable cost basis, subject to that hospital's ceiling, as determined under § 412.526(c)(1), for that period. Under § 412.526(c)(1), for each cost reporting period, the ceiling was determined by multiplying the updated target amount, as defined in § 412.526(c)(2), for that period by the
For FY 2021, in accordance with §§ 412.22(i) and 412.526(c)(2)(ii) of the regulations, for cost reporting periods beginning during FY 2021, the update to the target amount for extended neoplastic disease care hospitals (that is, hospitals described under § 412.22(i)) is the applicable annual rate-of-increase percentage specified in § 413.40(c)(3) for FY 2021, which would be equal to the percentage increase in the hospital market basket index, which is estimated to be the percentage increase in the 2014-based IPPS operating market basket (that is, the estimate of the market basket rate-of-increase). Accordingly, the update to an extended neoplastic disease care hospital's target amount for FY 2021 is 2.4 percent, which is based on IGI's 2020 second quarter forecast. Furthermore, we proposed that if more recent data become available for the final rule, we would use such data, if appropriate, to calculate the IPPS operating market basket update for FY 2021.
We did not receive comments in response to the proposals, as previously discussed. Therefore, for the reasons set forth in this final rule and in the FY 2021 IPPS/LTCH PPS proposed rule, we are finalizing as proposed, without modification, our policy for updating the target amounts for excluded hospitals. As discussed previously, based on IGI's 2020 second quarter forecast, the FY 2021 rate-of-increase percentage that will be applied to the FY 2020 target amounts in order to calculate the FY 2021 target amounts for children's hospitals, the 11 cancer hospitals, RNCHIs, extended neoplastic disease care hospitals, and short-term acute care hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa is 2.4 percent.
Section 4419(b) of Public Law 105–33 requires the Secretary to publish annually in the
The process of requesting, adjusting, and awarding an adjustment payment is likely to occur over a 2-year period or longer. First, generally, an excluded hospital must file its cost report for the fiscal year in accordance with § 413.24(f)(2) of the regulations. The MAC reviews the cost report and issues a notice of provider reimbursement (NPR). Once the hospital receives the NPR, if its operating costs are in excess of the ceiling, the hospital may file a request for an adjustment payment. After the MAC receives the hospital's request in accordance with applicable regulations, the MAC or CMS, depending on the type of adjustment requested, reviews the request and determines if an adjustment payment is warranted. This determination is sometimes not made until more than 180 days after the date the request is filed because there are times when the request applications are incomplete and additional information must be requested in order to have a completed request application. However, in an attempt to provide interested parties with data on the most recent adjustment payments for which we have data, we are publishing data on adjustment payments that were processed by the MAC or CMS during FY 2019.
The table that follows includes the most recent data available from the MACs and CMS on adjustment payments that were adjudicated during FY 2019. As indicated previously, the adjustments made during FY 2019 only pertain to cost reporting periods ending in years prior to FY 2019. Total adjustment payments made to IPPS-excluded hospitals during FY 2019 are $44,068,703. The table depicts for each class of hospitals, in the aggregate, the number of adjustment requests adjudicated, the excess operating costs over the ceiling, and the amount of the adjustment payments.
Section 1820 of the Act provides for the establishment of Medicare Rural Hospital Flexibility Programs (MRHFPs), under which individual States may designate certain facilities as critical access hospitals (CAHs). Facilities that are so designated and meet the CAH conditions of participation under 42 CFR part 485, subpart F, will be certified as CAHs by CMS. Regulations governing payments to CAHs for services to Medicare beneficiaries are located in 42 CFR part 413.
As discussed in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42044 through 42701), section 123 of the Medicare Improvements for Patients and Providers Act of 2008 (Pub. L. 110–275), as amended by section 3126 of the Affordable Care Act, authorized a demonstration project to allow eligible entities to develop and test new models for the delivery of health care services in eligible counties in order to improve access to and better integrate the delivery of acute care, extended care and other health care services to Medicare beneficiaries. The demonstration was titled “Demonstration Project on Community Health Integration Models in Certain Rural Counties,” and commonly known as the Frontier Community Health Integration Project (FCHIP) demonstration.
The authorizing statute stated the eligibility criteria for entities to be able to participate in the demonstration. An eligible entity, as defined in section 123(d)(1)(B) of Public Law 110–275, as amended, is an MRHFP grantee under
The authorizing statute stipulated several other requirements for the demonstration. Section 123(d)(2)(B) of Public Law 110–275, as amended, limited participation in the demonstration to eligible entities in not more than 4 States. Section 123(f)(1) of Public Law 110–275 required the demonstration project to be conducted for a 3-year period. In addition, section 123(g)(1)(B) of Public Law 110–275 required that the demonstration be budget neutral. Specifically, this provision stated that, in conducting the demonstration project, the Secretary shall ensure that the aggregate payments made by the Secretary do not exceed the amount which the Secretary estimates would have been paid if the demonstration project under the section were not implemented. Furthermore, section 123(i) of Public Law 110–275 stated that the Secretary may waive such requirements of titles XVIII and XIX of the Act as may be necessary and appropriate for the purpose of carrying out the demonstration project, thus allowing the waiver of Medicare payment rules encompassed in the demonstration.
In January 2014, we released a request for applications (RFA) for the FCHIP demonstration. Using 2013 data from the U.S. Census Bureau, CMS identified Alaska, Montana, Nevada, North Dakota, and Wyoming as meeting the statutory eligibility requirement for participation in the demonstration. The RFA solicited CAHs in these five States to participate in the demonstration, stating that participation would be limited to CAHs in four of the States. To apply, CAHs were required to meet the eligibility requirements in the authorizing legislation, and to describe a proposal to enhance health-related services that would complement those currently provided by the CAH and better serve the community's needs. In addition, in the RFA, CMS interpreted the eligible entity definition in the statute as meaning a CAH that receives funding through the MHRFP. The RFA identified four interventions, under which specific waivers of Medicare payment rules would allow for enhanced payment for telehealth, skilled nursing facility/nursing facility beds, ambulance services, and home health services, respectively. These waivers were formulated with the goal of increasing access to care with no net increase in costs.
Ten CAHs were selected for participation in the demonstration, which started on August 1, 2016, and concluded on July 31, 2019. The selected CAHs were located in Montana, Nevada, and North Dakota, and participated in three of the four interventions identified in the FY 2017 IPPS/LTCH PPS final rule (81 FR 57064 through 57065), the FY 2018 IPPS/LTCH PPS final rule (82 FR 38294 through 38296), and the FY 2019 IPPS/LTCH PPS final rule (83 FR 41516 through 41517), and the FY 2020 IPPS/LTCH PPS final rule (84 FR 42044 through 42701). Eight CAHs participated in the telehealth intervention, three CAHs participated in the skilled nursing facility/nursing facility bed intervention, and two CAHs participated in the ambulance services intervention. Each CAH was allowed to participate in more than one of the interventions. None of the selected CAHs were participants in the home health intervention, which was the fourth intervention included in the RFA.
In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57064 through 57065), we finalized a policy to address the budget neutrality requirement for the demonstration. We also discussed this policy in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38294 through 38296), the FY 2019 IPPS/LTCH PPS final rule (83 FR 41516 through 41517), and the FY 2020 IPPS/LTCH PPS final rule (84 FR 42044 through 42701), but did not make any changes to the policy that was adopted in FY 2017. As explained in the FY 2017 IPPS/LTCH PPS final rule, we based our selection of CAHs for participation in the demonstration with the goal of maintaining the budget neutrality of the demonstration on its own terms (that is, the demonstration would produce savings from reduced transfers and admissions to other health care providers, thus offsetting any increase in Medicare payments as a result of the demonstration). However, because of the small size of the demonstration and uncertainty associated with the projected Medicare utilization and costs, the policy we adopted in the FY 2017 IPPS/LTCH PPS final rule provides a contingency plan to ensure that the budget neutrality requirement in section 123 of Public Law 110–275 is met. If analysis of claims data for Medicare beneficiaries receiving services at each of the participating CAHs, as well as from other data sources, including cost reports for these CAHs, shows that increases in Medicare payments under the demonstration during the 3-year period are not sufficiently offset by reductions elsewhere, we will recoup the additional expenditures attributable to the demonstration through a reduction in payments to all CAHs nationwide. Because of the small scale of the demonstration, we indicated that we did not believe it would be feasible to implement budget neutrality by reducing payments to only the participating CAHs. Therefore, in the event that this demonstration is found to result in aggregate payments in excess of the amount that would have been paid if this demonstration were not implemented, we will comply with the budget neutrality requirement by reducing payments to all CAHs, not just those participating in the demonstration. We stated that we believe it is appropriate to make any payment reductions across all CAHs because the FCHIP demonstration was specifically designed to test innovations that affect delivery of services by the CAH provider category. We explained our belief that the language of the statutory budget neutrality requirement at section 123(g)(1)(B) of Public Law 110–275 permits the agency to implement the budget neutrality provision in this manner. The statutory language merely refers to ensuring that aggregate payments made by the Secretary do not exceed the amount which the Secretary estimates would have been paid if the demonstration project was not implemented, and does not identify the range across which aggregate payments must be held equal.
Based on actuarial analysis using cost report settlements for FYs 2013 and 2014, the FCHIP demonstration is projected to satisfy the budget neutrality requirement and likely yield a total net savings. For this FY 2021 IPPS/LTCH PPS final rule, we estimate that the total impact of the payment recoupment (if needed) will be no greater than 0.03 percent of CAHs' total Medicare payments (that is, Medicare Part A and Part B) within 1 fiscal year. The final budget neutrality estimates for the FCHIP demonstration will be based on costs incurred during the entire demonstration period, which is August 1, 2016, through July 31, 2019.
As explained in the FY 2021 IPPS/LTCH PPS proposed rule, our goal was to maintain the budget neutrality of the demonstration on its own terms (that is, the demonstration would produce savings from reduced transfers and admissions to other health care providers, thus offsetting any increase in payments to the participating CAHs
We intend to incorporate two components into the budget neutrality analytical approach: (1) Medicare cost reports; and (2) Medicare administrative claims. As described in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32800), we propose to estimate the cost of the demonstration for each fiscal year of the demonstration period using Medicare cost reports for the participating hospitals, and Medicare administrative claims and enrollment data for beneficiaries who received demonstration intervention related services.
First, using Medicare administrative claims and enrollment data, a difference-in-difference (DID) regression analysis will be used to compute the impact of the demonstration interventions on Medicare expenditures, relative to what expenditures would have looked like without the demonstration. The DID regression analysis will compare the direct cost and potential downstream effects of intervention services, including any savings that may have accrued, during the baseline and performance period for both the demonstration and comparison groups.
Second, the Medicare administrative claims analysis will be reconciled using data obtained from auditing the participating CAHs' Medicare cost reports. We will estimate the costs of the demonstration using “as submitted” cost reports for each hospital's financial fiscal year participation within each demonstration performance year. While the majority of demonstration participants had cost reporting years that aligned with the demonstration period start date of July 1, 2016, several participating CAHs did not have cost reporting years that coincided with the demonstration start date. The cost report is structured to gather costs, revenues and statistical data on the provider's financial fiscal period. As a result, when a CAH's cost reporting year does not align with the timeframes used under the demonstration, additional calculations are necessary to carve-out data that relates to the portion of a cost reporting year when the demonstration was not in effect. We will determine the final budget neutrality results for the demonstration once complete data is available for the demonstration period. As we stated in the proposed rule, while this discussion represents our anticipated approach to assessing the financial impact of the demonstration based on the data available to date, upon receiving data for the full demonstration period, we may update and/or modify the FCHIP budget neutrality methodology and analytical approach to ensure that the full impact of the demonstration is appropriately captured.
Under the policy finalized in the FY 2017 IPPS/LTCH PPS final rule, in the event the demonstration is found not to have been budget neutral, any excess costs will be recouped over a period of 3 cost reporting years. The 3-year period for recoupment will allow for a reasonable timeframe for the payment reduction and minimize any impact on CAHs' operations. Under the policy adopted in FY 2017 IPPS/LTCH PPS final rule, in the event the demonstration is found not to have been budget neutral, any excess costs will be recouped beginning in CY 2020. In the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32810), we stated that based on the currently available data, the determination of budget neutrality results is preliminary and the amount of any reduction to CAH payments that will be needed in order to recoup excess costs under the demonstration remains uncertain. Therefore, we proposed to revise the policy originally adopted in the FY 2017 IPPS/LTCH PPS final rule, to delay the implementation of any budget neutrality adjustment and stated that we will revisit this policy in rulemaking for FY 2022, when we expect to have complete data for the demonstration period. Since our data analysis is incomplete, it is not possible to determine the impact of this policy for any national payment system for FY 2021.
Section 123 of the Medicare, Medicaid, and SCHIP (State Children's Health Insurance Program) Balanced Budget Refinement Act of 1999 (BBRA) (Pub. L. 106–113), as amended by section 307(b) of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106554), provides for payment for both the operating and capital-related costs of hospital inpatient stays in long-term care hospitals (LTCHs) under Medicare Part A based on prospectively set rates. The Medicare prospective payment system (PPS) for LTCHs applies to hospitals that are described in section 1886(d)(1)(B)(iv) of the Act, effective for cost reporting periods beginning on or after October 1, 2002.
Section 1886(d)(1)(B)(iv)(I) of the Act originally defined an LTCH as a hospital which has an average inpatient length of stay (as determined by the Secretary) of greater than 25 days. Section 1886(d)(1)(B)(iv)(II) of the Act (“subclause II” LTCHs) also provided an alternative definition of LTCHs. However, section 15008 of the 21st Century Cures Act (Pub. L. 114–255) amended section 1886 of the Act to exclude former “subclause II” LTCHs from being paid under the LTCH PPS and created a new category of IPPS-excluded hospitals, which we refer to as “extended neoplastic disease care hospitals,” to be paid as hospitals that were formally classified as “subclause (II)” LTCHs (82 FR 38298).
Section 123 of the BBRA requires the PPS for LTCHs to be a “per discharge” system with a diagnosis-related group (DRG) based patient classification system that reflects the differences in patient resources and costs in LTCHs.
Section 307(b)(1) of the BIPA, among other things, mandates that the Secretary shall examine, and may provide for, adjustments to payments under the LTCH PPS, including adjustments to DRG weights, area wage
In the August 30, 2002
The LTCH PPS replaced the reasonable cost-based payment system under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) (Pub. L. 97248) for payments for inpatient services provided by an LTCH with a cost reporting period beginning on or after October 1, 2002. (The regulations implementing the TEFRA reasonable-cost-based payment provisions are located at 42 CFR part 413.) With the implementation of the PPS for acute care hospitals authorized by the Social Security Amendments of 1983 (Pub. L. 9821), which added section 1886(d) to the Act, certain hospitals, including LTCHs, were excluded from the PPS for acute care hospitals and were paid their reasonable costs for inpatient services subject to a per discharge limitation or target amount under the TEFRA system. For each cost reporting period, a hospital specific ceiling on payments was determined by multiplying the hospital's updated target amount by the number of total current year Medicare discharges. (Generally, in this section of the preamble of this final rule, when we refer to discharges, we describe Medicare discharges.) The August 30, 2002 final rule further details the payment policy under the TEFRA system (67 FR 55954).
In the August 30, 2002 final rule, we provided for a 5-year transition period from payments under the TEFRA system to payments under the LTCH PPS. During this 5-year transition period, an LTCH's total payment under the PPS was based on an increasing percentage of the Federal rate with a corresponding decrease in the percentage of the LTCH PPS payment that is based on reasonable cost concepts, unless an LTCH made a one-time election to be paid based on 100 percent of the Federal rate. Beginning with LTCHs' cost reporting periods beginning on or after October 1, 2006, total LTCH PPS payments are based on 100 percent of the Federal rate.
In addition, in the August 30, 2002 final rule, we presented an in-depth discussion of the LTCH PPS, including the patient classification system, relative weights, payment rates, additional payments, and the budget neutrality requirements mandated by section 123 of the BBRA. The same final rule that established regulations for the LTCH PPS under 42 CFR part 412, subpart O, also contained LTCH provisions related to covered inpatient services, limitation on charges to beneficiaries, medical review requirements, furnishing of inpatient hospital services directly or under arrangement, and reporting and recordkeeping requirements. We refer readers to the August 30, 2002 final rule for a comprehensive discussion of the research and data that supported the establishment of the LTCH PPS (67 FR 55954).
In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49601 through 49623), we implemented the provisions of the Pathway for Sustainable Growth Rate (SGR) Reform Act of 2013 (Pub. L. 113–67), which mandated the application of the “site neutral” payment rate under the LTCH PPS for discharges that do not meet the statutory criteria for exclusion beginning in FY 2016. For cost reporting periods beginning on or after October 1, 2015, discharges that do not meet certain statutory criteria for exclusion are paid based on the site neutral payment rate. Discharges that do meet the statutory criteria continue to receive payment based on the LTCH PPS standard Federal payment rate. For more information on the statutory requirements of the Pathway for SGR Reform Act of 2013, we refer readers to the FY 2016 IPPS/LTCH PPS final rule (80 FR 49601 through 49623) and the FY 2017 IPPS/LTCH PPS final rule (81 FR 57068 through 57075).
In the FY 2018 IPPS/LTCH PPS final rule, we implemented several provisions of the 21st Century Cures Act (“the Cures Act”) (Pub. L. 114–255) that affected the LTCH PPS. (For more information on these provisions, we refer readers to 82 FR 38299.)
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41529), we made conforming changes to our regulations to implement the provisions of section 51005 of the Bipartisan Budget Act of 2018 (Pub. L. 115–123), which extends the transitional blended payment rate for site neutral payment rate cases for an additional 2 years. We refer readers to section VII.C. of the preamble of the FY 2019 IPPS/LTCH PPS final rule for a discussion of our final policy. In addition, in the FY 2019 IPPS/LTCH PPS final rule, we removed the 25-percent threshold policy under 42 CFR 412.538.
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42439), we further revised our regulations to implement the provisions of the Pathway for SGR Reform Act of 2013 (Pub. L. 113–67) that relate to the payment adjustment for discharges from LTCHs that do not maintain the requisite discharge payment percentage and the process by which such LTCHs may have the payment adjustment discontinued.
We received several public comments that addressed issues, including the Coronavirus disease 2019 (COVID–19) pandemic, that were outside the scope of the FY 2021 IPPS/LTCH PPS proposed rule. We will keep these comments in mind and may consider them for future rulemaking.
Under the regulations at § 412.23(e)(1), to qualify to be paid under the LTCH PPS, a hospital must have a provider agreement with Medicare. Furthermore, § 412.23(e)(2)(i), which implements section 1886(d)(1)(B)(iv) of the Act, requires that a hospital have an average Medicare inpatient length of stay of greater than 25 days to be paid under the LTCH PPS. In accordance with section 1206(a)(3) of the Pathway for SGR Reform Act of 2013 (Pub. L. 113–67), as amended by section 15007 of Public Law 114–255, we amended our regulations to specify that Medicare Advantage plans' and site neutral payment rate discharges are excluded from the calculation of the average length of stay for all LTCHs, for discharges occurring in cost reporting period beginning on or after October 1, 2015.
The following hospitals are paid under special payment provisions, as described in § 412.22(c) and, therefore, are not subject to the LTCH PPS rules:
• Veterans Administration hospitals.
• Hospitals that are reimbursed under State cost control systems approved under 42 CFR part 403.
• Hospitals that are reimbursed in accordance with demonstration projects authorized under section 402(a) of the
• Nonparticipating hospitals furnishing emergency services to Medicare beneficiaries.
In the August 30, 2002 final rule, we presented an in-depth discussion of beneficiary liability under the LTCH PPS (67 FR 55974 through 55975). This discussion was further clarified in the RY 2005 LTCH PPS final rule (69 FR 25676). In keeping with those discussions, if the Medicare payment to the LTCH is the full LTC–DRG payment amount, consistent with other established hospital prospective payment systems, § 412.507 currently provides that an LTCH may not bill a Medicare beneficiary for more than the deductible and coinsurance amounts as specified under §§ 409.82, 409.83, and 409.87, and for items and services specified under § 489.30(a). However, under the LTCH PPS, Medicare will only pay for services furnished during the days for which the beneficiary has coverage until the short-stay outlier (SSO) threshold is exceeded. If the Medicare payment was for a SSO case (in accordance with § 412.529), and that payment was less than the full LTC–DRG payment amount because the beneficiary had insufficient coverage as a result of the remaining Medicare days, the LTCH also is currently permitted to charge the beneficiary for services delivered on those uncovered days (in accordance with § 412.507). In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49623), we amended our regulations to expressly limit the charges that may be imposed upon beneficiaries whose LTCHs' discharges are paid at the site neutral payment rate under the LTCH PPS. In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57102), we amended the regulations under § 412.507 to clarify our existing policy that blended payments made to an LTCH during its transitional period (that is, an LTCH's payment for discharges occurring in cost reporting periods beginning in FYs 2016 through 2019) are considered to be site neutral payment rate payments.
Section 123 of the BBRA required that the Secretary implement a PPS for LTCHs to replace the cost-based payment system under TEFRA. Section 307(b)(1) of the BIPA modified the requirements of section 123 of the BBRA by requiring that the Secretary examine the feasibility and the impact of basing payment under the LTCH PPS on the use of existing (or refined) hospital DRGs that have been modified to account for different resource use of LTCH patients.
When the LTCH PPS was implemented for cost reporting periods beginning on or after October 1, 2002, we adopted the same DRG patient classification system utilized at that time under the IPPS. As a component of the LTCH PPS, we refer to this patient classification system as the “long-term care diagnosis-related groups (LTC–DRGs).” Although the patient classification system used under both the LTCH PPS and the IPPS are the same, the relative weights are different. The established relative weight methodology and data used under the LTCH PPS result in relative weights under the LTCH PPS that reflect the differences in patient resource use of LTCH patients, consistent with section 123(a)(1) of the BBRA (Pub. L. 106–113).
As part of our efforts to better recognize severity of illness among patients, in the FY 2008 IPPS final rule with comment period (72 FR 47130), the MS–DRGs and the Medicare severity long-term care diagnosis-related groups (MS–LTC–DRGs) were adopted under the IPPS and the LTCH PPS, respectively, effective beginning October 1, 2007 (FY 2008). For a full description of the development, implementation, and rationale for the use of the MS–DRGs and MS–LTC–DRGs, we refer readers to the FY 2008 IPPS final rule with comment period (72 FR 47141 through 47175 and 47277 through 47299). (We note that, in that same final rule, we revised the regulations at § 412.503 to specify that for LTCH discharges occurring on or after October 1, 2007, when applying the provisions of 42 CFR part 412, subpart O applicable to LTCHs for policy descriptions and payment calculations, all references to LTC–DRGs would be considered a reference to MS–LTC–DRGs. For the remainder of this section, we present the discussion in terms of the current MS–LTC–DRG patient classification system unless specifically referring to the previous LTC–DRG patient classification system that was in effect before October 1, 2007.)
The MS–DRGs adopted in FY 2008 represent an increase in the number of DRGs by 207 (that is, from 538 to 745) (72 FR 47171). The MS–DRG classifications are updated annually. There are currently 761 MS–DRG groupings. For FY 2021, there will be 767 MS–DRG groupings based on the changes, as discussed in section II.E. of the preamble of this final rule. Consistent with section 123 of the BBRA, as amended by section 307(b)(1) of the BIPA, and § 412.515 of the regulations, we use information derived from LTCH PPS patient records to classify LTCH discharges into distinct MS–LTC–DRGs based on clinical characteristics and estimated resource needs. Then we assign an appropriate weight to the MS–LTC–DRGs to account for the difference in resource use by patients exhibiting the case complexity and multiple medical problems characteristic of LTCHs.
In this section of this final rule, we provide a general summary of our existing methodology for determining the FY 2021 MS–LTC–DRG relative weights under the LTCH PPS.
As we proposed in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32803), in general, for FY 2021, we are continuing to use our existing methodology to determine the MS–LTC–DRG relative weights (as discussed in greater detail in section VII.B.3. of the preamble of this final rule). As we established when we implemented the dual rate LTCH PPS payment structure codified under § 412.522, which began in FY 2016, as we proposed, the annual recalibration of the MS–LTC–DRG relative weights are determined: (1) Using only data from available LTCH PPS claims that would have qualified for payment under the new LTCH PPS standard Federal payment rate if that rate had been in effect at the time of discharge when claims data from time periods before the dual rate LTCH PPS payment structure applies are used to calculate the relative weights; and (2) using only data from available LTCH PPS claims that qualify for payment under the new LTCH PPS standard Federal payment rate when claims data from time periods after the dual rate LTCH PPS payment structure applies are used to calculate the relative weights (80 FR 49624). That is, under our current methodology, our MS–LTC–DRG relative weight calculations do not use data from cases paid at the site neutral payment rate under § 412.522(c)(1) or data from cases that
Furthermore, for FY 2021, in using data from applicable LTCH cases to establish MS–LTC–DRG relative weights, as we proposed, we are continuing to establish low-volume MS–LTC–DRGs (that is, MS–LTC–DRGs with less than 25 cases) using our quintile methodology in determining the MS–LTC–DRG relative weights because LTCHs do not typically treat the full range of diagnoses as do acute care hospitals. Therefore, for purposes of determining the relative weights for the large number of low-volume MS–LTC–DRGs, we grouped all of the low-volume MS–LTC–DRGs into five quintiles based on average charges per discharge. Then, under our existing methodology, we accounted for adjustments made to LTCH PPS standard Federal payments for short-stay outlier (SSO) cases (that is, cases where the covered length of stay at the LTCH is less than or equal to five-sixths of the geometric average length of stay for the MS–LTC–DRG), and we made adjustments to account for nonmonotonically increasing weights, when necessary. The methodology is premised on more severe cases under the MS–LTC–DRG system requiring greater expenditure of medical care resources and higher average charges such that, in the severity levels within a base MS–LTC–DRG, the relative weights should increase monotonically with severity from the lowest to highest severity level. (We discuss each of these components of our MS–LTC–DRG relative weight methodology in greater detail in section VII.B.3.g. of the preamble of this final rule.)
The MS–DRGs (used under the IPPS) and the MS–LTC–DRGs (used under the LTCH PPS) are based on the CMS DRG structure. As noted previously in this section, we refer to the DRGs under the LTCH PPS as MS–LTC–DRGs although they are structurally identical to the MS–DRGs used under the IPPS.
The MS–DRGs are organized into 25 major diagnostic categories (MDCs), most of which are based on a particular organ system of the body; the remainder involve multiple organ systems (such as MDC 22, Burns). Within most MDCs, cases are then divided into surgical DRGs and medical DRGs. Surgical DRGs are assigned based on a surgical hierarchy that orders operating room (O.R.) procedures or groups of O.R. procedures by resource intensity. The GROUPER software program does not recognize all ICD–10–PCS procedure codes as procedures affecting DRG assignment. That is, procedures that are not surgical (for example, EKGs), or minor surgical procedures (for example, a biopsy of skin and subcutaneous tissue (procedure code 0JBH3ZX)) do not affect the MS–LTC–DRG assignment based on their presence on the claim.
Generally, under the LTCH PPS, a Medicare payment is made at a predetermined specific rate for each discharge that varies based on the MS–LTC–DRG to which a beneficiary's discharge is assigned. Cases are classified into MS–LTC–DRGs for payment based on the following six data elements:
• Principal diagnosis.
• Additional or secondary diagnoses.
• Surgical procedures.
• Age.
• Sex.
• Discharge status of the patient.
Currently, for claims submitted using version ASC X12 5010 format, up to 25 diagnosis codes and 25 procedure codes are considered for an MS–DRG assignment. This includes one principal diagnosis and up to 24 secondary diagnoses for severity of illness determinations. (For additional information on the processing of up to 25 diagnosis codes and 25 procedure codes on hospital inpatient claims, we refer readers to section II.G.11.c. of the preamble of the FY 2011 IPPS/LTCH PPS final rule (75 FR 50127).)
Under the HIPAA transactions and code sets regulations at 45 CFR parts 160 and 162, covered entities must comply with the adopted transaction standards and operating rules specified in subparts I through S of part 162. Among other requirements, on or after January 1, 2012, covered entities were required to use the ASC X12 Standards for Electronic Data Interchange Technical Report Type 3—Health Care Claim: Institutional (837), May 2006, ASC X12N/005010X223, and Type 1 Errata to Health Care Claim: Institutional (837) ASC X12 Standards for Electronic Data Interchange Technical Report Type 3, October 2007, ASC X12N/005010X233A1 for the health care claims or equivalent encounter information transaction (45 CFR 162.1102(c)).
HIPAA requires covered entities to use the applicable medical data code set requirements when conducting HIPAA transactions (45 CFR 162.1000). Currently, upon the discharge of the patient, the LTCH must assign appropriate diagnosis and procedure codes from the most current version of the International Classification of Diseases, 10th Revision, Clinical Modification (ICD–10–CM) for diagnosis coding and the International Classification of Diseases, 10th Revision, Procedure Coding System (ICD–10–PCS) for inpatient hospital procedure coding, both of which were required to be implemented October 1, 2015 (45 CFR 162.1002(c)(2) and (3)). For additional information on the implementation of the ICD–10 coding system, we refer readers to section II.F.1. of the preamble of the FY 2017 IPPS/LTCH PPS final rule (81 FR 56787 through 56790) and section II.E.1. of the preamble of this final rule. Additional coding instructions and examples are published in the AHA's
To create the MS–DRGs (and by extension, the MS–LTC–DRGs), base DRGs were subdivided according to the presence of specific secondary diagnoses designated as complications or comorbidities (CCs) into one, two, or three levels of severity, depending on the impact of the CCs on resources used for those cases. Specifically, there are sets of MS–DRGs that are split into 2 or 3 subgroups based on the presence or absence of a CC or a major complication or comorbidity (MCC). We refer readers to section II.D. of the preamble of the FY 2008 IPPS final rule with comment period for a detailed discussion about the creation of MS–DRGs based on severity of illness levels (72 FR 47141 through 47175).
MACs enter the clinical and demographic information submitted by LTCHs into their claims processing systems and subject this information to a series of automated screening processes called the Medicare Code Editor (MCE). These screens are designed to identify cases that require further review before assignment into a MS–LTC–DRG can be made. During this process, certain cases are selected for further explanation (74 FR 43949).
After screening through the MCE, each claim is classified into the appropriate MS–LTC–DRG by the Medicare LTCH GROUPER software on the basis of diagnosis and procedure codes and other demographic information (age, sex, and discharge status). The GROUPER software used under the LTCH PPS is the same GROUPER software program used under the IPPS. Following the MS–LTC–DRG assignment, the MAC determines the prospective payment amount by using the Medicare PRICER program, which accounts for hospital-specific adjustments. Under the LTCH PPS, we provide an opportunity for LTCHs to review the MS–LTC–DRG assignments made by the MAC and to submit additional information within a specified timeframe as provided in § 412.513(c).
The GROUPER software is used both to classify past cases to measure relative hospital resource consumption to establish the MS–LTC–DRG relative weights and to classify current cases for purposes of determining payment. The records for all Medicare hospital inpatient discharges are maintained in the MedPAR file. The data in this file are used to evaluate possible MS–DRG and MS–LTC–DRG classification changes and to recalibrate the MS–DRG and MS–LTC–DRG relative weights during our annual update under both the IPPS (§ 412.60(e)) and the LTCH PPS (§ 412.517), respectively.
As specified by our regulations at § 412.517(a), which require that the MS–LTC–DRG classifications and relative weights be updated annually, and consistent with our historical practice of using the same patient classification system under the LTCH PPS as is used under the IPPS, in this final rule, as we proposed, we updated the MS–LTC–DRG classifications effective October 1, 2020 through September 30, 2021 (FY 2021), consistent with the changes to specific MS–DRG classifications presented in section II.F. of the preamble of this final rule. Accordingly, the MS–LTC–DRGs for FY 2021 presented in section II.F. of the preamble of this final rule are the same as the MS–DRGs that are being used under the IPPS for FY 2021. In addition, because the MS–LTC–DRGs for FY 2021 are the same as the MS–DRGs for FY 2021, the other changes that affect MS–DRG (and by extension MS–LTC–DRG) assignments under GROUPER Version 38 as discussed in section II.E. of the preamble of this final rule, including the changes to the MCE software and the ICD–10–CM/PCS coding system, also are applicable under the LTCH PPS for FY 2021.
One of the primary goals for the implementation of the LTCH PPS is to pay each LTCH an appropriate amount for the efficient delivery of medical care to Medicare patients. The system must be able to account adequately for each LTCH's case-mix in order to ensure both fair distribution of Medicare payments and access to adequate care for those Medicare patients whose care is costlier (67 FR 55984). To accomplish these goals, we have annually adjusted the LTCH PPS standard Federal prospective payment rate by the applicable relative weight in determining payment to LTCHs for each case. In order to make these annual adjustments under the dual rate LTCH PPS payment structure, beginning with FY 2016, we recalibrate the MS–LTC–DRG relative weighting factors annually using data from applicable LTCH cases (80 FR 49614 through 49617). Under this policy, the resulting MS–LTC–DRG relative weights would continue to be used to adjust the LTCH PPS standard Federal payment rate when calculating the payment for LTCH PPS standard Federal payment rate cases.
The established methodology to develop the MS–LTC–DRG relative weights is generally consistent with the methodology established when the LTCH PPS was implemented in the August 30, 2002 LTCH PPS final rule (67 FR 55989 through 55991). However, there have been some modifications of our historical procedures for assigning relative weights in cases of zero volume and/or nonmonotonicity resulting from the adoption of the MS–LTC–DRGs, along with the change made in conjunction with the implementation of the dual rate LTCH PPS payment structure beginning in FY 2016 to use LTCH claims data from only LTCH PPS standard Federal payment rate cases (or LTCH PPS cases that would have qualified for payment under the LTCH PPS standard Federal payment rate if the dual rate LTCH PPS payment structure had been in effect at the time of the discharge). (For details on the modifications to our historical procedures for assigning relative weights in cases of zero volume and/or nonmonotonicity, we refer readers to the FY 2008 IPPS final rule with comment period (72 FR 47289 through 47295) and the FY 2009 IPPS final rule (73 FR 48542 through 48550).) For details on the change in our historical methodology to use LTCH claims data only from LTCH PPS standard Federal payment rate cases (or cases that would have qualified for such payment had the LTCH PPS dual payment rate structure been in effect at the time) to determine the MS–LTC–DRG relative weights, we refer readers to the FY 2016 IPPS/LTCH PPS final rule (80 FR 49614 through 49617). Under the LTCH PPS, relative weights for each MS–LTC–DRG are a primary element used to account for the variations in cost per discharge and resource utilization among the payment groups (§ 412.515). To ensure that Medicare patients classified to each MS–LTC–DRG have access to an appropriate level of services and to encourage efficiency, we calculate a relative weight for each MS–LTC–DRG that represents the resources needed by an average inpatient LTCH case in that MS–LTC–DRG. For example, cases in an MS–LTC–DRG with a relative weight of 2 would, on average, cost twice as much to treat as cases in an MS–LTC–DRG with a relative weight of 1.
In this final rule, as we proposed in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32805), we are continuing to use our current methodology to determine the MS–LTC–DRG relative weights for FY 2021, including the continued application of established policies related to: The hospital-specific relative value methodology, the treatment of severity levels in the MS–LTC–DRGs, low-volume and no-volume MS–LTC–DRGs, adjustments for nonmonotonicity, the steps for calculating the MS–LTC–DRG relative weights with a budget neutrality factor, and only using data from applicable LTCH cases (which includes our policy of only using cases that would meet the criteria for exclusion from the site neutral payment rate (or, for discharges occurring prior to the implementation of the dual rate LTCH PPS payment structure, would have met the criteria for exclusion had those criteria been in effect at the time of the discharge)).
In this section, we present our application of our existing methodology for determining the MS–LTC–DRG relative weights for FY 2021, and we discuss the effects of our policies concerning the data used to determine the FY 2021 MS–LTC–DRG relative weights on the various components of our existing methodology in the discussion that follows.
We generally provide the low-volume quintiles and no-volume crosswalk data
For the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32805), consistent with our proposals regarding the calculation of the proposed MS–LTC–DRG relative weights for FY 2021, we obtained total charges from FY 2019 Medicare LTCH claims data from the December 2019 update of the FY 2019 MedPAR file, which was the best available data at that time, and we proposed to use Version 38 of the GROUPER to classify LTCH cases. Consistent with our historical practice, we proposed that if more recent data become available, we would use those data and the finalized Version 38 of the GROUPER in establishing the FY 2021 MS–LTC–DRG relative weights in the final rule. Accordingly, for this final rule, we are establishing the FY 2021 MS–LTC–DRG relative weights based on updated FY 2019 Medicare LTCH claims data from the March 2020 update of the FY 2019 MedPAR file, which is the best available data at the time of development of this final rule, and used the finalized Version 38 of the GROUPER to classify LTCH cases.
To calculate the FY 2021 MS–LTC–DRG relative weights under the dual rate LTCH PPS payment structure, as we proposed, we continued to use applicable LTCH data, which includes our policy of only using cases that meet the criteria for exclusion from the site neutral payment rate (or would have met the criteria had they been in effect at the time of the discharge) (80 FR 49624). Specifically, we began by first evaluating the LTCH claims data in the March 2020 update of the FY 2019 MedPAR file to determine which LTCH cases would meet the criteria for exclusion from the site neutral payment rate under § 412.522(b) or had the dual rate LTCH PPS payment structure applied to those cases at the time of discharge. We identified the FY 2019 LTCH cases that were not assigned to MS–LTC–DRGs 876, 880, 881, 882, 883, 884, 885, 886, 887, 894, 895, 896, 897, 945, and 946, which identify LTCH cases that do not have a principal diagnosis relating to a psychiatric diagnosis or to rehabilitation; and that either—
• The admission to the LTCH was “immediately preceded” by discharge from a subsection (d) hospital and the immediately preceding stay in that subsection (d) hospital included at least 3 days in an ICU, as we define under the ICU criterion; or
• The admission to the LTCH was “immediately preceded” by discharge from a subsection (d) hospital and the claim for the LTCH discharge includes the applicable procedure code that indicates at least 96 hours of ventilator services were provided during the LTCH stay, as we define under the ventilator criterion. Claims data from the FY 2019 MedPAR file that reported ICD–10–PCS procedure code 5A1955Z were used to identify cases involving at least 96 hours of ventilator services in accordance with the ventilator criterion. (We note that, for purposes of developing the MS–LTC–DRG relative weights we have previously addressed the treatment of cases that would have been excluded from the site neutral payment rate under the statutory provisions that provided for temporary exception from the site neutral payment rate under the LTCH PPS for certain spinal cord specialty hospitals or for certain severe wound care discharges from certain LTCHs provided by sections 15009 and 15010 of Public Law 114–255, respectively. The temporary exception from the site neutral payment rate for certain spinal cord specialty hospitals is effective for discharges in cost reporting periods beginning during FYs 2018 and 2019, and the temporary exception from the site neutral payment rate for certain severe wound care discharges from certain LTCHs was effective for a discharge in cost reporting period beginning during FY 2018. These statutory provisions will no longer be in effect for any discharges occurring in FY 2021 (that is, an LTCH with a cost reporting period that begins on the last day of FY 2019, on September 30, 2019, would end on September 29, 2020, the day prior to the start of FY 2021 on October 1, 2020). Therefore, we no longer need to address the treatment of these cases for purposes of developing the MS–LTC–DRG relative weights for FY 2021 and subsequent years.
Furthermore, consistent with our historical methodology, we excluded any claims in the resulting data set that were submitted by LTCHs that were all-inclusive rate providers and LTCHs that are paid in accordance with demonstration projects authorized under section 402(a) of Public Law 90–248 or section 222(a) of Public Law 92–603. In addition, consistent with our historical practice and our policies, we excluded any Medicare Advantage (Part C) claims in the resulting data. Such claims were identified based on the presence of a GHO Paid indicator value of “1” in the MedPAR files. The claims that remained after these three trims (that is, the applicable LTCH data) were then used to calculate the MS–LTC–DRG relative weights for FY 2021.
In summary, in general, we identified the claims data used in the development of the FY 2021 MS–LTC–DRG relative weights in this final rule, as we proposed, by trimming claims data that were paid the site neutral payment rate or would have been paid the site neutral payment rate had the dual payment rate structure been in effect. Finally, as we proposed, we trimmed the claims data of all-inclusive rate providers reported in the March 2020 update of the FY 2019 MedPAR file and any Medicare Advantage claims data. There were no data from any LTCHs that are paid in accordance with a demonstration project reported in the March 2020 update of the FY 2019 MedPAR file, but, had there been any, we would have trimmed the claims data from those LTCHs as well, in accordance with our established policy. As we proposed, we used the remaining data (that is, the applicable LTCH data) to calculate the relative weights for FY 2021.
By nature, LTCHs often specialize in certain areas, such as ventilator-dependent patients. Some case types (MS–LTC–DRGs) may be treated, to a large extent, in hospitals that have, from a perspective of charges, relatively high (or low) charges. This nonrandom distribution of cases with relatively high (or low) charges in specific MS–LTC–DRGs has the potential to inappropriately distort the measure of average charges. To account for the fact that cases may not be randomly distributed across LTCHs, consistent with the methodology we have used since the implementation of the LTCH
Under the HSRV methodology, we standardize charges for each LTCH by converting its charges for each applicable LTCH case to hospital-specific relative charge values and then adjusting those values for the LTCH's case-mix. The adjustment for case-mix is needed to rescale the hospital-specific relative charge values (which, by definition, average 1.0 for each LTCH). The average relative weight for an LTCH is its case-mix; therefore, it is reasonable to scale each LTCH's average relative charge value by its case-mix. In this way, each LTCH's relative charge value is adjusted by its case-mix to an average that reflects the complexity of the applicable LTCH cases it treats relative to the complexity of the applicable LTCH cases treated by all other LTCHs (the average LTCH PPS case-mix of all applicable LTCH cases across all LTCHs).
In accordance with our established methodology, for FY 2021, as we proposed, we continued to standardize charges for each applicable LTCH case by first dividing the adjusted charge for the case (adjusted for SSOs under § 412.529 as described in section VII.B.3.g. of the preamble of this final rule (Step 3) of the preamble of this final rule) by the average adjusted charge for all applicable LTCH cases at the LTCH in which the case was treated. SSO cases are cases with a length of stay that is less than or equal to five-sixths the average length of stay of the MS–LTC–DRG (§§ 412.529 and 412.503). The average adjusted charge reflects the average intensity of the health care services delivered by a particular LTCH and the average cost level of that LTCH. The resulting ratio was multiplied by that LTCH's case-mix index to determine the standardized charge for the case.
Multiplying the resulting ratio by the LTCH's case-mix index accounts for the fact that the same relative charges are given greater weight at an LTCH with higher average costs than they would at an LTCH with low average costs, which is needed to adjust each LTCH's relative charge value to reflect its case-mix relative to the average case-mix for all LTCHs. By standardizing charges in this manner, we count charges for a Medicare patient at an LTCH with high average charges as less resource intensive than they would be at an LTCH with low average charges. For example, a $10,000 charge for a case at an LTCH with an average adjusted charge of $17,500 reflects a higher level of relative resource use than a $10,000 charge for a case at an LTCH with the same case-mix, but an average adjusted charge of $35,000. We believe that the adjusted charge of an individual case more accurately reflects actual resource use for an individual LTCH because the variation in charges due to systematic differences in the markup of charges among LTCHs is taken into account.
For purposes of determining the MS–LTC–DRG relative weights, under our historical methodology, there are three different categories of MS–DRGs based on volume of cases within specific MS–LTC–DRGs: (1) MS–LTC–DRGs with at least 25 applicable LTCH cases in the data used to calculate the relative weight, which are each assigned a unique relative weight; (2) low-volume MS–LTC–DRGs (that is, MS–LTC–DRGs that contain between 1 and 24 applicable LTCH cases that are grouped into quintiles (as described later in this section of this final rule) and assigned the relative weight of the quintile); and (3) no-volume MS–LTC–DRGs that are cross-walked to other MS–LTC–DRGs based on the clinical similarities and assigned the relative weight of the cross-walked MS–LTC–DRG (as described in greater detail in this final rule). For FY 2021, as we proposed in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32806), we are continuing to use applicable LTCH cases to establish the same volume-based categories to calculate the FY 2021 MS–LTC–DRG relative weights.
In determining the FY 2021 MS–LTC–DRG relative weights, when necessary, as is our longstanding practice, as we proposed, we made adjustments to account for nonmonotonicity, as discussed in greater detail later in Step 6 of section VII.B.3.g. of the preamble of this final rule. We refer readers to the discussion in the FY 2010 IPPS/RY 2010 LTCH PPS final rule for our rationale for including an adjustment for nonmonotonicity (74 FR 43953 through 43954).
In order to account for MS–LTC–DRGs with low-volume (that is, with fewer than 25 applicable LTCH cases), consistent with our existing methodology, as we proposed in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32807), we are continuing to employ the quintile methodology for low-volume MS–LTC–DRGs, such that we grouped the “low-volume MS–LTC–DRGs” (that is, MS–LTC–DRGs that contain between 1 and 24 applicable LTCH cases into one of five categories (quintiles) based on average charges (67 FR 55984 through 55995; 72 FR 47283 through 47288; and 81 FR 25148).) In cases where the initial assignment of a low-volume MS–LTC–DRG to a quintile results in nonmonotonicity within a base-DRG, as we proposed, we made adjustments to the resulting low-volume MS–LTC–DRGs to preserve monotonicity, as discussed in detail in section VII.B.3.g. (Step 6) of the preamble of this final rule.
In this final rule, based on the best available data (that is, the March 2020 update of the FY 2019 MedPAR files), we identified 251 MS–LTC–DRGs that contained between 1 and 24 applicable LTCH cases. This list of MS–LTC–DRGs was then divided into 1 of the 5 low-volume quintiles, each containing at least 50 MS–LTC–DRGs (251/5 = 50 with a remainder of 1). We assigned the low-volume MS–LTC–DRGs to specific low-volume quintiles by sorting the low-volume MS–LTC–DRGs in ascending order by average charge in accordance with our established methodology. Based on the data available for this final rule, the number of MS–LTC–DRGs with less than 25 applicable LTCH cases was not evenly divisible by 5 and, therefore, as we proposed, we employed our historical methodology for determining which of the low-volume quintiles would contain the additional low-volume MS–LTC–DRG. Specifically for this final rule, because the average charge of the 151st low-volume MS–LTC–DRG in the sorted list was closer to the average charge of the 152nd low-volume MS–LTC–DRG (assigned to Quintile 4) than to the average charge of the 150th low-volume MS–LTC–DRG (assigned to Quintile 3), we assigned it to Quintile 4 (such that Quintile 4 contains 51 low-volume MS–LTC–DRGs before any adjustments for nonmonotonicity, as discussed in this final rule). This resulted in 4 of the 5 low-volume quintiles containing 50 MS–LTC–DRGs (Quintiles 1, 2, 3, and 5) and 1 low-volume quintiles containing
In order to determine the FY 2021 relative weights for the low-volume MS–LTC–DRGs, consistent with our historical practice, as we proposed, we used the five low-volume quintiles described previously. We determined a relative weight and (geometric) average length of stay for each of the five low-volume quintiles using the methodology described in section VII.B.3.g. of the preamble of this final rule. We assigned the same relative weight and average length of stay to each of the low-volume MS–LTC–DRGs that make up an individual low-volume quintile. We note that, as this system is dynamic, it is possible that the number and specific type of MS–LTC–DRGs with a low-volume of applicable LTCH cases will vary in the future. Furthermore, we note that we continue to monitor the volume (that is, the number of applicable LTCH cases) in the low-volume quintiles to ensure that our quintile assignments used in determining the MS–LTC–DRG relative weights result in appropriate payment for LTCH cases grouped to low-volume MS–LTC–DRGs and do not result in an unintended financial incentive for LTCHs to inappropriately admit these types of cases.
In this final rule, as we proposed in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32807), we are continuing to use our current methodology to determine the FY 2021 MS–LTC–DRG relative weights.
In summary, to determine the FY 2021 MS–LTC–DRG relative weights, as we proposed, we grouped applicable LTCH cases to the appropriate MS–LTC–DRG, while taking into account the low-volume quintiles (as described previously) and cross-walked no-volume MS–LTC–DRGs (as described later in this section). After establishing the appropriate MS–LTC–DRG (or low-volume quintile), as we proposed, we calculated the FY 2021 relative weights by first removing cases with a length of stay of 7 days or less and statistical outliers (Steps 1 and 2). Next, as we proposed, we adjusted the number of applicable LTCH cases in each MS–LTC–DRG (or low-volume quintile) for the effect of SSO cases (Step 3). After removing applicable LTCH cases with a length of stay of 7 days or less (Step 1) and statistical outliers (Step 2), which are the SSO-adjusted applicable LTCH cases and corresponding charges (Step 3), as we proposed, we calculated “relative adjusted weights” for each MS–LTC–DRG (or low-volume quintile) using the HSRV method.
The first step in our calculation of the FY 2021 MS–LTC–DRG relative weights is to remove cases with a length of stay of 7 days or less. The MS–LTC–DRG relative weights reflect the average of resources used on representative cases of a specific type. Generally, cases with a length of stay of 7 days or less do not belong in an LTCH because these stays do not fully receive or benefit from treatment that is typical in an LTCH stay, and full resources are often not used in the earlier stages of admission to an LTCH. If we were to include stays of 7 days or less in the computation of the FY 2021 MS–LTC–DRG relative weights, the value of many relative weights would decrease and, therefore, payments would decrease to a level that may no longer be appropriate. We do not believe that it would be appropriate to compromise the integrity of the payment determination for those LTCH cases that actually benefit from and receive a full course of treatment at an LTCH by including data from these very short stays. Therefore, consistent with our existing relative weight methodology, in determining the FY 2021 MS–LTC–DRG relative weights, as we proposed, we removed LTCH cases with a length of stay of 7 days or less from applicable LTCH cases. (For additional information on what is removed in this step of the relative weight methodology, we refer readers to 67 FR 55989 and 74 FR 43959.)
The next step in our calculation of the FY 2021 MS–LTC–DRG relative weights is to remove statistical outlier cases from the LTCH cases with a length of stay of at least 8 days. Consistent with our existing relative weight methodology, as we proposed, we continued to define statistical outliers as cases that are outside of 3.0 standard deviations from the mean of the log distribution of both charges per case and the charges per day for each MS–LTC–DRG. These statistical outliers are removed prior to calculating the relative weights because we believe that they may represent aberrations in the data that distort the measure of average resource use. Including those LTCH cases in the calculation of the relative weights could result in an inaccurate relative weight that does not truly reflect relative resource use among those MS–LTC–DRGs. (For additional information on what is removed in this step of the relative weight methodology, we refer readers to 67 FR 55989 and 74 FR 43959.) After removing cases with a length of stay of 7 days or less and statistical outliers, we were left with applicable LTCH cases that have a length of stay greater than or equal to 8 days. In this final rule, we refer to these cases as “trimmed applicable LTCH cases.”
As the next step in the calculation of the FY 2021 MS–LTC–DRG relative weights, consistent with our historical approach, as we proposed, we adjusted each LTCH's charges per discharge for those remaining cases (that is, trimmed applicable LTCH cases) for the effects of SSOs (as defined in § 412.529(a) in conjunction with § 412.503). Specifically, as we proposed, we made this adjustment by counting an SSO case as a fraction of a discharge based on the ratio of the length of stay of the case to the average length of stay for the MS–LTC–DRG for non-SSO cases. This has the effect of proportionately reducing the impact of the lower charges for the SSO cases in calculating the average charge for the MS–LTC–DRG. This process produces the same result as if the actual charges per discharge of an SSO case were adjusted to what they would have been had the patient's length of stay been equal to the average length of stay of the MS–LTC–DRG.
Counting SSO cases as full LTCH cases with no adjustment in determining the FY 2021 MS–LTC–DRG relative weights would lower the FY 2021 MS–LTC–DRG relative weight for affected MS–LTC–DRGs because the relatively lower charges of the SSO cases would bring down the average charge for all cases within a MS–LTC–DRG. This would result in an “underpayment” for non-SSO cases and an “overpayment” for SSO cases. Therefore, as we proposed, we continued to adjust for SSO cases under § 412.529 in this manner because it would result in more appropriate payments for all LTCH PPS standard Federal payment rate cases. (For additional information on this step of the relative weight methodology, we refer readers to 67 FR 55989 and 74 FR 43959.)
Consistent with our historical relative weight methodology, as we proposed, we calculated the FY 2021 MS–LTC–DRG relative weights using the HSRV methodology, which is an iterative process. First, for each SSO-adjusted trimmed applicable LTCH case, we calculated a hospital-specific relative charge value by dividing the charge per discharge after adjusting for SSOs of the LTCH case (from Step 3) by the average charge per SSO-adjusted discharge for the LTCH in which the case occurred. The resulting ratio is then multiplied by the LTCH's case-mix index to produce an adjusted hospital-specific relative charge value for the case. We used an initial case-mix index value of 1.0 for each LTCH.
For each MS–LTC–DRG, we calculated the FY 2021 relative weight by dividing the SSO-adjusted average of the hospital-specific relative charge values for applicable LTCH cases for the MS–LTC–DRG (that is, the sum of the hospital-specific relative charge value, as previously stated, divided by the sum of equivalent cases from Step 3 for each MS–LTC–DRG) by the overall SSO-adjusted average hospital-specific relative charge value across all applicable LTCH cases for all LTCHs (that is, the sum of the hospital-specific relative charge value, as previously stated, divided by the sum of equivalent applicable LTCH cases from Step 3 for each MS–LTC–DRG). Using these recalculated MS–LTC–DRG relative weights, each LTCH's average relative weight for all of its SSO-adjusted trimmed applicable LTCH cases (that is, its case-mix) was calculated by dividing the sum of all the LTCH's MS–LTC–DRG relative weights by its total number of SSO-adjusted trimmed applicable LTCH cases. The LTCHs' hospital-specific relative charge values (from previous) are then multiplied by the hospital-specific case-mix indexes. The hospital-specific case-mix adjusted relative charge values are then used to calculate a new set of MS–LTC–DRG relative weights across all LTCHs. This iterative process continued until there was convergence between the relative weights produced at adjacent steps, for example, when the maximum difference was less than 0.0001.
Using the trimmed applicable LTCH cases, consistent with our historical methodology, we identified the MS–LTC–DRGs for which there were no claims in the March 2020 update of the FY 2019 MedPAR file and, therefore, for which no charge data was available for these MS–LTC–DRGs. Because patients with a number of the diagnoses under these MS–LTC–DRGs may be treated at LTCHs, consistent with our historical methodology, we generally assign a relative weight to each of the no-volume MS–LTC–DRGs based on clinical similarity and relative costliness (with the exception of “transplant” MS–LTC–DRGs, “error” MS–LTC–DRGs, and MS–LTC–DRGs that indicate a principal diagnosis related to a psychiatric diagnosis or rehabilitation (referred to as the “psychiatric or rehabilitation” MS–LTC–DRGs), as discussed later in this section of this final rule). (For additional information on this step of the relative weight methodology, we refer readers to 67 FR 55991 and 74 FR 43959 through 43960.)
Consistent with our existing methodology, as we proposed, we cross-walked each no-volume MS–LTC–DRG to another MS–LTC–DRG for which we calculated a relative weight (determined in accordance with the methodology as previously described). Then, the “no-volume” MS–LTC–DRG is assigned the same relative weight (and average length of stay) of the MS–LTC–DRG to which it was cross-walked (as described in greater detail in this section of this rule).
Of the 767 MS–LTC–DRGs for FY 2021, we identified 375 MS–LTC–DRGs for which there were no trimmed applicable LTCH cases. This number includes the 11 “transplant” MS–LTC–DRGs, the 2 “error” MS–LTC–DRGs, and the 15 “psychiatric or rehabilitation” MS–LTC–DRGs, which are discussed in this section of this rule, such that we identified 347 MS–LTC–DRGs that for which, as we proposed, we assigned a relative weight using our existing “no-volume” MS–LTC–DRG methodology (that is, 375−11−2−15 = 347). As we proposed, we assigned relative weights to each of the 347 no-volume MS–LTC–DRGs based on clinical similarity and relative costliness to 1 of the remaining 392 (767−375 = 392) MS–LTC–DRGs for which we calculated relative weights based on the trimmed applicable LTCH cases in the FY 2019 MedPAR file data using the steps described previously. (For the remainder of this discussion, we refer to the “cross-walked” MS–LTC–DRGs as one of the 392 MS–LTC–DRGs to which we cross-walked each of the 347 “no-volume” MS–LTC–DRGs.) Then, as we generally proposed, we assigned the 347 no-volume MS–LTC–DRGs the relative weight of the cross-walked MS–LTC–DRG. (As explained in Step 6, when necessary, we made adjustments to account for nonmonotonicity.)
We cross-walked the no-volume MS–LTC–DRG to a MS–LTC–DRG for which we calculated relative weights based on the March 2020 update of the FY 2019 MedPAR file, and to which it is similar clinically in intensity of use of resources and relative costliness as determined by criteria such as care provided during the period of time surrounding surgery, surgical approach (if applicable), length of time of surgical procedure, postoperative care, and length of stay. (For more details on our process for evaluating relative costliness, we refer readers to the FY 2010 IPPS/RY 2010 LTCH PPS final rule (73 FR 48543).) We believe in the rare event that there would be a few LTCH cases grouped to one of the no-volume MS–LTC–DRGs in FY 2021, the relative weights assigned based on the cross-walked MS–LTC–DRGs would result in an appropriate LTCH PPS payment because the crosswalks, which are based on clinical similarity and relative costliness, would be expected to generally require equivalent relative resource use.
Then we assigned the relative weight of the cross-walked MS–LTC–DRG as the relative weight for the no-volume MS–LTC–DRG such that both of these MS–LTC–DRGs (that is, the no-volume MS–LTC–DRG and the cross-walked MS–LTC–DRG) have the same relative weight (and average length of stay) for FY 2021. We note that, if the cross-walked MS–LTC–DRG had 25 applicable LTCH cases or more, its relative weight (calculated using the methodology as previously described in Steps 1 through 4) is assigned to the no-volume MS–LTC–DRG as well. Similarly, if the MS–LTC–DRG to which the no-volume MS–LTC–DRG was cross-walked had 24 or less cases and, therefore, was designated to 1 of the low-volume quintiles for purposes of determining the relative weights, we assigned the relative weight of the applicable low-volume quintile to the no-volume MS–LTC–DRG such that both of these MS–LTC–DRGs (that is, the no-volume MS–LTC–DRG and the cross-walked MS–LTC–DRG) have the same relative weight for FY 2021. (As we noted previously, in the infrequent case where nonmonotonicity involving a no-volume MS–LTC–DRG resulted, additional adjustments as described in Step 6 are required in order to maintain monotonically increasing relative weights.)
As discussed earlier, for this final rule, we are providing the list of the no-volume MS–LTC–DRGs and the MS–LTC–DRGs to which each was cross-walked (that is, the cross-walked MS–LTC–DRGs) for FY 2021 in a supplemental data file for public use
To illustrate this methodology for determining the relative weights for the FY 2021 MS–LTC–DRGs with no applicable LTCH cases, we are providing the following example, which refers to the no-volume MS–LTC–DRGs crosswalk information for FY 2021 (which, as previously stated, we are providing in a supplemental data file posted via the internet on the CMS website for this final rule).
Again, we note that, as this system is dynamic, it is entirely possible that the number of MS–LTC–DRGs with no volume will vary in the future. Consistent with our historical practice, as we proposed, we used the most recent available claims data to identify the trimmed applicable LTCH cases from which we determined the relative weights in the final rule.
For FY 2021, consistent with our historical relative weight methodology, as we proposed, we established a relative weight of 0.0000 for the following transplant MS–LTC–DRGs: Heart Transplant or Implant of Heart Assist System with MCC (MS–LTC–DRG 001); Heart Transplant or Implant of Heart Assist System without MCC (MS–LTC–DRG 002); Liver Transplant with MCC or Intestinal Transplant (MS–LTC–DRG 005); Liver Transplant without MCC (MS–LTC–DRG 006); Lung Transplant (MS–LTC–DRG 007); Simultaneous Pancreas/Kidney Transplant (MS–LTC–DRG 008); Simultaneous Pancreas/Kidney Transplant with Hemodialysis (MS–LTC–DRG 019); Pancreas Transplant (MS–LTC–DRG 010); Kidney Transplant (MS–LTC–DRG 652); Kidney Transplant with Hemodialysis with MCC (MS–LTC–DRG 650), and Kidney Transplant with Hemodialysis without MCC (MS LTC DRG 651). This is because Medicare only covers these procedures if they are performed at a hospital that has been certified for the specific procedures by Medicare and presently no LTCH has been so certified. At the present time, we include these 11 transplant MS–LTC–DRGs in the GROUPER program for administrative purposes only. Because we use the same GROUPER program for LTCHs as is used under the IPPS, removing these MS–LTC–DRGs would be administratively burdensome. (For additional information regarding our treatment of transplant MS–LTC–DRGs, we refer readers to the RY 2010 LTCH PPS final rule (74 FR 43964).) In addition, consistent with our historical policy, as we proposed, we established a relative weight of 0.0000 for the 2 “error” MS–LTC–DRGs (that is, MS–LTC–DRG 998 (Principal Diagnosis Invalid as Discharge Diagnosis) and MS–LTC–DRG 999 (Ungroupable)) because applicable LTCH cases grouped to these MS–LTC–DRGs cannot be properly assigned to an MS–LTC–DRG according to the grouping logic.
Additionally, as we proposed, we established a relative weight of 0.0000 for the following “psychiatric or rehabilitation” MS–LTC–DRGs: MS–LTC–DRG 876 (O.R. Procedure with Principal Diagnoses of Mental Illness); MS–LTC–DRG 880 (Acute Adjustment Reaction & Psychosocial Dysfunction); MS–LTC–DRG 881 (Depressive Neuroses); MS–LTC–DRG 882 (Neuroses Except Depressive); MS–LTC–DRG 883 (Disorders of Personality & Impulse Control); MS–LTC–DRG 884 (Organic Disturbances & Mental Retardation); MS–LTC–DRG 885 (Psychoses); MS–LTC–DRG 886 (Behavioral & Developmental Disorders); MS–LTC–DRG 887 (Other Mental Disorder Diagnoses); MS–LTC–DRG 894 (Alcohol/Drug Abuse or Dependence, Left Ama); MS–LTC–DRG 895 (Alcohol/Drug Abuse or Dependence, with Rehabilitation Therapy); MS–LTC–DRG 896 (Alcohol/Drug Abuse or Dependence, without Rehabilitation Therapy with MCC); MS–LTC–DRG 897 (Alcohol/Drug Abuse or Dependence, without Rehabilitation Therapy without MCC); MS–LTC–DRG 945 (Rehabilitation with CC/MCC); and MS–LTC–DRG 946 (Rehabilitation without CC/MCC). As we proposed, we established a relative weight 0.0000 for these 15 “psychiatric or rehabilitation” MS LTC DRGs because the blended payment rate and temporary exceptions to the site neutral payment rate will not be applicable for any LTCH discharges occurring in FY 2021, and as such payment under the LTCH PPS will be no longer be made in part based on the LTCH PPS standard Federal payment rate for any discharges assigned to those MS–DRGs.
The MS–DRGs contain base DRGs that have been subdivided into one, two, or three severity of illness levels. Where there are three severity levels, the most severe level has at least one secondary diagnosis code that is referred to as an MCC (that is, major complication or comorbidity). The next lower severity level contains cases with at least one secondary diagnosis code that is a CC (that is, complication or comorbidity). Those cases without an MCC or a CC are referred to as “without CC/MCC.” When data do not support the creation of three severity levels, the base MS–DRG is subdivided into either two levels or the base MS–DRG is not subdivided. The two-level subdivisions may consist of the MS–DRG with CC/MCC and the MS–DRG without CC/MCC. Alternatively, the other type of two-level subdivision may consist of the MS–DRG with MCC and the MS–DRG without MCC.
In those base MS–LTC–DRGs that are split into either two or three severity levels, cases classified into the “without CC/MCC” MS–LTC–DRG are expected to have a lower resource use (and lower costs) than the “with CC/MCC” MS–LTC–DRG (in the case of a two-level split) or both the “with CC” and the “with MCC” MS–LTC–DRGs (in the case of a three-level split). That is, theoretically, cases that are more severe typically require greater expenditure of medical care resources and would result in higher average charges. Therefore, in the three severity levels, relative weights should increase by severity, from lowest to highest. If the relative weights decrease as severity increases (that is, if within a base MS–LTC–DRG, an MS–LTC–DRG with CC has a higher relative weight than one with MCC, or the MS–LTC–DRG “without CC/MCC” has a higher relative weight than either of the others), they are nonmonotonic. We continue to believe that utilizing nonmonotonic relative weights to adjust Medicare payments would result in inappropriate payments because the payment for the cases in the higher severity level in a base MS–LTC–DRG (which are generally expected to have higher resource use and costs) would be lower than the payment for cases in a lower severity level within the same
In accordance with the regulations at § 412.517(b) (in conjunction with § 412.503), the annual update to the MS–LTC–DRG classifications and relative weights is done in a budget neutral manner such that estimated aggregate LTCH PPS payments would be unaffected, that is, would be neither greater than nor less than the estimated aggregate LTCH PPS payments that would have been made without the MS–LTC–DRG classification and relative weight changes. (For a detailed discussion on the establishment of the budget neutrality requirement for the annual update of the MS–LTC–DRG classifications and relative weights, we refer readers to the RY 2008 LTCH PPS final rule (72 FR 26881 and 26882).)
The MS–LTC–DRG classifications and relative weights are updated annually based on the most recent available LTCH claims data to reflect changes in relative LTCH resource use (§ 412.517(a) in conjunction with § 412.503). To achieve the budget neutrality requirement at § 412.517(b), under our established methodology, for each annual update, the MS–LTC–DRG relative weights are uniformly adjusted to ensure that estimated aggregate payments under the LTCH PPS would not be affected (that is, decreased or increased). Consistent with that provision, as we proposed, we updated the MS–LTC–DRG classifications and relative weights for FY 2021 based on the most recent available LTCH data for applicable LTCH cases, and continued to apply a budget neutrality adjustment in determining the FY 2021 MS–LTC–DRG relative weights.
In this final rule, to ensure budget neutrality in the update to the MS–LTC–DRG classifications and relative weights under § 412.517(b), as we proposed, we continued to use our established two-step budget neutrality methodology.
To calculate the normalization factor for FY 2021, as we proposed in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32811), we grouped applicable LTCH cases using the FY 2021 Version 38 GROUPER, and the recalibrated FY 2021 MS–LTC–DRG relative weights to calculate the average case-mix index (CMI); we grouped the same applicable LTCH cases using the FY 2020 GROUPER Version 37 and MS–LTC–DRG relative weights and calculated the average CMI; and computed the ratio by dividing the average CMI for FY 2020 by the average CMI for FY 2021. That ratio is the normalization factor. Because the calculation of the normalization factor involves the relative weights for the MS–LTC–DRGs that contained applicable LTCH cases to calculate the average CMIs, any low-volume MS–LTC–DRGs are included in the calculation (and the MS–LTC–DRGs with no applicable LTCH cases are not included in the calculation).
To calculate the budget neutrality adjustment factor, we simulated estimated total FY 2021 LTCH PPS standard Federal payment rate payments for applicable LTCH cases using the FY 2021 normalized relative weights and GROUPER Version 38; simulated estimated total FY 2021 LTCH PPS standard Federal payment rate payments for applicable LTCH cases using the FY 2020 MS–LTC–DRG relative weights and the FY 2020 GROUPER Version 37; and calculated the ratio of these estimated total payments by dividing the simulated estimated total LTCH PPS standard Federal payment rate payments using the FY 2020 MS–LTC–DRG relative weights and the GROUPER Version 37 by the simulated estimated total LTCH PPS standard Federal payment rate payments using the FY 2021 MS–LTC–DRG relative weights and the GROUPER Version 38. The resulting ratio is the budget neutrality adjustment factor. The calculation of the budget neutrality factor involves the relative weights for the LTCH cases used in the payment simulation, which includes any cases grouped to low-volume MS–LTC–DRGs or to MS–LTC–DRGs with no applicable LTCH cases, and generally does not include payments for cases grouped to a MS–LTC–DRG with no applicable LTCH cases. (Occasionally, a few LTCH cases (that is, those with a covered length of stay of 7 days or less), which are removed from the relative weight calculation in step 2 that are grouped to a MS–LTC–DRG with no applicable LTCH cases are included in the payment simulations used to calculate the budget neutrality factor. However, the number and payment amount of such cases have a negligible impact on the budget neutrality factor calculation).
In this final rule, to ensure budget neutrality in the update to the MS–LTC–DRG classifications and relative weights under § 412.517(b), as we proposed, we continued to use our established two-step budget neutrality methodology. Therefore, in this final rule, in the first step of our MS–LTC–DRG budget neutrality methodology, for FY 2021, as we proposed, we calculated and applied a normalization factor to the recalibrated relative weights (the result of Steps 1 through 6 discussed previously) to ensure that estimated payments are not affected by changes in the composition of case types or the changes to the classification system. That is, the normalization adjustment is intended to ensure that the recalibration of the MS–LTC–DRG relative weights (that is, the process itself) neither increases nor decreases the average case-mix index.
To calculate the normalization factor for FY 2021 (the first step of our budget neutrality methodology), we used the following three steps: (1.a.) Use the most recent available applicable LTCH cases from the most recent available data (that is, LTCH discharges from the FY 2019 MedPAR file) and group them using the FY 2021 GROUPER (that is, Version 38 for FY 2021) and the recalibrated FY 2021 MS–LTC–DRG relative weights (determined in Steps 1 through 6 discussed previously) to calculate the average case-mix index; (1.b.) group the same applicable LTCH cases (as are used in Step 1.a.) using the FY 2020 GROUPER (Version 37) and FY 2020 MS–LTC–DRG relative weights and calculate the average case-mix index; and (1.c.) compute the ratio of these average case-mix indexes by dividing the average CMI for FY 2021 (determined in Step 1.a.) by the average case-mix index for FY 2020 (determined in Step 1.b.). As a result, in determining the MS–LTC–DRG relative weights for FY 2021, each recalibrated MS–LTC–DRG relative weight is multiplied by the normalization factor of 1.25890 (determined in Step 1.c.) in the first step of the budget neutrality methodology, which produced “normalized relative weights.”
In the second step of our MS–LTC–DRG budget neutrality methodology, we calculated a second budget neutrality
That is, for this final rule, for FY 2021, under the second step of the budget neutrality methodology, as we proposed, we determined the budget neutrality adjustment factor using the following three steps: (2.a.) Simulate estimated total FY 2021 LTCH PPS standard Federal payment rate payments for applicable LTCH cases using the normalized relative weights for FY 2021 and GROUPER Version 38 (as described previously); (2.b.) simulate estimated total FY 2021 LTCH PPS standard Federal payment rate payments for applicable LTCH cases using the FY 2020 GROUPER (Version 37) and the FY 2020 MS–LTC–DRG relative weights in Table 11 of the FY 2020 IPPS/LTCH PPS final rule available on the internet, as described in section VI. of the Addendum of that final rule; and (2.c.) calculate the ratio of these estimated total payments by dividing the value determined in Step 2.b. by the value determined in Step 2.a. In determining the FY 2021 MS–LTC–DRG relative weights, each normalized relative weight is then multiplied by a budget neutrality factor of 0.9995082 (the value determined in Step 2.c.) in the second step of the budget neutrality methodology to achieve the budget neutrality requirement at § 412.517(b).
Accordingly, in determining the FY 2021 MS–LTC–DRG relative weights in this final rule, consistent with our existing methodology, as we proposed, we applied a normalization factor of 1.25890 and a budget neutrality factor of 0.9995082. Table 11, which is listed in section VI. of the Addendum to this final rule and is available via the internet on the CMS website, lists the MS–LTC–DRGs and their respective relative weights, geometric mean length of stay, and five-sixths of the geometric mean length of stay (used to identify SSO cases under § 412.529(a)) for FY 2021.
The basic methodology for determining LTCH PPS standard Federal payment rates is currently set forth at 42 CFR 412.515 through 412.533 and 412.535. In this section, we discuss the factors that we used to update the LTCH PPS standard Federal payment rate for FY 2021, that is, effective for LTCH discharges occurring on or after October 1, 2020 through September 30, 2021. Under the dual rate LTCH PPS payment structure required by statute, beginning with discharges in cost reporting periods beginning in FY 2016, only LTCH discharges that meet the criteria for exclusion from the site neutral payment rate are paid based on the LTCH PPS standard Federal payment rate specified at § 412.523. (For additional details on our finalized policies related to the dual rate LTCH PPS payment structure required by statute, we refer readers to the FY 2016 IPPS/LTCH PPS final rule (80 FR 49601 through 49623).)
Prior to the implementation of the dual payment rate system in FY 2016, all LTCH discharges were paid similarly to those now exempt from the site neutral payment rate. That legacy payment rate was called the standard Federal rate. For details on the development of the initial standard Federal rate for FY 2003, we refer readers to the August 30, 2002 LTCH PPS final rule (67 FR 56027 through 56037). For subsequent updates to the standard Federal rate (FYs 2003 through 2015)/LTCH PPS standard Federal payment rate (FY 2016 through present) as implemented under § 412.523(c)(3), we refer readers to the FY 2020 IPPS/LTCH PPS final rule (84 FR 42445 through 42446).
In this FY 2021 IPPS/LTCH PPS final rule, we present our policies related to the annual update to the LTCH PPS standard Federal payment rate for FY 2021.
The update to the LTCH PPS standard Federal payment rate for FY 2021 is presented in section V.A. of the Addendum to this rule. The components of the annual update to the LTCH PPS standard Federal payment rate for FY 2021 are discussed in this section, including the statutory reduction to the annual update for LTCHs that fail to submit quality reporting data for FY 2021 as required by the statute (as discussed in section VII.C.2.c. of the preamble of this final rule). As we proposed in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32812), we also made an adjustment to the LTCH PPS standard Federal payment rate to account for the estimated effect of the changes to the area wage level for FY 2021 on estimated aggregate LTCH PPS payments, in accordance with § 412.523(d)(4) (as discussed in section V.B. of the Addendum to this final rule).
In addition, as discussed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41532 through 41537), we eliminated the 25-percent threshold policy in a budget neutral manner. The budget neutrality requirements are codified in the regulations at § 412.523(d)(6). Under these regulations, a temporary, one-time factor is applied to the standard Federal payment rate in FY 2019 and FY 2020, and a permanent, one-time factor in FY 2021. These factors as established in the correction to the FY 2019 IPPS/LTCH PPS final rule (83 FR 41536) are—
• For FY 2019, a temporary, one-time factor of 0.990878;
• For FY 2020, a temporary, one-time factor of 0.990737; and
• For FY 2021 and subsequent years, a permanent, one-time factor of 0.991249.
Therefore, in determining the FY 2021 LTCH PPS standard Federal payment rate, as we proposed, we—
• Removed the temporary, one-time factor of 0.990737 for the estimated cost of the elimination of the 25-percent threshold policy in FY 2020 by applying a factor of (1/0.990737);
• Applied a permanent, one-time factor of 0.991249 for the estimated cost of the elimination of the 25-percent threshold policy in FY 2021;
Historically, the Medicare program has used a market basket to account for input price increases in the services furnished by providers. The market basket used for the LTCH PPS includes both operating and capital related costs of LTCHs because the LTCH PPS uses a single payment rate for both operating and capital-related costs. We adopted the 2013-based LTCH market basket for use under the LTCH PPS beginning in FY 2017 (81 FR 57100 through 57102). As discussed in section VII.D. of the preamble of this final rule, as we proposed, we are rebasing and revising the 2013-based LTCH market basket to reflect a 2017 base year. For additional details on the historical development of the market basket used under the LTCH
Section 3401(c) of the Affordable Care Act provides for certain adjustments to any annual update to the LTCH PPS standard Federal payment rate and refers to the timeframes associated with such adjustments as a “rate year.” We note that, because the annual update to the LTCH PPS policies, rates, and factors now occurs on October 1, we adopted the term “fiscal year” (FY) rather than “rate year” (RY) under the LTCH PPS beginning October 1, 2010, to conform with the standard definition of the Federal fiscal year (October 1 through September 30) used by other PPSs, such as the IPPS (75 FR 50396 through 50397). Although the language of sections 3004(a), 3401(c), 10319, and 1105(b) of the Affordable Care Act refers to years 2010 and thereafter under the LTCH PPS as “rate year,” consistent with our change in the terminology used under the LTCH PPS from “rate year” to “fiscal year,” for purposes of clarity, when discussing the annual update for the LTCH PPS standard Federal payment rate, including the provisions of the Affordable Care Act, we use “fiscal year” rather than “rate year” for 2011 and subsequent years.
CMS has used an estimated market basket increase to update the LTCH PPS. As previously noted, for FY 2021 we rebased and revised the 2013-based LTCH market basket to reflect a 2017 base year. The 2017-based LTCH market basket is primarily based on the Medicare cost report data submitted by LTCHs and, therefore, specifically reflects the cost structures of only LTCHs. As we proposed, we used data from cost reports beginning in FY 2017 because these data are the latest available complete data at the time of rulemaking for purposes of calculating cost weights for the market basket. We believe that the 2017-based LTCH market basket appropriately reflects the cost structure of LTCHs, as discussed in greater detail in section VII.D. of the preamble of this final rule. In this final rule, as we proposed in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32812—32813), we used the 2017-based LTCH market basket to update the LTCH PPS standard Federal payment rate for FY 2021.
Section 1886(m)(3)(A) of the Act provides that, beginning in FY 2010, any annual update to the LTCH PPS standard Federal payment rate is reduced by the adjustments specified in clauses (i) and (ii) of subparagraph (A). Clause (i) of section 1886(m)(3)(A) of the Act provides for a reduction, for FY 2012 and each subsequent rate year, by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act (that is, “the multifactor productivity (MFP) adjustment”). Clause (ii) of section 1886(m)(3)(A) of the Act provided for a reduction, for each of FYs 2010 through 2019, by the “other adjustment” described in section 1886(m)(4)(F) of the Act; therefore, it is not applicable for FY 2021.
Section 1886(m)(3)(B) of the Act provides that the application of paragraph (3) of section 1886(m) of the Act may result in the annual update being less than zero for a rate year, and may result in payment rates for a rate year being less than such payment rates for the preceding rate year.
In accordance with section 1886(m)(5) of the Act, the Secretary established the Long-Term Care Hospital Quality Reporting Program (LTCH QRP). The reduction in the annual update to the LTCH PPS standard Federal payment rate for failure to report quality data under the LTCH QRP for FY 2014 and subsequent fiscal years is codified under 42 CFR 412.523(c)(4). The LTCH QRP, as required for FY 2014 and subsequent fiscal years by section 1886(m)(5)(A)(i) of the Act, applies a 2.0 percentage point reduction to any update under § 412.523(c)(3) for an LTCH that does not submit quality reporting data to the Secretary in accordance with section 1886(m)(5)(C) of the Act with respect to such a year (that is, in the form and manner and at the time specified by the Secretary under the LTCH QRP) (§ 412.523(c)(4)(i)). Section 1886(m)(5)(A)(ii) of the Act provides that the application of the 2.0 percentage points reduction may result in an annual update that is less than 0.0 for a year, and may result in LTCH PPS payment rates for a year being less than such LTCH PPS payment rates for the preceding year. Furthermore, section 1886(m)(5)(B) of the Act specifies that the 2.0 percentage points reduction is applied in a noncumulative manner, such that any reduction made under section 1886(m)(5)(A) of the Act shall apply only with respect to the year involved, and shall not be taken into account in computing the LTCH PPS payment amount for a subsequent year. These requirements are codified in the regulations at § 412.523(c)(4). (For additional information on the history of the LTCH QRP, including the statutory authority and the selected measures, we refer readers to section VIII.C. of the preamble of this final rule.)
Consistent with our historical practice and our proposal, we estimate the market basket increase and the MFP adjustment based on IGI's forecast using the most recent available data. In the proposed rule (85 FR 32813), we proposed to establish an annual update to the LTCH PPS standard Federal payment rate for FY 2021 of 2.5 percent based on the best available data at that time (that is, the estimated LTCH PPS market basket increase of 2.9 percent less the MFP adjustment of 0.4 percentage point). Consistent with our historical practice, we also proposed to use a more recent estimate of the market basket and the MFP adjustment, if appropriate, in the final rule to establish an annual update to the LTCH PPS standard Federal payment rate for FY 2021.
For this final rule, based on IGIs second-quarter 2020 forecast, the FY 2021 full market basket estimate for the LTCH PPS using the 2017-based LTCH market basket is 2.3 percent. We note that the fourth quarter 2019 forecast used for the proposed market basket update was developed prior to the economic impacts of the COVID–19 pandemic. This lower update (2.3 percent) for FY 2021, relative to the proposed rule (2.9 percent), is primarily driven by slower anticipated compensation growth for both health-related and other occupations as labor markets are expected to be significantly impacted during the recession that started in February 2020 and throughout the anticipated recovery.
For FY 2021, section 1886(m)(3)(A)(i) of the Act requires that any annual update to the LTCH PPS standard Federal payment rate be reduced by the productivity adjustment (“the MFP adjustment”) described in section 1886(b)(3)(B)(xi)(II) of the Act. (We note that sections 1886(m)(3)(A)(ii) and 1886(m)(4)(F) of the Act required an additional reduction each year only for FYs 2010 through 2019.) (For additional details on our established methodology
In the FY 2021 IPPS/LTCH PPS proposed rule, we proposed a MFP adjustment of 0.4 percentage point based on IGIs fourth quarter 2019 forecast. Based on the more recent data available for this final rule, the current estimate of the 10-year moving average growth of MFP for FY 2021 is -0.1 percentage point. This MFP is based on the most recent macroeconomic outlook from IGI at the time of rulemaking (released June 2020) in order to reflect more current historical economic data. IGI produces monthly macroeconomic forecasts, which include projections of all of the economic series used to derive MFP. In contrast, IGI only produces forecasts of the more detailed price proxies used in the LTCH market basket on a quarterly basis. Therefore, IGI's second quarter 2020 forecast is the most recent forecast of the LTCH market basket update.
We note that it has typically been our practice to base the projection of the market basket price proxies and MFP in the final rule on the second quarter IGI forecast. For this final rule, we are using the IGI June macroeconomic forecast for MFP because it is a more recent forecast, and it is important to use more recent data during this period when economic trends, particularly employment and labor productivity, are notably uncertain because of the COVID–19 pandemic. Historically, the MFP adjustment based on the second quarter IGI forecast has been very similar to the MFP adjustment derived with IGI's June macroeconomic forecast. Substantial changes in the macroeconomic indicators in between monthly forecasts are atypical.
Given the unprecedented economic uncertainty as a result of the COVID–19 pandemic, the changes in the IGI macroeconomic series used to derive MFP between the second quarter 2020 IGI forecast and the IGI June 2020 macroeconomic forecast is significant. Therefore, we believe it is technically appropriate to use IGI's more recent June 2020 macroeconomic forecast to determine the MFP adjustment for the final rule as it reflects more current historical data. For comparison purposes, the 10-year moving average growth of MFP for FY 2021 is projected to be -0.1 percentage point based on IGI's June 2020 macroeconomic forecast compared to a FY 2021 projected 10-year moving average growth of MFP of 0.7 percentage point based on IGI's second quarter 2020 forecast. Mechanically subtracting the negative 10-year moving average growth of MFP from the market basket percentage increase using the data from the IGI June 2020 macroeconomic forecast would have resulted in a 0.1 percentage point increase in the FY 2021 annual update to the LTCH PPS standard Federal payment rate. However, under section 1886(m)(3)(A)(i) of the Act, the Secretary is required to reduce (not increase) any annual update to the LTCH PPS standard Federal payment rate by 10-year moving average of changes in annual economy-wide private nonfarm business multi-factor productivity. Accordingly, we will be applying a 0.0 percentage point MFP adjustment to the market basket update. Therefore, the annual market basket update to the LTCH PPS standard Federal payment rate for FY 2021 is 2.3 percent (that is, the FY 2021 full market basket estimate for the LTCH PPS with 0.0 percentage point adjustment made for MFP).
For FY 2021, section 1886(m)(5) of the Act requires that, for LTCHs that do not submit quality reporting data as required under the LTCH QRP, any annual update to an LTCH PPS standard Federal payment rate, after application of the adjustments required by section 1886(m)(3) of the Act, shall be further reduced by 2.0 percentage points. Therefore, for LTCHs that fail to submit quality reporting data under the LTCH QRP, the 2.3 percent annual market basket update to the LTCH PPS standard Federal payment rate for FY 2021 will be reduced by 2.0 percentage points required by section 1886(m)(5) of the Act.
In this FY 2021 IPPS/LTCH PPS final rule, in accordance with the statute, under the authority of section 123 of the BBRA as amended by section 307(b) of the BIPA, consistent with our proposal, we are establishing an annual market basket update to the LTCH PPS standard Federal payment rate for FY 2021 of 2.3 percent (that is, the most recent estimate of the LTCH PPS market basket increase of 2.3 percent less the MFP adjustment of 0.0 percentage point).
While we have historically implemented the payment updates to the LTCH PPS in individual amendments to the regulations, given existing statutory provisions affecting the LTCH update are constant going forward, in the proposed rule we proposed to revise § 412.523(c)(3) by adding a new paragraph (xvii), which would specify that the LTCH PPS standard Federal payment rate for FY 2021 and subsequent fiscal years is the LTCH PPS standard Federal payment rate for the previous LTCH PPS payment year updated by the market basket (as determined by CMS), less a multifactor productivity adjustment (as determined by CMS), and further adjusted, as appropriate, as described in § 412.523(d) (including the application of the adjustment factor for the cost of the elimination of the 25-percent threshold policy under § 412.523(d)(6) as previously discussed) rather than codifying specific numerical updates annually as was our historical practice. For LTCHs that fail to submit quality reporting data under the LTCH QRP, under § 412.523(c)(3)(xvi) in conjunction with § 412.523(c)(4), we proposed to further reduce the annual update to the LTCH PPS standard Federal payment rate by 2.0 percentage points, in accordance with section 1886(m)(5) of the Act.
We did not receive any comments on this proposal. Therefore we are finalizing it as proposed without modification. Accordingly, as we proposed, we are establishing an annual update to the LTCH PPS standard Federal payment rate of 0.3 percent (that is, 2.3 percent minus 2.0 percentage points) for FY 2021 for LTCHs that fail to submit quality reporting data as required under the LTCH QRP. We note that, consistent with historical practice, as we proposed, we adjusted the FY 2021 LTCH PPS standard Federal payment rate by an area wage level budget neutrality factor in accordance with § 412.523(d)(4) (as discussed in section V.B.5. of the Addendum to this final rule).
The input price index (that is, the market basket) that was used to develop the LTCH PPS for FY 2003 was the “excluded hospital with capital” market basket. That market basket was based on 1997 Medicare cost report data and included data for Medicare-participating IRFs, IPFs, LTCHs, cancer hospitals, and children's hospitals. Although the term “market basket” technically describes the mix of goods and services used in providing hospital care, this term is also commonly used to denote the input price index (that is, cost category weights and price proxies combined) derived from that mix. Accordingly, the term “market basket,” as used in this section, refers to an input price index.
Beginning with rate year (RY) 2007, LTCH PPS payments were updated using a 2002-based market basket reflecting the operating and capital cost structures for IRFs, IPFs, and LTCHs (hereafter referred to as the rehabilitation, psychiatric, and long-term care (RPL) market basket). We
In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51756), we finalized the rebasing and revising of the 2002-based RPL market basket by creating and implementing a 2008-based RPL market basket. We also discussed the creation of a stand-alone LTCH market basket and received several public comments, all of which supported deriving a standalone LTCH market basket (76 FR 51756 through 51757). In the FY 2013 IPPS/LTCH PPS final rule, we finalized the adoption of a stand-alone 2009-based LTCH-specific market basket that reflects the cost structures of LTCHs only (77 FR 53467 through 53479). In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57085 through 57099), we finalized the rebasing and revising of the 2009-based LTCH market basket to reflect a 2013 base year (the 2013-based LTCH market basket).
For FY 2021, we proposed to rebase and revise the 2013-based LTCH market basket to reflect a 2017 base year (85 FR 32814). The proposed 2017-based LTCH market basket is primarily based on Medicare cost report data for LTCHs for 2017, which are for cost reporting periods beginning on and after October 1, 2016, and before October 1, 2017. We proposed to use data from cost reports beginning in FY 2017 because these data are the latest available complete data for purposes of calculating cost weights for the market basket at the time of rulemaking.
In the following discussion, we provide an overview of the proposed LTCH market basket, describe the proposed methodologies for developing the operating and capital portions of the 2017-based LTCH market basket, and provide information on the proposed price proxies. We then describe any comments received, responses to these comments, and our final policies for this final rule.
Similar to the 2013-based LTCH market basket, the proposed 2017-based LTCH market basket is a fixed-weight, Laspeyres-type price index. A Laspeyres price index measures the change in price, over time, of the same mix of goods and services purchased in the base period. Any changes in the quantity or mix (that is, intensity) of goods and services purchased over time are not measured. The index itself is constructed using three steps. First, a base period is selected (in the proposed rule, we proposed to use 2017 as the base period) and total base period expenditures are estimated for a set of mutually exclusive and exhaustive spending categories, with the proportion of total costs that each category represents being calculated. These proportions are called “cost weights” or “expenditure weights.” Second, each expenditure category is matched to an appropriate price or wage variable, referred to as a “price proxy.” In almost every instance, these price proxies are derived from publicly available statistical series that are published on a consistent schedule (preferably at least on a quarterly basis). Finally, the expenditure weight for each cost category is multiplied by the level of its respective price proxy. The sum of these products (that is, the expenditure weights multiplied by their price levels) for all cost categories yields the composite index level of the market basket in a given period. Repeating this step for other periods produces a series of market basket levels over time. Dividing an index level for a given period by an index level for an earlier period produces a rate of growth in the input price index over that timeframe. As previously noted, the market basket is described as a fixed-weight index because it represents the change in price over time of a constant mix (quantity and intensity) of goods and services needed to furnish hospital services. The effects on total expenditures resulting from changes in the mix of goods and services purchased subsequent to the base period are not measured. For example, a hospital hiring more nurses to accommodate the needs of patients would increase the volume of goods and services purchased by the hospital, but would not be factored into the price change measured by a fixed-weight hospital market basket. Only when the index is rebased would changes in the quantity and intensity be captured, with those changes being reflected in the cost weights. Therefore, we rebase the market basket periodically so that the cost weights reflect a recent mix of goods and services that hospitals purchase (hospital inputs) to furnish inpatient care.
We invited public comments on our proposed methodology, discussed in this section of this rule, for deriving the proposed 2017-based LTCH market basket.
We proposed a 2017-based LTCH market basket that consists of seven major cost categories and a residual derived from the 2017 Medicare cost reports (CMS Form 2552–10, OMB Control Number 0938–0050) for LTCHs. The seven cost categories are Wages and Salaries, Employee Benefits, Contract Labor, Pharmaceuticals, Professional Liability Insurance (PLI), Home Office/Related Organization Contract Labor, and Capital. The residual category reflects all remaining costs not captured in the seven cost categories. The 2013-based LTCH market basket did not use the Medicare cost reports to calculate the Home Office/Related Organization Contract Labor cost weight.
Medicare cost report data include costs for all patients, including Medicare, Medicaid, and private payer. Because our goal is to measure cost shares for facilities that serve Medicare beneficiaries, and are reflective of case mix and practice patterns associated with providing services to Medicare beneficiaries in LTCHs, we proposed to limit our selection of Medicare cost reports to those from LTCHs that have a Medicare average length of stay (LOS) that is within a comparable range of their total facility average LOS. We define the Medicare average LOS based on data reported on the Medicare cost report (CMS Form 2552–10, OMB Control Number 0938–0050) Worksheet S–3, Part I, line 14. We believe that applying the LOS edit results in a more accurate reflection of the structure of costs for Medicare covered days as our proposed edit excludes those LTCHs that had an average total facility LOS that was much different than the average Medicare LOS. For the 2013-based LTCH market basket, we used the cost reports submitted by LTCHs with Medicare average LOS within 25 percent (that is, 25 percent higher or lower) of the total facility average LOS for the hospital. Based on our analysis of the 2017 Medicare cost reports, for the proposed 2017-based LTCH market basket, we proposed to again use the cost reports submitted by LTCHs with
We proposed to use the cost reports for LTCHs that meet this requirement to calculate the costs for the seven major cost categories (Wages and Salaries, Employee Benefits, Contract Labor, Professional Liability Insurance, Pharmaceuticals, Home Office/Related Organization Contract Labor, and Capital) for the market basket. For comparison, the 2013-based LTCH market basket utilized the Bureau of Economic Analysis Benchmark Input-Output data rather than Medicare cost report data to derive the Home Office/Related Organization Contract Labor cost weight. A more detailed discussion of this methodological change is provided in section VII.D.3.a.(6). of the preamble of this final rule.
We proposed to derive Wages and Salaries costs as the sum of routine inpatient salaries, ancillary salaries, and a proportion of overhead (or general service cost center) salaries as reported on Worksheet A, column 1. Because overhead salary costs are attributable to the entire LTCH, we proposed to only include the proportion attributable to the Medicare allowable cost centers. For the 2017-based LTCH market basket, we proposed that routine and ancillary Wages and Salaries costs would be equal to salary costs as reported on Worksheet A, column 1, lines 30 through 35, 50 through 76 (excluding 52, 61, and 75), 90 through 91, and 93. Then, we proposed to estimate the proportion of overhead salaries that are attributed to Medicare allowable costs centers by multiplying the ratio of these routine and ancillary Wages and Salaries to total salaries (Worksheet A, column 1, line 200) times total overhead salaries (Worksheet A, column 1, lines 4 through 18). A similar methodology was used to derive Wages and Salaries costs in the 2013-based LTCH market basket.
Similar to the 2013-based LTCH market basket, we proposed to calculate Employee Benefits costs using Worksheet S–3, part II data. Specifically, we proposed to use data from Worksheet S–3, part II, column 4, lines 17, 18, 20, and 22, to derive Employee Benefits costs. The completion of Worksheet S–3, part II is only required for IPPS hospitals. For 2017, we found that approximately 20 percent of LTCHs voluntarily reported these data, which has fallen from the roughly 35 percent that reported these data for 2013. Our analysis of the Worksheet S–3, part II data submitted by these LTCHs indicates that we continue to have a large enough sample to enable us to produce a reasonable Employee Benefits cost weight. Specifically, we found that when we recalculated the cost weight after weighting to reflect the characteristics of the universe of LTCHs (type of control (nonprofit, for-profit, and government) and by region), the recalculation did not have a material effect on the resulting cost weight. Therefore, we proposed to use Worksheet S–3, part II data (as was done for the 2013-based LTCH market basket) to calculate the Employee Benefits cost weight in the proposed 2017-based LTCH market basket.
We note that, effective with the implementation of CMS Form 2552–10, OMB Control Number 0938–0050, we began collecting Employee Benefits and Contract Labor data on Worksheet S–3, part V, which is applicable to LTCHs. However, approximately 17 percent of LTCHs reported data on Worksheet S–3, part V for 2017, with most of these providers also reporting data on Worksheet S–3, part II. Because a greater percentage of LTCHs continue to report data on Worksheet S–3, part II than Worksheet S–3, part V for 2017, we did not propose to use the Employee Benefits and Contract Labor data reported on Worksheet S–3, part V to calculate the Employee Benefits cost weight in the proposed 2017-based LTCH market basket. We continue to encourage all providers to report these data on Worksheet S–3, Part V.
Contract Labor costs are primarily associated with direct patient care services. Contract Labor costs for services such as accounting, billing, and legal are estimated using other government data sources as described in this section of this final rule. Approximately 44 percent of LTCHs voluntarily reported Contract Labor costs on Worksheet S–3, part II, which was similar to the percentage obtained from 2013 Medicare cost reports. Only about 18 percent of LTCHs reported Contract Labor costs data on Worksheet S–3, part V.
As was done for the 2013-based LTCH market basket, we proposed to derive the Contract Labor costs for the proposed 2017-based LTCH market basket using voluntarily reported data from Worksheet S–3, part II. Our analysis of these data indicates that we have a large enough sample to enable us to produce a reasonable Contract Labor cost weight. Specifically, we found that when we recalculated the cost weight after weighting to reflect the characteristics of the universe of LTCHs (type of control (nonprofit, for-profit, and government) and by region), the recalculation did not have a material effect on the resulting cost weight. Therefore, we proposed to use data from Worksheet S–3, part II, column 4, lines 11 and 13 to calculate the Contract Labor cost weight in the proposed 2017-based LTCH market basket.
We proposed to calculate Pharmaceuticals costs using nonsalary costs for the pharmacy cost center (line 15) and drugs charged to patients cost center (line 73). We proposed to estimate these costs using total pharmaceutical costs reported on Worksheet B, part I, column 0, lines 15 and 73 and then removing a portion of these costs attributable to salaries. We proposed to estimate the proportion of costs for removal as Worksheet A, column 1, lines 15 and 73 divided by the sum of Worksheet A, columns 1 and 2, lines 15 and 73. A similar methodology was used for the 2013-based LTCH market basket.
We proposed that Professional Liability Insurance (PLI) costs (often referred to as malpractice costs) be equal to premiums, paid losses and self-insurance costs reported on Worksheet S–2, part I, columns 1 through 3, line 118. A similar methodology was used for the 2013-based LTCH market basket.
For the 2017-based LTCH market basket, we proposed to determine the Home Office/Related Organization Contract Labor costs using Medicare
The 2013-based LTCH market basket used the 2007 Benchmark Input-Output (I–O) expense data published by the Bureau of Economic Analysis (BEA) to derive these costs (81 FR 57089). A more detailed explanation of the general methodology using the BEA I–O data is provided in section VII.D.3.c. of the preamble of this final rule. We calculated the Home Office/Related Organization Contract Labor cost weight using expense data for North American Industry Classification System (NAICS) code 55, Management of Companies and Enterprises (81 FR 57098). We believe the proposed methodology for the 2017-based LTCH market basket is a technical improvement over the prior methodology because it represents more recent data that is representative compositionally and geographically of LTCHs.
We proposed that Capital costs be equal to Medicare allowable capital costs as reported on Worksheet B, part II, column 26, lines 30 through 35, 50 through 76 (excluding 52, 61, and 75), 90 through 91 and 93. A similar methodology was used for the 2013-based LTCH market basket.
After we derive costs for the major cost categories for each provider using the Medicare cost report data as previously described, we proposed to trim the data for outliers. For each of the seven major cost categories, we first proposed to divide the calculated costs for the category by total Medicare allowable costs calculated for the provider to obtain cost weights for the universe of LTCH providers. For the 2017-based LTCH market basket (similar to the 2013-based LTCH market basket), we proposed that total Medicare allowable costs would be equal to the total costs as reported on Worksheet B, part I, column 26, lines 30 through 35, 50 through 76 (excluding 52, 61 and 75), 90 through 91, and 93.
For the Wages and Salaries, Employee Benefits, Contract Labor, Pharmaceuticals, Professional Liability Insurance, and Capital cost weights, after excluding cost weights that are less than or equal to zero, we proposed to then remove those providers whose derived cost weights fall in the top and bottom 5 percent of provider specific derived cost weights to ensure the exclusion of outliers. After the outliers have been excluded, we sum the costs for each category across all remaining providers. We proposed to divide this by the sum of total Medicare allowable costs across all remaining providers to obtain a cost weight for the 2017-based LTCH market basket for the given category. This trimming process is done for each cost weight separately.
For the Home Office/Related Organization Contract Labor cost weight, we proposed to apply a 1-percent top only trimming methodology. This allows all providers' Medicare allowable costs to be included, even if their Home Office/Related Organization Contract Labor costs were zero. We believe, as the Medicare cost report data (Worksheet S–2, part I, line 140) indicate, that not all LTCHs have a home office. LTCHs without a home office can incur these expenses directly by having their own staff, for which the costs would be included in the Wages and Salaries and Employee Benefits cost weights. Alternatively, LTCHs without a home office could also purchase related services from external contractors for which these expenses would be captured in the residual “All Other” cost weight. We believe this 1-percent top-only trimming methodology is appropriate as it addresses outliers while allowing providers with zero Home Office/Related Organization Contract Labor costs to be included in the Home Office/Related Organization Contract Labor cost weight calculation. If we applied both the top and bottom 5 percent trimming methodology, we would exclude providers who have zero Home Office/Related Organization Contract Labor costs.
Finally, we proposed to calculate the residual “All Other” cost weight that reflects all remaining costs that are not captured in the seven cost categories listed.
We received no comments on the proposed methodology to derive the major cost weights using the Medicare cost reports and therefore are finalizing this methodology without modification. We refer readers to Table E1 for the resulting proposed and final cost weights for these major cost categories.
The Wages and Salaries cost weight calculated from the Medicare cost reports for the 2017-based LTCH market basket is approximately 1 percentage point higher than the Wages and Salaries cost weight for the 2013-based LTCH market basket, while the Contract Labor cost weight is 1.5 percentage point lower. The 2017-based Pharmaceuticals cost weight also is roughly 1.5 percentage point lower than the cost weight for the 2013-based LTCH market basket.
As we did for the 2013-based LTCH market basket, we proposed to allocate the Contract Labor cost weight to the Wages and Salaries and Employee Benefits cost weights based on their relative proportions under the assumption that Contract Labor costs are comprised of both Wages and Salaries and Employee Benefits. The Contract Labor allocation proportion for Wages and Salaries is equal to the Wages and Salaries cost weight as a percent of the sum of the Wages and Salaries cost weight and the Employee Benefits cost weight. This rounded percentage is 87 percent. Therefore, we proposed to allocate 87 percent of the Contract Labor cost weight to the Wages and Salaries cost weight and 13 percent to the Employee Benefits cost weight.
We received no comments on the proposed methodology to allocate the Contract Labor cost weight to the Wages and Salaries cost weight and Employee Benefits cost weight and therefore, are finalizing this methodology without modification. We refer readers to Table E2 that shows the proposed and final Wages and Salaries and Employee Benefits cost weights after Contract Labor cost weight allocation for both the 2017-based LTCH market basket and the 2013-based LTCH market basket.
After the allocation of the Contract Labor cost weight, the 2017-based Wages and Salaries cost weight is 0.2 percentage point lower and the Employee Benefits cost weight is 0.5 percentage point lower, relative to the respective cost weights for the 2013-based LTCH market basket. As a result, in the 2017-based LTCH market basket, the compensation cost weight is 0.7 percentage point lower than the Compensation cost weight for the 2013-based LTCH market basket.
To further divide the residual “All Other” cost weight estimated from the 2017 Medicare cost report data into more detailed cost categories, we proposed to use the 2012 Benchmark I–O “Use Tables/Before Redefinitions/Purchaser Value” for NAICS 622000, Hospitals, published by the Bureau of Economic Analysis (BEA). These data are publicly available at the following website:
The BEA Benchmark I–O data are scheduled for publication every 5 years with the most recent data available for 2012. The 2012 Benchmark I–O data are derived from the 2012 Economic Census and are the building blocks for BEA's economic accounts. Therefore, they represent the most comprehensive and complete set of data on the economic processes or mechanisms by which output is produced and distributed.
Using this methodology, we proposed to derive 17 detailed LTCH market basket cost category weights from the 2017-based LTCH market basket residual “All Other” cost weight (28.3 percent). These categories are: (1) Electricity; (2) Fuel, Oil, and Gasoline; (3) Food: Direct Purchases; (4) Food: Contract Services; (5) Chemicals; (6) Medical Instruments; (7) Rubber and Plastics; (8) Paper and Printing Products; (9) Miscellaneous Products; (10) Professional Fees: Labor-Related; (11) Administrative and Facilities Support Services; (12) Installation, Maintenance, and Repair Services; (13) All Other Labor-Related Services; (14) Professional Fees: Nonlabor-Related; (15) Financial Services; (16) Telephone Services; and (17) All Other Nonlabor-Related Services. We note that for the 2013-based LTCH market basket, we had a Water and Sewerage cost weight. For the 2017-based LTCH market basket, we proposed to include Water and
For the 2013-based LTCH market basket, we used the I–O data for NAICS 55 Management of Companies to derive the Home Office/Related Organization Contract Labor cost weight, which were classified in the Professional Fees: Labor-related and Professional Fees: Nonlabor-related cost weights. As previously discussed, we proposed to use the Medicare cost report data to derive the Home Office/Related Organization Contract Labor cost weight, which we would further classify into the Professional Fees: Labor-related or Professional Fees: Nonlabor-related categories which we discuss in section VII.D.6. of the preamble of this final rule.
We received no comments on the proposed methodology to derive the detailed operating cost weights and therefore are finalizing this methodology without modification.
As described in section VII.D.3.b. of the preamble of this final rule, we proposed a Capital-related cost weight of 9.9 percent as calculated from the 2017 Medicare cost reports for LTCHs after applying the proposed trims as previously described. We proposed to then separate this total Capital-related cost weight into more detailed cost categories. Using 2017 Medicare cost reports, we are able to group Capital-related costs into the following categories: Depreciation, Interest, Lease, and Other Capital-Related costs, as shown in Table E3. For each of these categories, we proposed to determine what proportion of total Capital-related costs the category represents using the data reported by the LTCH on Worksheet A–7, which is the same methodology used for the 2013-based LTCH market basket.
We also proposed to allocate lease costs across each of the remaining detailed Capital-related cost categories as was done in the 2013-based LTCH market basket. This would result in three primary Capital-related cost categories in the proposed 2017-based LTCH market basket: Depreciation, Interest, and Other Capital-Related costs. Lease costs are unique in that they are not broken out as a separate cost category in the proposed 2017-based LTCH market basket. Rather, we proposed to proportionally distribute these costs among the cost categories of Depreciation, Interest, and Other Capital-Related, reflecting the assumption that the underlying cost structure of leases is similar to that of Capital-related costs in general. As was done for the 2013-based LTCH market basket, we proposed to assume that 10 percent of the lease costs as a proportion of total Capital-related costs (63.0 percent) represents overhead and to assign those costs to the Other Capital-Related cost category accordingly. Therefore, we are assuming that approximately 6.3 percent (63.0 percent × 0.1) of total Capital-related costs represent lease costs attributable to overhead, and we proposed to add this 6.3 percentage points to the 6.7 percent Other Capital-Related cost category weight. We are also proposing to distribute the remaining lease costs (56.7 percent, or 63.0 percent less 6.3 percentage points) proportionally across the three cost categories (Depreciation, Interest, and Other Capital-Related) based on the proportion that these categories comprise of the sum of the Depreciation, Interest, and Other Capital-Related cost categories (excluding lease expenses). For example, the Other Capital-Related cost category represented 18.2 percent of all three cost categories (Depreciation, Interest, and Other Capital-Related) prior to any lease expenses being allocated. This 18.2 percent is applied to the 56.7 percent of remaining lease expenses so that another 10.3 percentage points of lease expenses as a percent of total Capital-related costs is allocated to the Other Capital-Related cost category. Therefore, the resulting proposed Other Capital-Related cost weight is 23.3 percent (6.7 percent + 6.3 percent + 10.3 percent). This is the same methodology used for the 2013-based LTCH market basket. The proposed allocation of these lease expenses are shown in Table E3.
Finally, we proposed to further divide the Depreciation and Interest cost categories. We proposed to separate Depreciation cost category into the following two categories: (1) Building and Fixed Equipment and (2) Movable Equipment. We also proposed to separate the Interest cost category into the following two categories: (1) Government/Nonprofit; and (2) For profit.
To disaggregate the Depreciation cost weight, we needed to determine the percent of total depreciation costs for LTCHs (after the allocation of lease costs) that are attributable to Building and Fixed equipment, which we hereafter refer to as the “fixed percentage.” We proposed to use depreciation and lease data from Worksheet A–7 of the 2017 Medicare cost reports, which is the same methodology used for the 2013-based LTCH market basket. Based on the 2017 LTCH Medicare cost report data, we have determined that depreciation costs for building and fixed equipment account for 44 percent of total depreciation costs, while depreciation costs for movable equipment account for 56 percent of total depreciation costs. As previously mentioned, we proposed to allocate lease expenses among the Depreciation, Interest, and Other Capital-Related cost categories. We determined that leasing building and fixed equipment expenses account for 88 percent of total leasing expenses, while leasing movable equipment expenses account for 12 percent of total leasing expenses. We proposed to sum the depreciation and leasing expenses for building and fixed equipment, as well as sum the depreciation and leasing expenses for movable equipment. This results in the proposed Building and Fixed Equipment Depreciation cost weight (after leasing costs are included) representing 76 percent of total depreciation costs and the Movable Equipment Depreciation cost weight (after leasing costs are included) representing 24 percent of total depreciation costs.
To disaggregate the Interest cost weight, we determine the percent of total interest costs for LTCHs that are attributable to government and nonprofit facilities, which we hereafter refer to as the “nonprofit percentage,” because price pressures associated with these types of interest costs tend to differ from those for for-profit facilities. We proposed to use interest costs data from Worksheet A–7 of the 2017 Medicare cost reports for LTCHs, which is the same methodology used for the 2013-based LTCH market basket. The nonprofit percentage determined using this method is 21 percent.
We received no comments on the proposed methodology to derive the detailed capital cost weights and therefore are finalizing this methodology without modification. Table E3 provides the proposed and final detailed capital cost shares obtained from the Medicare cost reports. Ultimately, these detailed capital cost shares are applied to the total Capital-related cost weight determined in section VII.D.3.b. of the preamble of this final rule to separate the total Capital-related cost weight of 9.9 percent into more detailed cost categories and weights.
Table E4 shows the cost categories and weights for the proposed and final 2017-based LTCH market basket compared to the 2013-based LTCH market basket.
After developing the proposed cost weights for the 2017-based LTCH market basket, we selected the most appropriate wage and price proxies currently available to represent the rate of price change for each expenditure category. For the majority of the cost weights, we base the price proxies on U.S. Bureau of Labor Statistics (BLS) data and group them into one of the following BLS categories:
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We evaluate the price proxies using the criteria of reliability, timeliness, availability, and relevance:
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We believe that the CPIs, PPIs, and ECIs that we have selected meet these criteria. Therefore, we believe that they continue to be the best measure of price changes for the cost categories to which they would be applied.
Table E7 lists all price proxies that we proposed to use for the 2017-based LTCH market basket. In this section of this rule is a detailed explanation of the price proxies we proposed for each cost category weight.
We proposed to continue to use the ECI for Wages and Salaries for All Civilian workers in Hospitals (BLS series code CIU1026220000000I) to measure the wage rate growth of this cost category. This is the same price proxy used in the 2013-based LTCH market basket (81 FR 57092).
We proposed to continue to use the ECI for Total Benefits for All Civilian workers in Hospitals to measure price growth of this category. This ECI is calculated using the ECI for Total Compensation for All Civilian workers in Hospitals (BLS series code CIU1016220000000I) and the relative importance of wages and salaries within total compensation. This is the same price proxy used in the 2013-based LTCH market basket (81 FR 57092).
We proposed to continue to use the PPI Commodity Index for Commercial Electric Power (BLS series code WPU0542) to measure the price growth of this cost category. This is the same price proxy used in the 2013-based LTCH market basket (81 FR 57092).
Similar to the 2013-based LTCH market basket, for the 2017-based LTCH market basket, we proposed to use a blend of the PPI Industry for Petroleum Refineries and the PPI Commodity for Natural Gas. Our analysis of the Bureau of Economic Analysis' 2012 Benchmark I–O data (use table before redefinitions, purchaser's value for NAICS 622000 [Hospitals]), shows that Petroleum Refineries expenses account for approximately 90 percent and Natural Gas expenses account for approximately 10 percent of Hospitals' (NAICS 622000) total Fuel, Oil, and Gasoline expenses. Therefore, we proposed to use a blend of 90 percent of the PPI Industry for Petroleum Refineries (BLS series code PCU324110324110) and 10 percent of the PPI Commodity Index for Natural Gas (BLS series code WPU0531) as the price proxy for this cost category. The 2013-based LTCH market basket used a 70/30 blend of these price proxies, reflecting the 2007 I–O data (81 FR 57092). We believe that these two price proxies continue to be the most technically appropriate indices available to measure the price growth of the Fuel, Oil, and Gasoline cost category in the 2017-based LTCH market basket.
We proposed to continue to use the CMS Hospital Professional Liability Index as the price proxy for PLI costs in the proposed 2017-based LTCH market basket. To generate this index, we collect commercial insurance medical liability premiums for a fixed level of coverage while holding non-price factors constant (such as a change in the level of coverage). This is the same proxy used in the 2013-based LTCH market basket (81 FR 57092).
We proposed to continue to use the PPI Commodity for Pharmaceuticals for Human Use, Prescription (BLS series code WPUSI07003) to measure the price growth of this cost category. This is the same proxy used in the 2013-based LTCH market basket (81 FR 57092).
We proposed to continue to use the PPI Commodity for Processed Foods and Feeds (BLS series code WPU02) to measure the price growth of this cost category. This is the same price proxy used in the 2013-based LTCH market basket (81 FR 57092).
We proposed to continue to use the CPI for Food Away From Home (BLS series code CUUR0000SEFV) to measure the price growth of this cost category. This is the same proxy used in the 2013-based LTCH market basket (81 FR 57092).
Similar to the 2013-based LTCH market basket, we proposed to use a four-part blended PPI as the proxy for the chemical cost category in the 2017-based LTCH market basket. The proposed blend is composed of the PPI Industry for Industrial Gas Manufacturing, Primary Products (BLS
We note that in the 2012 I–O data, the share of total chemicals expenses that the Soap and Cleaning Compound Manufacturing (NAICS 325610) represents decreased relative to the 2007 I–O data (from 5 percent to 2 percent), while the share of the total chemicals expenses that the All Other Chemical Product and Preparation manufacturing (NAICS 3259A0) categories represents increased (from 5 percent to 7 percent). As a result, we proposed to remove the PPI Industry for Soap and Cleaning Compound Manufacturing from the proposed blend for the 2017-based LTCH market basket and replace it with the PPI Industry for Other Miscellaneous Chemical Product Manufacturing.
We did not receive comments on the proposed methodology to derive the blended Chemicals price proxy using the 2012 Benchmark I–O and therefore are finalizing this methodology without modification. Table E5 shows the weights for each of the four PPIs used to create the proposed and final blended Chemical proxy for the 2017-based LTCH market basket compared to the 2013-based blended Chemical proxy.
We proposed to continue to use a blend of two PPIs for the Medical Instruments cost category. The 2012 Benchmark I–O data shows an approximate 57/43 split between Surgical and Medical Instruments and Medical and Surgical Appliances and Supplies for this cost category. Therefore, we proposed a blend composed of 57 percent of the commodity-based PPI Commodity for Surgical and Medical Instruments (BLS series code WPU1562) and 43 percent of the PPI Commodity for Medical and Surgical Appliances and Supplies (BLS series code WPU1563). The 2013-based LTCH market basket used a 50/50 blend of these PPIs based on the 2007 Benchmark I–O data (81 FR 57093).
We proposed to continue to use the PPI Commodity for Rubber and Plastic Products (BLS series code WPU07) to measure price growth of this cost category. This is the same proxy used in the 2013-based LTCH market basket (81 FR 57093).
We proposed to continue to use the PPI Commodity for Converted Paper and Paperboard Products (BLS series code WPU0915) to measure the price growth of this cost category. This is the same proxy used in the 2013-based LTCH market basket (81 FR 57093).
We proposed to continue to use the PPI Commodity for Finished Goods Less Food and Energy (BLS series code WPUFD4131) to measure the price growth of this cost category. This is the same proxy used in the 2013-based LTCH market basket (81 FR 57093).
We proposed to continue to use the ECI for Total Compensation for Private Industry workers in Professional and Related (BLS series code CIU2010000120000I) to measure the price growth of this category. This is the same proxy used in the 2013-based LTCH market basket (81 FR 57093).
We proposed to continue to use the ECI for Total Compensation for Private Industry workers in Office and Administrative Support (BLS series code CIU2010000220000I) to measure the price growth of this category. This is the same proxy used in the 2013-based LTCH market basket (81 FR 57093).
We proposed to continue to use the ECI for Total Compensation for All Civilian workers in Installation, Maintenance, and Repair (BLS series code CIU1010000430000I) to measure the price growth of this cost category. This is the same proxy used in the 2013-based LTCH market basket (81 FR 57093).
We proposed to continue to use the ECI for Total Compensation for Private Industry workers in Service Occupations (BLS series code
We proposed to continue to use the ECI for Total Compensation for Private Industry workers in Professional and Related (BLS series code CIU2010000120000I) to measure the price growth of this category. This is the same proxy used in the 2013-based LTCH market basket (81 FR 57093).
We proposed to continue to use the ECI for Total Compensation for Private Industry workers in Financial Activities (BLS series code CIU201520A000000I) to measure the price growth of this cost category. This is the same proxy used in the 2013-based LTCH market basket (81 FR 57093).
We proposed to continue to use the CPI for Telephone Services (BLS series code CUUR0000SEED) to measure the price growth of this cost category. This is the same proxy used in the 2013-based LTCH market basket (81 FR 57093).
We proposed to continue to use the CPI for All Items Less Food and Energy (BLS series code CUUR0000SA0L1E) to measure the price growth of this cost category. This is the same proxy used in the 2013-based LTCH market basket (81 FR 57093).
We received no comments on the proposed price proxies for the operating portion of the 2017-based LTCH market basket and therefore are finalizing the use of these price proxies without modification.
We proposed to continue to use the same price proxies for the capital-related cost categories as were applied in the 2013-based LTCH market basket, which are provided in Table E7 and described in this section of this rule. Specifically, we proposed to proxy:
• Depreciation: Building and Fixed Equipment cost category by BEA's Chained Price Index for Nonresidential Construction for Hospitals and Special Care Facilities (BEA Table 5.4.4. Price Indexes for Private Fixed Investment in Structures by Type).
• Depreciation: Movable Equipment cost category by the PPI Commodity for Machinery and Equipment (BLS series code WPU11).
• Nonprofit Interest cost category by the average yield on domestic municipal bonds (Bond Buyer 20-bond index).
• For-profit Interest cost category by the average yield on Moody's Aaa bonds (Federal Reserve).
• Other Capital-Related cost category by the CPI–U for Rent of Primary Residence (BLS series code CUUS0000SEHA).
We believe these are the most appropriate proxies for LTCH capital-related costs that meet our selection criteria of relevance, timeliness, availability, and reliability. We are also proposing to continue to vintage weight the capital price proxies for Depreciation and Interest in order to capture the long-term consumption of capital. This vintage weighting method is similar to the method used for the 2013-based LTCH market basket and is described in section VII.D.4.b.(2). of the preamble of this final rule.
We received no comments on the proposed price proxies for the capital portion of the 2017-based LTCH market basket and therefore are finalizing the use of these price proxies without modification.
Because capital is acquired and paid for over time, capital-related expenses in any given year are determined by both past and present purchases of physical and financial capital. The vintage-weighted capital-related portion of the proposed 2017-based LTCH market basket is intended to capture the long-term consumption of capital, using vintage weights for depreciation (physical capital) and interest (financial capital). These vintage weights reflect the proportion of capital-related purchases attributable to each year of the expected life of building and fixed equipment, movable equipment, and interest. We proposed to use vintage weights to compute vintage-weighted price changes associated with depreciation and interest expenses.
Capital-related costs are inherently complicated and are determined by complex capital-related purchasing decisions, over time, based on such factors as interest rates and debt financing. In addition, capital is depreciated over time instead of being consumed in the same period it is purchased. By accounting for the vintage nature of capital, we are able to provide an accurate and stable annual measure of price changes. Annual nonvintage price changes for capital are unstable due to the volatility of interest rate changes and, therefore, do not reflect the actual annual price changes for LTCH capital-related costs. The capital-related component of the proposed 2017-based LTCH market basket reflects the underlying stability of the capital-related acquisition process.
The methodology used to calculate the vintage weights for the proposed 2017-based LTCH market basket is the same as that used for the 2013-based LTCH market basket with the only difference being the inclusion of more recent data. To calculate the vintage weights for depreciation and interest expenses, we first need a time series of capital-related purchases for building and fixed equipment and movable equipment. We found no single source that provides an appropriate time series of capital-related purchases by hospitals for all of the previously mentioned components of capital purchases. The early Medicare cost reports did not have sufficient capital-related data to meet this need. Data we obtained from the American Hospital Association (AHA) do not include annual capital-related purchases. However, the AHA does provide a consistent database of total expenses back to 1963. Consequently, we proposed to use data from the AHA Panel Survey and the AHA Annual Survey to obtain a time series of total expenses for hospitals. We proposed to use data from the AHA Panel Survey supplemented with the ratio of depreciation to total hospital expenses obtained from the Medicare cost reports to derive a trend of annual depreciation expenses for 1963 through 2017. We proposed to separate these depreciation expenses into annual amounts of building and fixed equipment depreciation and movable equipment depreciation as previously determined. From these annual depreciation amounts we derive annual end-of-year book values for building and fixed equipment and movable equipment using the expected life for each type of asset category. While data are not available that are specific to LTCHs, we believe this information for all hospitals serves as a reasonable proxy for the pattern of depreciation for LTCHs.
To continue to calculate the vintage weights for depreciation and interest expenses, we also needed to account for the expected lives for building and fixed equipment, movable equipment, and interest for the proposed 2017-based LTCH market basket. We proposed to calculate the expected lives using Medicare cost report data for LTCHs.
Multiplying these expected lives by the annual depreciation amounts results in annual year-end asset costs for building and fixed equipment and movable equipment. Then we calculated a time series, beginning in 1964, of annual capital purchases by subtracting the previous year's asset costs from the current year's asset costs.
For the building and fixed equipment and movable equipment vintage weights, we proposed to use the real annual capital-related purchase amounts for each asset type to capture the actual amount of the physical acquisition, net of the effect of price inflation. These real annual capital-related purchase amounts are produced by deflating the nominal annual purchase amount by the associated price proxy as previously provided. For the interest vintage weights, we proposed to use the total nominal annual capital-related purchase amounts to capture the value of the debt instrument (including, but not limited to, mortgages and bonds). Using these capital-related purchase time series specific to each asset type, we proposed to calculate the vintage weights for building and fixed equipment, for movable equipment, and for interest.
The vintage weights for each asset type are deemed to represent the average purchase pattern of the asset over its expected life (in the case of building and fixed equipment and interest, 18 years, and in the case of movable equipment, 9 years). For each asset type, we used the time series of annual capital-related purchase amounts available from 2017 back to 1964. These data allow us to derive thirty-seven 18-year periods of capital-related purchases for building and fixed equipment and interest, and forty-six 9-year periods of capital-related purchases for movable equipment. For each 18-year period for building and fixed equipment and interest, or 9-year period for movable equipment, we proposed to calculate annual vintage weights by dividing the capital-related purchase amount in any given year by the total amount of purchases over the entire 18-year or 9-year period. This calculation is done for each year in the 18-year or 9-year period and for each of the periods for which we have data. Then we proposed to calculate the average vintage weight for a given year of the expected life by taking the average of these vintage weights across the multiple periods of data.
We received no comments on the proposed methodology to derive the vintage weights for the 2017-based LTCH market basket and therefore are finalizing these vintage weights without modification.
The vintage weights for the capital-related portion of the proposed and final 2017-based LTCH market basket and the 2013-based LTCH market basket are presented in Table E6.
The process of creating vintage-weighted price proxies requires applying the vintage weights to the price proxy index where the last applied vintage weight in Table E6 is applied to the most recent data point. We have provided on the CMS website an example of how the vintage weighting price proxies are calculated, using example vintage weights and example price indices. The example can be found at the following link:
Table E7 shows both the operating and capital price proxies for the proposed and final 2017-based LTCH market basket.
For FY 2021 (that is, October 1, 2020 through September 30, 2021), we proposed to use an estimate of the proposed 2017-based LTCH market basket to update payments to LTCHs based on the best available data. Consistent with historical practice, we estimated the LTCH market basket update for the LTCH PPS based on IHS Global, Inc.'s (IGI's) forecast using the most recent available data. IGI is a nationally recognized economic and financial forecasting firm with which we contract to forecast the components of the market baskets and multifactor productivity (MFP).
Based on IGI's fourth quarter 2019 forecast with history through the third quarter of 2019, the projected market basket update for FY 2021 is 2.9 percent. Therefore, consistent with our historical practice of estimating market basket updates based on the best available data, we proposed a market basket update of 2.9 percent for FY 2021. Furthermore, because the proposed FY 2021 annual update is based on the most recent market basket estimate for the 12-month period (currently 2.9 percent), we also proposed that if more recent data became subsequently available (for example, a more recent estimate of the market basket update), we would use such data, if appropriate, to determine the FY 2021 annual update in the final rule. (The proposed annual update to the LTCH PPS standard payment rate for FY 2021 is discussed in greater detail in section V.A.2. of the Addendum to the proposed rule.)
Based on the more recent data available for this FY 2021 IPPS/LTCH final rule (that is, IGI's second quarter 2020 forecast of the 2017-based LTCH market basket with historical data through the first quarter of 2020), we estimate that the FY 2021 market basket update is 2.3 percent. We note that the fourth quarter 2019 forecast was developed prior to the economic impacts of the Coronavirus disease 2019 (COVID–19) pandemic. This lower update (2.3 percent) for FY 2021 relative to the proposed rule (3.0 percent) is primarily driven by slower anticipated compensation growth for both health-related and other occupations as labor markets are expected to be significantly impacted during the recession that started in February 2020 and throughout the anticipated recovery.
Using the current 2013-based LTCH market basket and IGI's second quarter 2020 forecast for the market basket components, the FY 2021 market basket update would be 2.4 percent (before taking into account any statutory adjustment). Therefore, the update based on the 2017-based LTCH market basket is currently 0.1 percentage point lower. This lower update is primarily due to the lower Pharmaceuticals cost weight in the 2017-based market basket (6.2 percent) compared to the 2013-based LTCH market basket (7.6 percent). This is partially offset by the higher cost weights associated with All Other Services (such as Professional Fees and Installation, Maintenance, and Repair Services) for the 2017-based LTCH market basket relative to the 2013-based LTCH market basket. Table E8 compares the 2017-based LTCH market basket and the 2013-based LTCH market basket percent changes.
Over the time period covering FY 2016 through FY 2019, the average growth rate of the 2017-based LTCH market basket is roughly 0.1 percentage point lower than the 2013-based LTCH market basket. The lower growth rate is primarily a result of the lower Pharmaceuticals cost weight in the 2017-based market basket compared to the 2013-based LTCH market basket. Historically, the price growth of pharmaceutical costs has exceeded the price growth rates for most of the other market basket cost categories. Therefore, a lower Pharmaceuticals cost weight would, all else equal, result in a lower market basket update. As previously stated, the Pharmaceuticals cost weights for the 2017-based LTCH market basket and the 2013-based LTCH market basket are based on the 2017 and 2013
As discussed in section V.B. of the Addendum to this final rule, under the authority of section 123 of the BBRA as amended by section 307(b) of the BIPA, we established an adjustment to the LTCH PPS payments to account for differences in LTCH area wage levels (§ 412.525(c)). The labor-related portion of the LTCH PPS standard Federal payment rate, hereafter referred to as the labor-related share, is adjusted to account for geographic differences in area wage levels by applying the applicable LTCH PPS wage index. The labor-related share is determined by identifying the national average proportion of total costs that are related to, influenced by, or vary with the local labor market. As discussed in more detail in this section of this rule and similar to the 2013-based LTCH market basket, we classify a cost category as labor-related and include it in the labor-related share if the cost category is defined as being labor-intensive and its cost varies with the local labor market. As stated in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42642), the labor-related share for FY 2020 was defined as the sum of the FY 2020 relative importance of Wages and Salaries; Employee Benefits; Professional Fees: Labor-Related Services; Administrative and Facilities Support Services; Installation, Maintenance, and Repair Services; All Other: Labor-related Services; and a portion of the Capital-Related Costs from the 2013-based LTCH market basket.
We propose to continue to classify a cost category as labor-related if the costs are labor-intensive and vary with the local labor market. Given this, based on our definition of the labor-related share and the cost categories in the proposed 2017-based LTCH market basket, we proposed to include in the labor-related share for FY 2021 the sum of the FY 2021 relative importance of Wages and Salaries; Employee Benefits; Professional Fees: Labor-Related; Administrative and Facilities Support Services; Installation, Maintenance, and Repair Services; All Other: Labor-related Services; and a portion of the Capital-Related cost weight from the proposed 2017-based LTCH market basket.
Similar to the 2013-based LTCH market basket, the proposed 2017-based LTCH market basket includes two cost categories for nonmedical Professional fees (including but not limited to, expenses for legal, accounting, and engineering services). These are Professional Fees: Labor-related and Professional Fees: Nonlabor-related. For the proposed 2017-based LTCH market basket, we proposed to estimate the labor-related percentage of non-medical professional fees (and assign these expenses to the Professional Fees: Labor-related services cost category) based on the same method that was used to determine the labor-related percentage of professional fees in the 2013-based LTCH market basket.
As was done for the 2013-based LTCH market basket, we proposed to determine the proportion of legal, accounting and auditing, engineering, and management consulting services that meet our definition of labor-related services based on a survey of hospitals conducted by CMS in 2008. We notified the public of our intent to conduct this survey on December 9, 2005 (70 FR 73250) and did not receive any public comments in response to the notice (71 FR 8588). A discussion of the composition of the survey and post-stratification can be found in the FY 2010 IPPS/LTCH PPS final rule (74 FR 43850 through 43856). Based on the weighted results of the survey, we determined that hospitals purchase, on average, the following portions of contracted professional services outside of their local labor market:
• 34 percent of accounting and auditing services.
• 30 percent of engineering services.
• 33 percent of legal services.
• 42 percent of management consulting services.
For the proposed 2017-based LTCH market basket, we proposed to apply each of these percentages to the respective 2012 Benchmark I–O cost category underlying the professional fees cost category to determine the Professional Fees: Nonlabor-related costs. The Professional Fees: Labor-related costs were determined to be the difference between the total costs for each Benchmark I–O category and the Professional Fees: Nonlabor-related costs. This is the same methodology that we used to separate the 2013-based LTCH market basket professional fees category into Professional Fees: Labor-related and Professional Fees: Nonlabor-related cost categories.
In the proposed 2017-based LTCH market basket, nonmedical professional fees that were subject to allocation based on these survey results represent approximately 5.6 percent of total costs (and are limited to those fees related to Accounting & Auditing, Legal, Engineering, and Management Consulting services). Based on our survey results, we proposed to apportion approximately 3.6 percentage points of the 5.6 percentage point figure into the Professional Fees: Labor-related share cost category and designate the remaining approximately 2.0 percentage points into the Professional Fees: Nonlabor-related cost category.
In addition to the professional services as previously listed, for the 2017-based LTCH market basket, we proposed to allocate a proportion of the Home Office/Related Organization Contract Labor cost weight, calculated using the Medicare cost reports as previously stated, into the Professional Fees: Labor-related and Professional Fees: Nonlabor-related cost categories. We proposed to classify these expenses as labor-related and nonlabor-related as many facilities are not located in the same geographic area as their home office and, therefore, do not meet our definition for the labor-related share that requires the services to be purchased in the local labor market.
Similar to the 2013-based LTCH market basket, we proposed for the 2017-based LTCH market basket to use the Medicare cost reports for LTCHs to determine the home office labor-related percentages. The Medicare cost report requires a hospital to report information regarding their home office provider. Using information on the Medicare cost report, we compared the location of the LTCH with the location of the LTCH's home office. We proposed to classify a LTCH with a home office located in their respective labor market if the LTCH and its home office are located in the same Metropolitan Statistical Area (MSA). Then we determine the proportion of the Home Office/Related Organization Contract Labor cost weight that should be allocated to the labor-related share based on the percent of total Home Office/Related Organization Contract Labor costs for those LTCHs that had home offices located in their respective local labor markets of total Home Office/Related Organization Contract Labor costs for LTCHs with a home office. We determined a LTCH's and its home office's MSA using their zip code information from the Medicare cost report. Using this methodology, we determined that 4 percent of LTCHs' Home Office/Related Organization Contract Labor costs were for home offices located in their respective local labor markets. Therefore, we proposed to allocate 4 percent of the Home Office/Related Organization Contract Labor cost weight (0.1 percentage point = 1.9 percent × 4 percent) to the Professional Fees: Labor-related cost weight and 96 percent of the Home Office/Related Organization Contract Labor cost weight to the Professional Fees: Nonlabor-related cost weight (1.8 percentage points = 1.9 percent × 96 percent). For
In summary, based on the two allocations mentioned earlier, we proposed to apportion 3.7 percentage points of the professional fees and Home Office/Related Organization Contract Labor cost weights into the Professional Fees: Labor-Related cost category. This amount was added to the portion of professional fees that we already identified as labor-related using the I–O data such as contracted advertising and marketing costs (approximately 0.8 percentage point of total costs) resulting in a Professional Fees: Labor-Related cost weight of 4.5 percent.
We received no comments on our proposed methodology to derive the Professional Fees: Labor-Related cost weight and therefore are finalizing this methodology without modification.
As previously stated, we proposed to include in the labor-related share the sum of the relative importance of Wages and Salaries; Employee Benefits; Professional Fees: Labor-Related; Administrative and Facilities Support Services; Installation, Maintenance, and Repair Services; All Other: Labor-related Services; and a portion of the Capital-Related cost weight from the proposed 2017-based LTCH market basket. The relative importance reflects the different rates of price change for these cost categories between the base year (2017) and FY 2021. Based on IGI's fourth quarter 2019 forecast of the proposed 2017-based LTCH market basket, the sum of the FY 2021 relative importance for Wages and Salaries, Employee Benefits, Professional Fees: Labor-related, Administrative and Facilities Support Services, Installation Maintenance & Repair Services, and All Other: Labor-related Services is 63.6 percent. The portion of Capital costs that is influenced by the local labor market is estimated to be 46 percent, which is the same percentage applied to the 2013-based LTCH market basket. Since the relative importance for Capital is 9.5 percent of the proposed 2017-based LTCH market basket in FY 2021, we took 46 percent of 9.5 percent to determine the proposed labor-related share of Capital for FY 2021 of 4.4 percent. Therefore, we proposed a total labor-related share for FY 2021 of 68.0 percent (the sum of 63.6 percent for the operating cost and 4.4 percent for the labor-related share of Capital).
Based on IGI's second quarter 2020 forecast of the 2017-based LTCH market basket, the sum of the FY 2021 relative importance for Wages and Salaries, Employee Benefits, Professional Fees: Labor-related, Administrative and Facilities Support Services, Installation Maintenance & Repair Services, and All Other: Labor-related Services is 63.7 percent. The portion of Capital costs that is influenced by the local labor market is estimated to be 46 percent, which is the same percentage applied to the 2013-based LTCH market basket. Since the relative importance for Capital is 9.5 percent of the 2017-based LTCH market basket in FY 2021, we took 46 percent of 9.5 percent to determine the labor-related share of Capital for FY 2021 of 4.4 percent. Therefore, using more recent data, the total labor-related share for FY 2021 is 68.1 percent (the sum of 63.7 percent for the operating cost and 4.4 percent for the labor-related share of Capital).
We received several comments on the proposed FY 2021 labor-related share.
After consideration of public comments, we are finalizing a FY 2021 labor-related share of 68.1 percent.
Table E9 shows the FY 2021 labor-related share using the 2017-based LTCH market basket relative importance and the FY 2020 labor-related share using the 2013-based LTCH market basket.
The total difference between the FY 2021 labor-related share using the 2017-based LTCH market basket and the FY 2020 labor-related share using the 2013-based LTCH market basket is 1.8 percentage points (68.1 percent and 66.3 percent, respectively). This difference is attributable to: (1) Revision to the base year cost weights (0.8 percentage point); (2) revision to starting point of calculation of relative importance (base year) from 2013 to 2017 (0.6 percentage point); and (3) using an updated IGI forecast and reflecting an additional year of inflation (0.4 percentage point). The 0.8-percentage point difference in the base year cost weights is primarily due to the incorporation of the 2012 I–O data which shows an increase in the Professional Fees: Labor-Related services.
We note that the use of the Medicare cost report to derive the Home Office/Related Organization Contract Labor cost weight has −0.1 percentage point impact, meaning if we were to use the I–O data to derive the Home Office/Related Organization Contract Labor cost weight, the labor-related share would be 0.1 percentage point higher. The impact of using the Medicare cost report data to calculate the Home Office/Related Organization Contract Labor cost weight is minimal because if we were to instead use the I–O data to derive this weight, it would also increase the residual “All Other” cost weight from 28.3 percent (using the Medicare cost report data to calculate the Home Office/Related Organization Contract Labor cost weight) to 30.2 percent (using the I–O data to calculate the Home Office/Related Organization Contract labor cost weight). The higher residual “All Other” cost weight then leads to relatively higher cost weight for Administrative and Facilities Support Services which is also reflected in the labor-related share.
In section VIII. of the preamble of the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32830 through 32852), we discussed the following Medicare quality reporting systems:
• In section VIII.A., the Hospital IQR Program;
• In section VIII.B., the PCHQR Program; and
• In section VIII.C., the LTCH QRP.
In addition, in section VIII.D. of the preamble of that proposed rule (85 FR 32852 through 32858), we proposed changes to the Medicare and Medicaid Promoting Interoperability Programs (previously known as the Medicare and Medicaid EHR Incentive Programs) for eligible hospitals and critical access hospitals (CAHs).
The Hospital IQR Program strives to put patients first by ensuring they are empowered to make decisions about their own healthcare along with their clinicians using information from data-driven insights that are increasingly aligned with meaningful quality measures. We support technology that reduces burden and allows clinicians to focus on providing high quality healthcare for their patients. We also support innovative approaches to improve quality, accessibility, and affordability of care, while paying particular attention to improving clinicians' and beneficiaries' experiences when interacting with CMS programs. In combination with other efforts across the Department of Health and Human Services, we believe the Hospital IQR Program incentivizes hospitals to improve healthcare quality and value, while giving patients the tools and information needed to make the best decisions for themselves.
We seek to promote higher quality and more efficient healthcare for Medicare beneficiaries. This effort is supported by the adoption of widely-agreed upon quality and cost measures. We have worked with relevant stakeholders to define measures in almost every care setting and currently measure some aspect of care for almost
We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53512 through 53513) for our finalized measure retention policy. In the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32830), we did not propose any changes to this policy.
We refer readers to the FY 2019 IPPS/LTCH PPS final rule (83 FR 41540 through 41544) for a summary of the Hospital IQR Program's removal factors.
In the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32830), we did not propose any changes to our policies regarding measure removal.
We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53510 through 53512) for a discussion of the previous considerations we have used to expand and update quality measures under the Hospital IQR Program. We also refer readers to the FY 2019 IPPS/LTCH PPS final rule (83 FR 41147 through 41148), in which we describe the Meaningful Measures Initiative, our objectives under this framework for quality measurement, and the quality topics that we have identified as high impact measurement areas that are relevant and meaningful to both patients and providers. In the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32830), we did not propose any changes to these policies.
In the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32830), we did not propose to adopt any new measures.
This table summarizes the previously finalized Hospital IQR Program Measures for the FY 2022 Payment Determiniation:
This table summarizes previously finalized Hospital IQR Program measure set for the FY 2023 Payment Determination:
This tables summarizes the previously finalized Hospital IQR Program measure set for the FY 2024 Payment Determination and Subsequent Years
Sections 1886(b)(3)(B)(viii)(I) and (b)(3)(B)(viii)(II) of the Act state that the applicable percentage increase for FY 2015 and each subsequent year shall be reduced by one quarter- of such applicable percentage increase (determined without regard to sections 1886(b)(3)(B)(ix), (xi), or (xii) of the Act) for any subsection (d) hospital that does not submit data required to be submitted on measures specified by the Secretary in a form and manner, and at a time, specified by the Secretary. In order to successfully participate in the Hospital IQR Program, hospitals must meet specific procedural, data collection, submission, and validation requirements.
For each Hospital IQR Program payment determination, we require that hospitals submit data on each specified measure in accordance with the measure's specifications for a particular period of time. We refer readers to the FY 2019 IPPS/LTCH PPS final rule (83 FR 41538) in which we summarized how the Hospital IQR Program maintains the technical measure specifications for quality measures and the subregulatory process for
The data submission requirements, Specifications Manual, and submission deadlines are posted on the QualityNet website at:
The Hospital IQR Program's procedural requirements are codified in regulation at 42 CFR 412.140. We refer readers to these codified regulations for participation requirements, as further explained by the FY 2014 IPPS/LTCH PPS final rule (78 FR 50810 through 50811) and the FY 2017 IPPS/LTCH PPS final rule (81 FR 57168). We did not propose any changes to these procedural requirements.
We refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51640 through 51641), the FY 2013 IPPS/LTCH PPS final rule (77 FR 53536 through 53537), and the FY 2014 IPPS/LTCH PPS final rule (78 FR 50811) for details on the Hospital IQR Program data submission requirements for chart-abstracted measures. We did not propose any changes to the data submission requirements for chart-abstracted measures.
For a discussion of our previously finalized reporting and submission requirements for eCQMs, we refer readers to the FY 2014 IPPS/LTCH PPS final rule (78 FR 50807 through 50810; 50811 through 50819), the FY 2015 IPPS/LTCH PPS final rule (79 FR 50241 through 50253; 50256 through 50259; and 50273 through 50276), the FY 2016 IPPS/LTCH PPS final rule (80 FR 49692 through 49698; and 49704 through 49709), the FY 2017 IPPS/LTCH PPS final rule (81 FR 57150 through 57161; and 57169 through 57172), the FY 2018 IPPS/LTCH PPS final rule (82 FR 38355 through 38361; 38386 through 38394; 38474 through 38485; and 38487 through 38493), the FY 2019 IPPS/LTCH PPS final rule (83 FR 41567 through 41575; 83 FR 41602 through 41607), and the FY 2020 IPPS/LTCH PPS final rule (84 FR 42501 through 42506). Current reporting and submission requirements were established in the FY 2018 IPPS/LTCH PPS final rule. In that final rule (82 FR 38368 through 38361), we finalized eCQM reporting and submission requirements such that hospitals were required to report only one, self-selected calendar quarter of data for four self-selected eCQMs for the CY 2018 reporting period/FY 2020 payment determination. Those reporting requirements were extended to the CY 2019 reporting period/FY 2021 payment determination in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41603 through 41604), as well as to the CY 2020 reporting period/FY 2022 payment determination and the CY 2021 reporting period/FY 2023 payment determination in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42501 through 42503).
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42503 through 42505), we also finalized that for the CY 2022 reporting period/FY 2024 payment determination, hospitals would be required to report one, self-selected calendar quarter of data for: (a) Three self-selected eCQMs, and (b) the Safe Use of Opioids—Concurrent Prescribing eCQM (Safe Use eCQM), for a total of four eCQMs.
In the FY 2021 IPPS/LTCH PPS proposed rule, we proposed to progressively increase, over a 3-year period, the number of quarters for which hospitals are required to report eCQM data, from the current requirement of one self-selected quarter of data to four quarters of data. We believe that increasing the number of quarters for which hospitals are required to report eCQM data will produce more comprehensive and reliable quality measure data for patients and providers. Increasing the number of reported quarters has several benefits. Primarily, a single quarter of data is not enough to capture trends in performance over time. Evaluating multiple quarters of data would provide a more reliable and accurate picture of overall performance. Further, reporting multiple quarters of data would provide hospitals with a more continuous information stream to monitor their levels of performance. Ongoing, timely data analysis can better identify a change in performance that may necessitate investigation and potentially corrective action.
The current policy requiring more limited reporting was established due to stakeholder feedback about challenges in reporting data, and to give hospitals more time to gain experience with reporting (including upgrading systems and training to support eCQM reporting) (82 FR 78355 through 78361). That policy, as well as the changes we proposed, are consistent with our stated goal to create a gradual shift to more robust eCQM reporting (82 FR 38356). Taking an incremental approach over a 3-year period would give hospitals and their vendors time to plan in advance and build upon and utilize investments already made in their EHR infrastructures. We refer readers to section XI.B.7. of the preamble of this final rule for a discussion of the increased collection of information burden associated with this provision. We also refer readers to section VIII.D.6.b of the preamble of this final rule for similar provisions under the Promoting Interoperability Program.
In the FY 2021 IPPS/LTCH PPS proposed rule, for the CY 2021 reporting period/FY 2023 payment determination, we proposed to increase the amount of data required while keeping the number of eCQMs required the same. Specifically, in the proposed rule, we proposed that hospitals report two self-selected calendar quarters of data for each of the four self-selected eCQMs for the CY 2021 reporting period/FY 2023 payment determination (85 FR 32837).
In the FY 2021 IPPS/LTCH PPS proposed rule, for the CY 2022 reporting period/FY 2024 payment determination, we proposed to increase the amount of data required while keeping the number and type of eCQMs required the same. Specifically, in the proposed rule, we proposed to require that hospitals report three self-selected calendar quarters of data for the CY 2022 reporting period/FY 2024 payment determination for each required eCQM: (a) Three self-selected eCQMs; and (b) the Safe Use of Opioids eCQM (85 FR 32837).
In the FY 2021 IPPS/LTCH PPS proposed rule, for the CY 2023 reporting period/FY 2025 payment determination and beyond, we proposed to further increase the amount of data required while keeping the number and type of eCQMs required the same. Specifically, in the proposed rule, we proposed to require that hospitals report four calendar quarters of data beginning with the CY 2023 reporting period/FY 2025 payment determination and for subsequent years for each required eCQM: (a) Three self-selected eCQMs; and (b) the Safe Use of Opioids eCQM (85 FR 32837).
Due to the duplicative nature of comments received on the proposals to progressively increase, over a 3-year period, the number of quarters for which hospitals are required to report eCQM data, from the current requirement of one self-selected quarter of data to four quarters of data, we are responding to all comments received on the proposals in section VII.A.9.e.4. of this final rule below.
In addition, the 21st Century Cures Act final rule that appeared in the May 1, 2020
As noted previously, our current policy for eCQM reporting requires hospitals to report only one, self-selected calendar quarter of data for four self-selected eCQMs for the CY 2020 reporting period/FY 2022 payment determination. Calendar year 2021 will be the fifth year that hospitals have submitted eCQM data, and current reporting and submission requirements were established in the FY 2018 IPPS/LTCH PPS final rule. In that final rule (82 FR 38361), we finalized a policy that eCQM reporting would be required for one self-selected quarter of data for 4 self-selected eCQMs, rather than finalizing our proposal to require reporting on the first three calendar quarters of data for 6 eCQMs in the FY 2018 proposed rule (82 FR 20050 through20051) or continuing our previously finalized policy to require hospitals to submit one full calendar year of data for 8 eCQMs (81 FR 57152). We made this change due to stakeholder concerns about the challenges associated with collecting and reporting eCQM data (82 FR 38355 through 38361). We believed it was important to give stakeholders more time to build and refine their EHR systems and gain experience reporting eCQMs (82 FR 38356). At that time, we stated our intention to gradually transition toward more robust eCQM reporting (82 FR 38356), and we reiterated that intention in a subsequent final rule (84 FR 42502).
As stated in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32836), we believe that increasing the number of quarters for which hospitals are required to report eCQM data will produce more comprehensive quality measure data for patients and providers and that submitting and evaluating multiple quarters of data would provide a more reliable and accurate picture of hospital performance.
Internal review of Hospital IQR Program eCQM submissions data revealed that approximately 97 percent of eligible hospitals successfully submitted one quarter of eCQM data for four self-selected eCQMs for CY 2018 (84 FR 42458). We believe that hospitals have had adequate time to prepare for providing two quarters of data, especially given that hospitals may select to report the third and fourth quarters of CY 2021, allowing them to use the first half of CY 2021 to continue to prepare. After holding eCQM reporting and submission policies constant for a number of years in order to give hospitals and their vendors additional time to improve eCQM reporting capabilities, and stating our intention to transition to more robust reporting, we believe that it is time to increase the level of reporting in order to capture additional quarters of data. As we noted in the proposed rule, we believe that a single quarter of data is not enough to capture trends in performance over time. Our goal in proposing to progressively increase the number of quarters of data to be collected over 3 years was to strike an appropriate balance between increasing eCQM reporting and providing hospitals with the necessary time to implement such changes.
If hospitals are concerned that their annual payment update may be impacted because vendors will be unable to meet the regulatory requirements related to the reporting of electronic clinical quality measures, we emphasize that hospitals may be eligible for an ECE under the IQR program as described above and further below.
With respect to the usefulness and challenges of extracting this data after one quarter rather than requiring two quarters, we believe that our proposal further advances our goal of incrementally increasing the use of EHR data for quality measurement and improvement and is responsive to the feedback of some stakeholders urging a faster transition to full electronic reporting (84 FR 42503). In fact, past stakeholder feedback has included the concern that rural hospitals specifically have trouble meeting the minimum reporting threshold when the measurement period is one quarter (84 FR 42502). We also believe that reporting of the Safe Use eCQM will provide valuable information on the area of high-risk prescribing to providers, and further our efforts to combat the negative impacts of the opioid crisis. Further, regarding the challenges of data extraction, the Safe Use eCQM was developed with implementation feasibility and ease in mind. Testing showed that 96 percent of the data elements required to calculate the performance rate are: (1) Collected during routine care; (2) extractable from structured fields in the electronic health systems of test sites; and (3) likely to be accurate. (84 FR 42454).
The meaningfulness of eCQMs to small, rural hospitals, rural health and healthcare remains one of our priorities. In 2016, we established an agency-wide Rural Health Council and in 2017 we launched the Meaningful Measures Initiative and included Improving
As for the commenter's recommendation for eCQM submission tool enhancement, we appreciate the commenter's feedback and will take these recommendations into consideration as we assess how to advance eCQM reporting in the Hospital IQR Program. We also note that the eCQM Annual Updates (which include the eCQM specifications, educational materials, value sets, code systems, direct reference codes, terminology, etc.) are released in the spring for the next year's reporting period. For example, the CY 2021 reporting period/FY 2023 payment determination information was released and posted on the eCQI Resource Center in the spring of 2020. This timeframe for updates was adopted in an effort to support EHR system upgrades and development as hospitals and vendors prepare for the next reporting period. We also note that testing becomes available via the HQR System when the submission period opens in the Fall before the Spring eCQM submission deadline.
As to concerns regarding the future of the impact of the COVID–19 PHE, as noted above, we issued a nationwide ECE that excepted certain data reporting requirements and extended numerous deadlines. We will continue to monitor the impact that the COVID–19 PHE has on hospitals, including small, rural hospitals, and will issue additional exceptions as necessary. Additionally, if, due to COVID–19 or any other external circumstance, any hospital—including small, rural hospitals, believes that reporting would have a significant detrimental impact, they can apply for an ECE.
In order to fulfill these requirements, hospitals are expected to report QRDA I, patient-level files representative of their patient population for the specified reporting quarter. With regard to the comment on the submission of larger QRDA I files, the maximum QRDA I patient file size remains 10MB. We are maintaining our established submission format of one patient, per file, per quarter, which includes all patient encounters, eCQMs and applicable data elements for those measures. Maintaining this process is intended to reduce provider burden through the preservation of established file requirements so that submitters are familiar and experienced with eCQM reporting.
In addition, users are able to submit multiple quarters of patient data within one batch file to the HQR System, with
After consideration of comments received, we are finalizing our proposal as proposed to progressively increase, over a 3-year period, the number of quarters for which hospitals are required to report eCQM data, from the current requirement of one self-selected quarter of data to four quarters of data. Specifically, for the CY 2021 reporting period/FY 2023 payment determination, hospitals will be required to report two self-selected calendar quarters of data for each of the four self-selected eCQMs. For the CY 2022 reporting period/FY 2024 payment determination, hospitals will be required to report three self-selected calendar quarters of data for each required eCQM: (a) Three self-selected eCQMs; and (b) the Safe Use of Opioids eCQMs. For the CY 2023 reporting period/FY 2025 payment determination and subsequent years, hospitals will be required to report four calendar quarters of data for each required eCQM: (a) Three self-selected eCQMs; and (b) the Safe Use of Opioids eCQMs. In addition, we are clarifying that until hospitals are required to report all four quarters of data beginning with the CY 2023 reporting period/FY 2025 payment determination, they may submit either consecutive or non-consecutive self-selected quarters of data. We also refer readers to section VIII.D. of this final rule where we are also finalizing similar polices under the PI Program.
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41604 through 41607), to align the Hospital IQR Program with the Promoting Interoperability Program, we finalized a policy to require hospitals to use the 2015 Edition certification criteria for certified EHR technology (CEHRT) for the CY 2019 reporting period/FY 2021 payment determination and subsequent years. While we did not propose any changes to this policy in the FY 2021 IPPS/LTCH PPS proposed rule, as stated above, we did propose changes to this policy in the CY 2021 Payment Policies Under the Physician Fee Schedule Proposed Rule published August 17, 2020. To reiterate, the 21st Century Cures Act final rule that appeared in the May 1, 2020
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42505 through 42506), we finalized the requirement that EHRs be certified to all available eCQMs used in the Hospital IQR Program for the CY 2020 reporting period/FY 2022 payment determination and subsequent years. We did not propose any changes to this policy in the FY 2021 IPPS/LTCH PPS proposed rule. However, as mentioned above, we refer readers to the CY 2021 Payment Policies Under the Physician Fee Schedule Proposed Rule published August 17, 2020, where we proposed to expand flexibility under the Hospital IQR Program to allow hospitals to use either: (1) Technology certified to the 2015 Edition criteria for CEHRT as was previously finalized for reporting eCQMs in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41537–41608) and for reporting hybrid measures in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42507), or (2) technology certified to the 2015 Edition Cures Update standards as finalized in the 21st Century Cures Act final rule (85 FR 25642 through 25961) and sought public comment on our proposal (85 FR 50271).
We refer readers to the FY 2016 IPPS/LTCH PPS final rule (80 FR 49705 through 49708) and the FY 2017 IPPS/LTCH PPS final rule (81 FR 57169 through 57170) for our previously adopted eCQM file format requirements. Under these requirements, hospitals: (1) Must submit eCQM data via the Quality Reporting Document Architecture Category I (QRDA I) file format as was previously required; (2) may use third parties to submit QRDA I files on their behalf; and (3) may either use abstraction or pull the data from non-certified sources in order to then input these data into CEHRT for capture and reporting QRDA I files. Hospitals can continue to meet the reporting requirements by submitting data via QRDA I files, zero denominator declaration, or case threshold exemption (82 FR 38387).
More specifically regarding the use of QRDA I files, in the FY 2017 IPPS/LTCH PPS final rule (81 FR 57169 through 57170), we stated that we expect QRDA I files to reflect data for one patient per file per quarter, and that they contain the following four key elements that are utilized to identify the file:
• CMS Certification Number (CCN).
• CMS Program Name.
• EHR Patient ID.
• Reporting period specified in the Reporting Parameters Section per the CMS Implementation Guide for the applicable reporting year, which is published on the eCQI Resource Center website at
In the FY 2021 IPPS/LTCH PPS proposed rule, we proposed to add EHR Submitter ID to the four key elements listed, as previously discussed, as a fifth key element for file identification beginning with the CY 2021 reporting period/FY 2023 payment determination (85 FR 32837). An EHR Submitter ID is the ID that is assigned by QualityNet to submitter entities upon registering into the system and will be used to upload QRDA I files. For vendors, the EHR Submitter ID is the Vendor ID; for hospitals, the EHR, Submitter ID is the hospital's CCN. Particularly for situations when a hospital uses one or more vendors to submit QRDA I files via the QualityNet Secure Portal (also referred to as the Hospital Quality Reporting (HQR) System), this additional element would prevent the risk of a previously submitted file by a different vendor unintentionally being overwritten. Therefore, hospitals would be required to submit the following elements to identify the QRDA 1 file:
• CMS Certification Number (CCN).
• CMS Program Name.
• EHR Patient ID.
• Reporting period specified in the Reporting Parameters Section.
• EHR Submitter ID.
After consideration of the public comments received, we are finalizing our proposal as proposed to add EHR Submitter ID as the fifth key element for file identification beginning with the CY 2021 reporting period/FY 2023 payment determination.
We refer readers to the FY 2015 IPPS/LTCH PPS final rule (79 FR 50256 through 50259), the FY 2016 IPPS/LTCH PPS final rule (80 FR 49705 through 49709), and the FY 2017 IPPS/LTCH PPS final rule (81 FR 57169 through 57172) for our previously adopted policies to align eCQM data reporting periods and submission deadlines for both the Hospital IQR and Medicare Promoting Interoperability Programs. In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57172), we finalized the alignment of the Hospital IQR Program eCQM submission deadline with that of the Medicare Promoting Interoperability Program—the end of 2 months following the close of the calendar year—for the CY 2017 reporting period/FY 2019 payment determination and subsequent years. We note the submission deadline may be moved to the next business day if it falls on a weekend or federal holiday. In the FY 2021 IPPS/LTCH PPS proposed rule, we did not propose any changes to the eCQM submission deadlines. Even though hospitals will be required to gradually increase the number of quarters of eCQM data submitted, the submission deadline does not change. Hospitals must still submit eCQM data by the end of the data submission time period regardless of how many quarters of data are required to be reported for a given calendar year. That time period will continue to be the 2 months following the close of the respective calendar year. For example, for the CY 2021 reporting period/FY 2023 payment determination, hospitals should submit data by Monday, February 28, 2022.
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38350 through 38355), we finalized voluntary reporting of the Hybrid Hospital-Wide Readmission (HWR) measure for the CY 2018 reporting period. For data submission and reporting requirements under the 2018 Voluntary Reporting Period, we finalized that the 13 core clinical data elements and six linking variables for
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42507), we finalized a requirement that hospitals use EHR technology certified to the 2015 Edition to submit data on the Hybrid HWR measure. In addition, we finalized that the core clinical data elements and linking variables identified in hybrid measure specifications must be submitted using the QRDA I file format. In order to ensure that the data have been appropriately connected to the encounter, the core clinical data elements specified for risk adjustment need to be captured in relation to the start of an inpatient encounter. The QRDA I file standard enables the creation of an individual patient-level quality report that contains quality data for one patient for one or more quality measures.
In the FY 2021 IPPS/LTCH PPS proposed rule, we proposed to continue the policy that requires hospitals to use EHR technology certified to the 2015 Edition to submit data on the Hybrid HWR measure and expand this requirement to apply to any future hybrid measure adopted into the Hospital IQR Program's measure set (85 FR 32838). We also clarified that core clinical data elements and linking variables must be submitted using the QRDA I file format for future hybrid measures in the program. We invited public comment on our proposals.
As discussed above, the 21st Century Cures Act final rule finalized a number of updates to the 2015 Edition of health IT certification criteria. Since publication of the FY 2021 IPPS/LTCH PPS proposed rule, we proposed in the CY 2021 PFS proposed rule to allow hospitals to continue to use technology certified to the 2015 Edition criteria for CEHRT or to use technology certified to the 2015 Edition Cures Update standards (85 FR 50271). If finalized, this would mean that hospitals could continue to use their current edition or update to the updated edition when made available by their vendor.
After consideration of the public comments we received, we are finalizing our proposals as proposed to continue the policy that requires hospitals to use EHR technology certified to the 2015 Edition to submit data on the Hybrid HWR measure and expand this requirement to apply to any future hybrid measure adopted into the Hospital IQR Program's measure set. However, as noted above, we refer readers to our proposal in the CY 2021 PFS proposed rule to allow hospitals to use either: (1) Technology certified to the 2015 Edition criteria for CEHRT for reporting eCQMs and hybrid measures or (2) technology certified to the 2015 Edition Cures Update standards as finalized in the 21st Century Cures Act final rule (85 FR 50271).
In the FY 2020 IPPS/LTCH PPS final rule, we finalized allowing hospitals to meet the hybrid measure reporting and submission requirements by submitting any combination of data via QRDA I files, zero denominator declarations, and/or case threshold exemptions (84 FR 42507). We also finalized applying similar zero denominator declaration and case threshold exemption policies to hybrid measure reporting as we allow for eCQM reporting (84 FR 42507 through 42508). We did not propose any changes to the hybrid measure reporting and submission requirement supporting any combination of data via QRDA I files, zero denominator declaration, and/or case threshold exemptions. We note that the ONC 21st Century Cures Act final rule revises the clinical quality measurement criterion at § 170.315(c)(3) to refer to CMS QRDA Implementation Guides and removes the Health Level 7 (HL7®) QRDA standard requirements (85 FR 25645). Based on our data, the majority of Hospital IQR Program participants already use the CMS QRDA I Implementation Guide for Hospital Quality Reporting for submission of eCQMs to the Hospital IQR Program. Under our proposal in the CY 2021 PFS proposed rule, discussed above, hospitals would have the flexibility to use either: (1) Technology certified to the 2015 Edition criteria for CEHRT for reporting eCQMs and hybrid measures, or (2) technology certified to the 2015
We refer readers to the FY 2020 IPPS/LTCH PPS final rule (84 FR 42508), where we finalized submission deadlines for hybrid measures. We did not propose any changes to these policies.
We refer readers to the FY 2011 IPPS/LTCH PPS final rule (75 FR 50221), the FY 2012 IPPS/LTCH PPS final rule (76 FR 51641), the FY 2013 IPPS/LTCH PPS final rule (77 FR 53537), the FY 2014 IPPS/LTCH PPS final rule (78 FR 50819), and the FY 2016 IPPS/LTCH PPS final rule (80 FR 49709) for details on our sampling and case thresholds for the FY 2016 payment determination and subsequent years. We did not propose any changes to this policy.
We refer readers to the FY 2011 IPPS/LTCH PPS final rule (75 FR 50220), the FY 2012 IPPS/LTCH PPS final rule (76 FR 51641 through 51643), the FY 2013 IPPS/LTCH PPS final rule (77 FR 53537 through 53538), and the FY 2014 IPPS/LTCH PPS final rule (78 FR 50819 through 50820) for details on previously-adopted HCAHPS submission requirements. We also refer hospitals and HCAHPS Survey vendors to the official HCAHPS website at:
There are no remaining structural measures in the Hospital IQR Program.
For details on the data submission and reporting requirements for Healthcare-Associated Infection (HAI) measures reported via the CDC's National Healthcare Safety Network (NHSN), we refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51629 through 51633; 51644 through 51645), the FY 2013 IPPS/LTCH PPS final rule (77 FR 53539), the FY 2014 IPPS/LTCH PPS final rule (78 FR 50821 through 50822), and the FY 2015 IPPS/LTCH PPS final rule (79 FR 50259 through 50262). The data submission deadlines are posted on the QualityNet website.
We refer readers to the FY 2019 IPPS/LTCH PPS final rule (83 FR 41547 through 41553), in which we finalized the removal of five of these measures (CLABSI, CAUTI, Colon and Abdominal Hysterectomy SSI, MRSA Bacteremia, and CDI) from the Hospital IQR Program. As a result, hospitals will not be required to submit any data for those measures under the Hospital IQR Program following their removal beginning with the CY 2020 reporting period/FY 2022 payment determination. However, the five CDC NHSN HAI measures are included in the HAC Reduction and Hospital VBP Programs and reported via the CDC NHSN portal (83 FR 41474 through 41477; 83 FR 41449 through 41452). We further note that the HCP measure remains in the Hospital IQR Program and will continue to be reported via NHSN. We did not propose any changes to these policies.
We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53539 through 53553), the FY 2014 IPPS/LTCH PPS final rule (78 FR 50822 through 50835), the FY 2015 IPPS/LTCH PPS final rule (79 FR 50262 through 50273), the FY 2016 IPPS/LTCH PPS final rule (80 FR 49710 through 49712), the FY 2017 IPPS/LTCH PPS final rule (81 FR 57173 through 57181), the FY 2018 IPPS/LTCH PPS final rule (82 FR 38398 through 38403), and the FY 2019 IPPS/LTCH PPS final rule (83 FR 41607 through 41608) for detailed information on validation processes for chart-abstracted measures and eCQMs, and previous updates to these processes for the Hospital IQR Program.
Validation for chart-abstracted measures has been updated over recent years as the number of chart-abstracted measures has been reduced. In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41562 through 41567), we removed four clinical process of care measures,
We adopted the process for validating eCQM data in the FY 2017 IPPS/LTCH PPS final rule (81 FR 57173 through 57181). Validation of eCQM data was finalized for the FY 2020 payment determination and subsequent years (starting with the validation of CY 2017 eCQM data that would impact FY 2020 payment determinations). We refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38398 through 38403), in which we finalized several updates to the processes and procedures for validation of CY 2017 eCQM data for the FY 2020 payment determination, validation of CY 2018 eCQM data for the FY 2021 payment determination, and eCQM data validation for subsequent years.
In the FY 2021 IPPS/LTCH PPS proposed rule, we proposed to incrementally combine the validation processes for chart-abstracted measure data and eCQM data and related policies in a stepwise process (85 FR 32839). To accomplish this, we proposed to: (1) Update the quarters of data required for validation for both chart-abstracted measures and eCQMs; (2) expand targeting criteria to include hospital selection for eCQMs; (3) change the validation pool from 800 hospitals to 400 hospitals; (4) remove the current exclusions for eCQM validation selection, (5) require electronic file submissions for chart-abstracted measure data; (6) align the eCQM and chart-abstracted measure scoring processes; and (7) update the educational review process to address eCQM validation results. We believe these proposals would ultimately streamline the validation process and reduce the total number of hospitals selected for validation. These are discussed in detail in the following sections.
Currently, we require hospitals selected for chart-abstracted measures to submit data from the Q3 and Q4 of the calendar year, 3 years before the payment determination and the Q1 and Q2 of the calendar year, 2 years before the payment determination (FY 2014 IPPS/LTCH final rule (78 FR 50822 through 50823). This is because there is a lag associated with validation. In general, validation is a year behind. Validation results affecting a certain FY payment determination are based on measures submitted for the prior payment determination. For example, validation results affecting the FY 2024 payment determination are based on measures submitted for the FY 2023 payment determination (CY 2021 discharge period with data submission completing in CY 2022).
For validation affecting the FY 2023 payment determination, hospitals must submit data to validate chart-abstracted measures from the Q3 and Q4 of CY 2020 and the Q1 and Q2 of CY 2021. These are data originally submitted for the FY 2022 program payment determination. Depending on whether a hospital is selected as a random or targeted hospital, CMS requests data between 1 and 5 months following the data reporting submission deadline for a given reporting quarter. Following this request, hospitals have 30 days to submit randomly selected medical records to the Clinical Data Abstraction Center (CDAC), and after submission, CMS validates the data in preparation to make the associated payment determination. Under the current policy, hospitals selected for eCQM validation for a given payment determination year are required to provide medical records for a sample of cases occurring during one of the self-selected calendar quarters of the year 3 years before that payment determination (82 FR 38399 through 38400). For example, for validation affecting the FY 2023 payment determination period, hospitals selected during CY 2021 for eCQM validation are required to submit data from one self-selected quarter out of the 4 calendar quarters of 2020, that is Q1 through Q4 of CY 2020 (82 FR 38398 through 38403). These requirements are illustrated in the following table.
To support the transition to a combined validation process for both chart-abstracted measures and eCQMs, we proposed to shift the quarters of data used for both chart-abstracted measure validation and eCQM validation in an incremental manner in order to align the two over time.
In order to align the quarters of data used for chart-abstracted measure validation and eCQM validation, we proposed to first change the period for validation affecting the FY 2023 payment determination. Instead of validating chart-abstracted measure data from Q3 2020–Q2 2021, we proposed to validate measure data only from the Q3 and Q4 of CY 2020 for validation affecting the FY 2023 payment determination for chart-abstracted measures (illustrated in Table: 2 that follows) as a transition year. Specifically, this means that we would not require facilities to submit data for chart-abstracted measure validation for the Q1 and Q2 of CY 2021 for validation affecting the FY 2023 payment determination. We would use measure data from only two quarters (Q3 and Q4 of CY 2020) for hospitals selected under both the random and targeted chart-abstracted measure validation. We note that this proposal only affects chart-abstracted measure validation; we would continue to validate the self-selected quarter of eCQM data submitted during 2020 for validation affecting the FY 2023 payment determination as previously finalized.
After consideration of the public comments we received, we are finalizing our proposal as proposed to validate measure data only from the Q3 and Q4 of CY 2020 for validation affecting the FY 2023 payment determination for chart-abstracted measures as a transition year.
For validation affecting the FY 2024 payment determination and subsequent years, we proposed to use Q1–Q4 data of the applicable calendar year for validation of both chart-abstracted measures and eCQMs. For example, the quarters required for validation affecting the FY 2024 payment determination would occur as displayed in the following table.
In the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32840), we stated that we believe aligning the quarters of submission data used for both chart-abstracted measures and eCQM validation will allow hospitals selected for validation to more easily track and meet validation requirements, such as medical records requests from the CDAC.
We invited the public to comment on our proposal to incrementally align the quarters used for chart-abstracted measure and eCQM validation as previously discussed.
After consideration of the public comments that we received, we are finalizing our proposal as proposed to use Q1 through Q4 data of the applicable calendar year of both chart-abstracted measures and eCQMs for validation affecting FY 2024 payment determination and subsequent years.
As noted previously, in the FY 2017 IPPS/LTCH PPS final rule (81 FR 57173), we finalized a separate validation process for eCQMs in the Hospital IQR Program. In addition to validating the chart-abstracted measures, we began validating an additional pool of up to 200 randomly selected hospitals for eCQMs (81 FR 57173).
Upon alignment of validation quarters as in section VIII.A.10.b.(2). of the preamble of this final rule, we wish to combine the validation process for both chart-abstracted measures and eCQMs. Therefore, in the FY 2021 IPPS/LTCH PPS proposed rule, we proposed to remove the separate process for eCQM validation, beginning with the validation affecting the FY 2024 payment determination (for validation commencing in CY 2022 using data from the CY 2021 reporting period) (85 FR 32840). Instead, beginning with validation affecting the FY 2024 payment determination and subsequent years, we proposed to incorporate eCQMs into the existing validation process for chart-abstracted measures such that there would be one pool of hospitals selected through random selection and one pool of hospitals selected using targeting criteria, for both chart-abstracted measures and eCQMs. Under the aligned validation process, a single hospital would be selected for validation of both eCQMs and chart-abstracted measures and would be expected to submit data for both chart-abstracted measures and eCQMs. For specific data submission requirements, we refer readers to section VIII.A.10.e of
We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53552 through 53553) and the FY 2014 IPPS/LTCH PPS final rule (78 FR 50834) where we finalized targeted chart-abstracted measure validation for a supplemental sample of hospitals in addition to random validation. The supplemental sample of hospitals includes all hospitals that failed validation in the previous year and a random sample of hospitals meeting certain targeting criteria. These criteria are as follows:
• Any hospital with abnormal or conflicting data patterns. One example of an abnormal data pattern would be if a hospital has extremely high or extremely low values for a particular measure. As described in the FY 2013 IPPS/LTCH PPS final rule, we define an extremely high or low value as one that falls more than 3 standard deviations from the mean which is consistent with the Hospital OQR Program (76 FR 74485). An example of a conflicting data pattern would be if two records were identified for the same patient episode of care but the data elements were mismatched for primary diagnosis. Primary diagnosis is just one of many fields that should remain constant across measure sets for an episode of care. Other examples of fields that should remain constant across measure sets are patient age and sex. Any hospital not included in the base validation annual sample and with statistically significantly more abnormal or conflicting data patterns per record than would be expected based on chance alone (p < .05), would be included in the population of hospitals targeted in the supplemental sample.
• Any hospital with rapidly changing data patterns. For this targeting criterion, we define a rapidly changing
• Any hospital that submits data to NHSN after the Hospital IQR Program data submission deadline has passed.
• Any hospital that joined the Hospital IQR Program within the previous 3 years, and which has not been previously validated.
• Any hospital that has not been randomly selected for validation in any of the previous 3 years.
• Any hospital that passed validation in the previous year, but had a two-tailed confidence interval that included 75 percent.
• Any hospital which failed to report to NHSN at least half of actual HAI events detected as determined during the previous year's validation effort.
In the FY 2021 IPPS/LTCH PPS proposed rule, we proposed that beginning with validation affecting the FY 2024 payment determination, the existing targeting criteria would apply to all applicable hospitals, capturing both measure types (that is, chart-abstracted measures and eCQMs) (85 FR 32841). In other words, we proposed to expand targeted validation to include eCQMs, not just chart-abstracted- measures. We stated that doing so will facilitate the proposed combination of chart-abstracted and eCQM validation such that hospitals selected under this combined targeting approach would be validated for both chart-abstracted and eCQMs.
Additionally, we clarified that a hospital that has been granted an Extraordinary Circumstances Exception could still be selected for validation (chart-abstracted measures and eCQMs) under the targeting criteria. We invited public comment on our proposal.
After consideration of the public comments, we are finalizing our proposal as proposed to apply our existing targeting criteria to all applicable hospitals, capturing both measure types (that is, chart-abstracted measures and eCQMs).
In the FYs 2013 and 2014 IPPS/LTCH PPS final rules (77 FR 53551 through 53554 and 78 FR 50833), we finalized that for chart-abstracted measure validation, we take an annual sample from 400 randomly selected hospitals and from up to 200 hospitals selected using targeting criteria. In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57173 through 57178), we finalized that for eCQMs, we take an annual sample of up to 200 randomly selected hospitals that have not been selected for chart-abstracted measure validation. Under these existing policies, we may validate data from up to a total of 800 hospitals for a given year for both chart-abstracted measures and eCQMs.
In the FY 2021 IPPS/LTCH PPS proposed rule, we proposed to change the hospital selection policies to reduce the total number of hospitals selected for validation from up to 800 hospitals to up to 400 hospitals, beginning with validation affecting the FY 2024 payment determination (85 FR 32841). We proposed that up to 200 hospitals would be selected randomly and up to 200 would be selected using targeted criteria. Here, we summarize and respond to general comments. Detailed descriptions on proposals to effectuate that reduction and related comments and responses follow further below.
Instead of taking an annual sample from 400 randomly selected hospitals as
One of our goals for the annual random sample is to estimate the total percentage of hospitals in the Hospital IQR Program that have been reporting unreliable data. The basic premise behind random sampling is that one can learn something about all hospitals by gathering data on just a subset of hospitals (77 FR 53552). The minimum sample size required to assess the percentage of hospitals in the Hospital IQR Program that have been reporting unreliable data depends on the expected percentage of hospitals that fail validation. Because a very high percentage of Hospital IQR Program hospitals pass validation (96.4 percent for the FY 2018 payment determination, 95.8 percent for the FY 2019 payment determination, and 96.2 percent for the FY 2020 payment determination), we believe that we can reduce burden on hospitals by selecting fewer hospitals for the base annual random sample without adversely affecting our estimate of this percentage. Using an estimated passing rate of 96 percent, our power calculations indicate that with a pool of up to 200 hospitals, we can be highly confident that at least 94.8 percent of all hospitals in the Hospital IQR Program population are achieving the requisite reliability score.
In addition, in the FY 2019 IPPS/LTCH PPS final rule, we finalized removal of five healthcare associated infection measures
In the FY 2021 IPPS/LTCH PPS proposed Rule, we proposed to change the Hospital IQR Program policy from an exact number of hospitals selected for random validation (that is, 400) to a range (that is, up to 200) (85 FR 32842). This is because there are some hospitals that are eligible for the HAC Reduction Program, but which do not also participate in the Hospital IQR Program. Over 95 percent of hospitals that are eligible for the HAC Reduction Program also participate in the Hospital IQR Program. The small proportion of hospitals that do not participate in the Hospital IQR Program would be included in the single pool from which hospitals could be randomly selected; however, if such a hospital were selected for validation, it would not be required to submit data for validation under the Hospital IQR Program. Therefore, selecting a single sample for both programs could potentially result in a number totaling less than 200 hospitals for validation of Hospital IQR Program chart-abstracted data because hospitals that are eligible for the HAC Reduction Program, but do not participate in the Hospital IQR Program would not be validated in the Hospital IQR Program. This is consistent with the previously finalized Hospital IQR Program chart-abstracted validation process, for which hospitals were subject to both chart-abstracted measure validation as well as HAI measure validation (83 FR 41608). The only difference is that HAI measure validation has since moved to the HAC Reduction Program and, hence, the HAI validation performance will be accounted for under the HAC Reduction Program.
We stated our belief that this proposal will simplify validation for hospitals under both programs and enable us to continue validating Hospital IQR Program chart-abstracted data without increasing the total number of hospitals selected for validation across both programs. We also refer readers to section IV.M. of the preamble of this final rule for more detail on the validation proposals for the HAC Reduction Program. Again, we note that this proposal is being made in conjunction with that in the HAC Reduction Program, and finalization of this proposal in the Hospital IQR Program would be contingent on the HAC Reduction Program proposal also being finalized.
We invited public comment on this proposal.
After consideration of the public comments, we are finalizing our proposal as proposed to change the Hospital IQR Program policy from an exact number of hospitals selected for random validation (that is, 400) to a range (that is, up to 200). We refer readers to section M.6 of this final rule where we are also finalizing similar policies under the HAC Reduction Program.
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38399), we finalized exclusion criteria, applied before the random selection of up to 200 hospitals for eCQM validation. The exclusion criteria include any hospital—
• Selected for chart-abstracted measure validation;
• That has been granted an Extraordinary Circumstances Exception (ECE); and
• That does not have at least five discharges for at least one reported eCQM included among their QRDA I file submissions (81 FR 57174 and 82 FR 38399).
Hospitals meeting one or more of these exclusion criteria are not eligible for selection for eCQM validation each year (82 FR 38399).
In the FY 2021 IPPS/LTCH PPS proposed rule, in conjunction with our proposal to combine chart-abstracted measure and eCQM validation, we proposed to remove all of the previously finalized exclusion criteria (as previously referenced) beginning with validation affecting the FY 2024 payment determination and for subsequent years (85 FR 32842). Since a separate sample of hospitals for eCQM validation will no longer need to be identified, the previously finalized exclusion criteria for eCQM validation hospital selection will no longer be needed. We invited public comment on our proposal to remove the previously finalized exclusion criteria. We stated that finalization of this proposal would be contingent on finalization of our proposal to combine chart-abstracted measure and eCQM validation.
We refer readers to FY 2013 IPPS/LTCH PPS final rule (77 FR 53552 through 53553) where we previously established that we would select up to 200 hospitals for chart-abstracted measures data validation using the targeting criteria described in section VIII.A.11.c. of the preamble of this final rule. The Hospital IQR Program does not currently have a policy for targeted selection of hospitals for eCQM validation.
In the FY 2021 IPPS/LTCH PPS proposed rule, while we did not propose any changes to the number of hospitals selected using targeting criteria (see sections VIII.A.3.c.(1) and VIII.A.10.a. of this final rule), we proposed to combine chart-abstracted measure and eCQM validation and to decrease the number of randomly selected hospitals (85 FR 32842 through 32843); we also refer readers to sections VIII.A.3.c.(1) and VIII.A.10.a above where these are discussed. If these proposals are both finalized, the total number of hospitals selected for validation (for both chart-abstracted measures and eCQMs) would be at maximum 400 (up to 200 hospitals randomly selected + up to 200 hospitals using targeting criteria). The current and proposed validation hospital numbers and measure types are illustrated in the tables that follow:
Under the aligned validation process we are finalizing in this final rule, the Hospital IQR Program would validate a pool of up to 400 hospitals (up to 200 randomly selected and up to 200 selected using the targeting criteria), across both measure types.
Currently, hospitals may choose to submit paper copies of medical records for chart-abstracted measure validation (75 FR 50226), or they may submit copies of medical records for validation by securely transmitting electronic versions of medical information (78 FR 50834 and 79 FR 50269). Submission of electronic versions can either entail downloading or copying the digital image of the medical record onto CD, DVD, or flash drive (78 FR 50835), or submission of PDFs using a secure file transmission process after logging into the QualityNet Secure Portal (also referred to as the Hospital Quality Reporting (HQR) System) (79 FR 50269). We reimburse hospitals at $3.00 per chart (78 FR 50956). Neither paper copies nor submission of CD, DVD, or flash drive is applicable for eCQMs since that data is required to be submitted electronically via Secure File Transfer (81 FR 57174 through 57178).
In the FY 2021 IPPS/LTCH PPS proposed rule, we proposed to discontinue the option for hospitals to send paper copies of, or CDs, DVDs, or flash drives containing medical records for validation affecting the FY 2024 payment determination (that is, beginning with data submission for Q1 of CY 2021) (85 FR 32843). We proposed to require hospitals to instead submit only electronic files when submitting copies of medical records for validation of chart-abstracted measures, beginning with validation affecting the FY 2024 payment determination (that is, Q1 of CY 2021) and for subsequent years. Under this proposal, hospitals would be required to submit PDF copies of medical records using direct electronic file submission via a CMS-approved secure file transmission process. We would continue to reimburse hospitals at $3.00 per chart, consistent with the current reimbursement amount for electronic submissions of charts.
We strive to provide the public with accurate quality data while maintaining alignment with hospital recordkeeping practices. We appreciate that hospitals have rapidly adopted EHR systems as their primary source of information about patient care, which can facilitate the process of producing electronic copies of medical records (78 FR 50834). Additionally, we monitor the medical records submissions to the CMS Clinical Data Abstraction Center (CDAC) contractor, and have found that almost two-thirds of hospitals already use the option to submit PDF copies of medical records as electronic files. In our assessment based on this monitoring, we believe requiring electronic file submissions can be a more effective and efficient process for hospitals selected for validation. Requiring electronic file submissions reduces the burden of not only coordinating numerous paper-based pages of medical records, but also of having to then ship the papers or physical digital media storage to the CDAC. Therefore, we believe it is appropriate to require that hospitals use electronic file submissions via a CMS-approved secure file transmission process. We invited public comment on our proposal.
After consideration of the public comments, we are finalizing our proposal as proposed to require hospitals to submit only electronic files when submitting copies of medical records for validation of chart-abstracted measures, beginning with validation affecting the FY 2024 payment determination (that is, Q1 of CY 2021) and for subsequent years. Under this policy, hospitals would be required to submit PDF copies of medical records using direct electronic file submission via a CMS approved secure file transmission process. We will continue to reimburse hospitals at $3.00 per chart, consistent with the current reimbursement amount for electronic submissions of charts.
We refer readers to the FY 2017 IPPS/LTCH PPS final rule (81 FR 57179 through 57180) where we established a process in which the CDAC contractor requests selected hospitals to submit eight randomly selected medical records on a quarterly basis from which data are abstracted (for a total of 32 records per year). Once the CDAC contractor receives the data, it re-abstracts the measures which were submitted by the hospitals for the Hospital IQR Program and calculates the percentage of matching measure numerators and denominators for each measure within each chart submitted by the hospital. Each selected case may have multiple measures included in the validation. We did not propose any changes to the number of cases required from each selected hospital for chart-abstracted measure validation.
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38398 through 38399), we finalized that selected hospitals must submit eight cases per reported quarter to complete eCQM data validation. We consider a sample of eight cases per quarter to be the minimum sample size needed to accurately ascertain the quality of the reported data (82 FR 38399). Each selected case may have multiple measures included in the validation.
In the FY 2021 IPPS/LTCH PPS proposed rule, we did not propose any changes to this policy. However, we refer readers to section VIII.A.10.e. of the preamble (Reporting and Submission Requirements for eCQMs) of this final rule for more details on our finalized proposal to increase the number of quarters for which hospitals are required to report eCQM data: From one self-selected quarter of data to four quarters of data progressively over several years. With the finalization of the increased eCQM reporting quarters, hospitals selected for validation will be required to submit: (1) A total of 16 requested cases from 2 calendar quarters of CY 2021 eCQM data (8 cases × 2 quarters) for validation affecting the FY 2024 payment determination; (2) a total of 24 requested cases from 3 quarters of CY 2022 eCQM data (8 cases × 3 quarters) for validation affecting the FY 2025 payment determination; and (3) a total of 32 requested cases over 4 quarters of data (8 cases × 4 quarters), starting with validation of CY 2023 eCQM data, for validation affecting the FY 2026 payment determination and for subsequent years. This means that for eCQM validation, hospitals will have to submit validation data for each quarter of their self-selected eCQM submission quarters.
Currently, there are two separate processes for payment determinations related to validation requirements—one for chart-abstracted measure validation and another for eCQM validation.
For chart-abstracted measure validation scoring, under the current process, the CDAC contractor requests that hospitals submit eight randomly selected medical records on a quarterly basis from which data are abstracted and submitted by the hospital to the Clinical Data Warehouse (for a total of 32 records per year per hospital). Once the CDAC contractor receives the data, it re-abstracts the same data submitted by the hospitals and calculates the percentage of matching measure numerators and denominators for each measure within each chart submitted by the hospital (81 FR 57179 through 57180). Each selected case may have multiple measures included in the validation score. Specifically, one patient may meet the numerator and denominator criteria for multiple measures, and therefore, would generate multiple measures in the validation score. Consistent with previous years, each quarter and clinical topic is treated as a stratum for variance estimation purposes. Approximately 4 months after each quarter's validation submission deadline, validation results for chart-abstracted measures for the quarter are posted on the QualityNet Secure Portal (also referred to as the Hospital Quality Reporting (HQR) System). At the end of the year, the validation score is calculated by combining the data from all four quarters into one agreement rate for each hospital. At this point, we calculate a confidence interval around the agreement rate for each hospital using a normal distribution assumption. The upper bound of the confidence interval is calculated as the final validation score. A hospital must attain at least a 75 percent validation score based upon all four quarters of chart-abstracted data validation to pass the validation requirement. The overall
eCQM validation is different, because the accuracy of eCQM data submitted for validation (as measured by the agreement rate) does not currently affect a hospital's payment determination as described in the FY 2017 IPPS/LTCH PPS final rule (81 FR 57181). As finalized in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38398 through 38399), selected hospitals must submit eight cases, per self-selected quarter to complete eCQM data validation. Because the reporting quarter is self-selected, validation occurs on an annual basis using all 8 cases that are submitted. For hospitals to receive their full APU, they must provide at least 75 percent of requested eCQM medical records in a timely and complete manner (82 FR 38398 through 38401). Hospitals receive eCQM validation results through email communications on an annual basis.
To support the transition to a combined validation process for both chart-abstracted measures and eCQMs, in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32844), we proposed to provide one combined validation score starting with validation affecting the FY 2024 payment determination and for subsequent years. Specifically, this single score would reflect a weighted combination of a hospital's validation performance for chart-abstracted measures and eCQMs. Since eCQMs are not currently validated for accuracy, we proposed that the eCQM portion of the combined agreement rate would be multiplied by a weight of zero percent and chart-abstracted measure agreement rate would be weighted at 100 percent for validation affecting the FY 2024 payment determination and subsequent years (that is, starting with the CY 2021 discharge data submitted for FY 2023 payment determination and validation affecting the FY 2024 payment determination). The agreement rate and associated confidence interval would be calculated based on the validation data collected from each hospital for each fiscal year. The validation score associated with the combined agreement rate would be the upper bound of the calculated confidence interval. For more detailed information on the confidence interval, please refer to the Chart-Abstracted Data validation page of QualityNet:
As we move forward, we will determine when eCQM measure data are ready for accuracy scoring for validation. We have progressively increased the number of eCQM validation cases (from 8 cases for validation affecting FY 2023 payment determination, to 16 cases for validation affecting FY 2024 payment determination, to 24 cases for validation affecting FY 2025 payment determination, and to 32 cases for validation affecting FY 2026 payment determination and beyond). The additional cases collected and validated under the proposal will support the calculation of a statistically robust validation score. We anticipate increasing the eCQM validation score weighting in the future to include eCQM measures accuracy as part of the overall validation score. Any adjustments in the weighting and scoring would be proposed through future rulemaking. We invited public comments on our proposal.
After consideration of the public comments, we are finalizing our proposal as proposed to provide one combined validation score starting with validation affecting the FY 2024 payment determination and for subsequent years. Specifically, this single score would reflect a weighted combination of a hospital's validation performance for chart-abstracted measures and eCQMs. Since eCQMs are not currently validated for accuracy, the eCQM portion of the combined agreement rate will be multiplied by a weight of zero percent and chart-abstracted measure agreement rate will be weighted at 100 percent for validation affecting the FY 2024 payment determination and subsequent years (that is, starting with the CY 2021 discharge data submitted for FY 2023 payment determination and validation affecting the FY 2024 payment determination).
Our validation proposals are summarized in the following table:
In the FY 2015 IPPS/LTCH PPS final rule (79 FR 50260), we established an educational review process for validation of chart-abstracted measures. The process was subsequently updated in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38402 through 38403). In this process, hospitals may request an educational review if they believe they have been scored incorrectly or if they have questions about their validation results. As noted previously, approximately 4 months after each quarter's validation submission deadline, validation results for chart-abstracted measures for the quarter are posted on the QualityNet Secure Portal (also referred to as the Hospital Quality
If an educational review yields incorrect CMS validation results for chart-abstracted measures, we use the corrected quarterly score, as recalculated during the educational review process to compute the final confidence interval (82 FR 38402). We use the revised score identified through an educational review when determining whether or not a hospital failed validation (82 FR 38402). Corrected scores, however, are only used if they indicate that the hospital performed more favorably than previously determined (82 FR 38402).
In the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32845), we proposed to extend a similar process established for chart-abstracted measure validation educational reviews to eCQM validation beginning with validation affecting the FY 2023 payment determination and subsequent years (that is, starting with data from CY 2020). While we proposed and are finalizing combining the hospital pool and generating a single score for both eCQM and chart-abstracted measure data validation, these underlying processes would still remain distinct because the underlying data being validated is distinct. We believe that expanding the educational review process to incorporate eCQMs would allow hospitals to better understand the processes and data for eCQM validation. Under our proposal, hospitals may request an educational review if they believe they have been scored incorrectly or if they have questions about their validation of eCQMs. Specifically, a hospital would have 30 calendar days to contact the VSC to solicit a written explanation of the validation performance following the date that the validation results were provided to the hospital. Because hospitals receive eCQM validation results on an annual basis, however, they would have the opportunity to request an educational review once annually following receipt of their results. Upon receipt of an educational review request, we would review the requested data elements and written justifications provided by the hospital. We also proposed to provide the results of the eCQM validation educational review to the requesting hospital, outlining the findings of whether the scores were correct or incorrect, through a CMS-approved secure file transmission process.
We invited public comment on our proposal.
After consideration of the public comments, we are finalizing our proposal as proposed to extend a similar process established for chart-abstracted measure validation educational reviews to eCQM- validation beginning with validation affecting the FY 2023 payment determination and subsequent years (that is, starting with data from CY 2020).
We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53554) for previously adopted details on DACA requirements. We did not propose any changes to this policy.
Section 1886(b)(3)(B)(viii)(VII) of the Act requires the Secretary to report quality measures of process, structure, outcome, patients' perspectives on care, efficiency, and costs of care that relate to services furnished in inpatient settings in hospitals on the internet website of CMS. Section 1886(b)(3)(B)(viii)(VII) of the Act also requires that the Secretary establish procedures for making information regarding measures available to the public after ensuring that a hospital has the opportunity to review its data before they are made public. Our current policy is to report data from the Hospital IQR Program as soon as it is feasible on CMS websites such as the
The Hospital IQR Program initiated voluntary reporting of eCQM data in the FY 2014 IPPS/LTCH PPS final rule, for the CY 2014 reporting period/FY 2016 payment determination (78 FR 50807 through 50810). At that time, we noted our belief that electronic collection and reporting of quality data using health IT would ultimately simplify and streamline quality reporting (78 FR 50807). Based on our ongoing experience with eCQMs, we continue to believe this. We also believe that electronic reporting furthers CMS and HHS policy goals to promote quality through performance measurement and, in the long-term, will both improve the accuracy of the data and reduce
Since the FY 2014 IPPS/LTCH PPS final rule, the Hospital IQR Program's eCQM reporting requirements have evolved. In the FY 2016 IPPS/LTCH PPS final rule, the reporting of eCQM data became required (rather than voluntary) under the Hospital IQR Program, beginning with the CY 2016 reporting period/FY 2018 payment determination (80 FR 49693 through 49698). At the time of publication of this final rule, hospitals will have completed the reporting of eCQM data for the CY 2019 reporting period/FY 2021 payment determination by the March 2, 2020 submission deadline, the fourth year of required eCQM reporting.
Most recently, in the FY 2020 IPPS/PPS LTCH final rule, we finalized the Hospital IQR Program's reporting requirements for the CY 2022 reporting period/FY 2024 payment determination, to require that hospitals report one self-selected calendar quarter of data for: (a) three self-selected eCQMs; and (b) the Safe Use of Opioids—Concurrent Prescribing eCQM (Safe Use eCQM), for a total of four eCQMs (84 FR 42503). We refer readers to section VIII.A.10.e of the preamble of this final rule where we discuss our finalized proposal to progressively increase the quarters of eCQM data, beginning with the CY 2021 reporting period/FY 2023 payment determination.
As eCQM reporting for the Hospital IQR Program continues to advance and hospitals have gained several years of experience with successfully collecting and reporting eCQM data, we believe it is important to further our policy goals of leveraging EHR-based quality measure reporting in order to incentivize data accuracy, promote interoperability, increase transparency, and reduce long-term provider burden by providing public access to the reported eCQM data. Originally, as we incorporated eCQMs into the Hospital IQR Program on a voluntary basis, we stated that we would need time to assess the data submitted by hospitals to determine the optimal timing and transition strategy for publicly reporting eCQM data (78 FR 50813). We finalized that eCQM data reported for the Hospital IQR Program would only be publicly reported if we determine the data are accurate enough to be reported (78 FR 50818). In the FY 2016 IPPS/LTCH PPS final rule when we made the reporting of eCQMs required rather than voluntary, we stated that any data submitted electronically would not be posted on the
The eCQM validation pilot was completed in 2015 and was addressed in the FY 2017 IPPS/LTCH PPS final rule (81 FR 57173 through 57174). Building upon the validation pilot, we adopted procedures to begin the required validation of eCQM data under the Hospital IQR Program in the FY 2017 IPPS/LTCH PPS final rule, and stated that the first validation of eCQM data would occur in spring 2018 to validate data from the CY 2017 reporting period. As finalized in the FY 2017 IPPS/LTCH PPS final rule (81 FR 57180 through 57181), the validation process for eCQMs was established as an incremental process to ensure hospitals are able to successfully report the medical records that correspond to the data used for eCQM measure reporting. Scoring for eCQM validation is different, because the accuracy of eCQM data submitted for validation currently does not affect a hospital's payment determination.
Our validation of eCQM data submitted from CY 2017 and CY 2018 has demonstrated that hospitals are capable of reporting eCQM measure data. Since the eCQM validation pilot, we have completed eCQM data validation from the CY 2017 reporting period and the CY 2018 reporting period, and worked with stakeholders to develop a more fulsome understanding of the eCQM data submitted. Our review of the CY 2017 and CY 2018 eCQM data submitted for validation included an analysis of over 1,200 patient episodes of care submitted by over 190 hospitals per reporting period. The majority of hospitals successfully submitted validation records within the timeline requested. The results demonstrate that over half of the measures validated had agreement rates of 80 percent or better. Agreement rates are the ratios which reflect the frequency at which a hospital's electronically reported medical record data matches results adjudicated by the Clinical Data Abstraction Center (CDAC). CMS calculates an agreement rate for each hospital. Our analysis demonstrates that hospitals continue to improve the accuracy of identifying patients appropriate for measure denominator inclusion, and tend to accurately report a wide variety of data types, including diagnoses, medications, and laboratory values. Based on our review of the CY 2017 and CY 2018 eCQM data submitted for validation, and on the finding that the majority of eCQM data was reported with agreement rates of 80 percent or better, we believe eCQM data are accurate enough to be publicly reported in aggregate. Because eCQM validation examines eCQMs on a chart-by-chart basis (as opposed to in aggregate) and affects payment, in section VIII.A.10.f. of the preamble of this final rule, we discuss the finalized proposal that eCQM validation continue to be based on successful submission of at least 75 percent of the requested medical records for eCQM validation instead of reporting accuracy. In the interests of providing data to the public as quickly as possible, and as expressed in more detail later in this section, we proposed to begin public reporting of eCQM data beginning in CY 2022 using data reported for the CY 2021 reporting period/FY 2023 payment determination.
Based on our validation of eCQM data submitted from CY 2017 and CY 2018, and in alignment with our goal to encourage data accuracy and transparency, in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32847), we proposed to publicly report eCQM data beginning with the eCQM data reported by hospitals for the CY 2021 reporting period/FY 2023 payment determination and for subsequent years. These data could be made available to the public as early as the fall of 2022. We refer readers to section VIII.A.10.f.(2). of the preamble to this final rule for a discussion of finalized chart-abstracted measure and eCQM validation weighted scoring.
As with other Hospital IQR Program measures, hospitals would have the opportunity to review their data before they are made public, as required by section 1886(b)(3)(B)(viii)(VII) of the Act, during a 30-day preview period in accordance with previously finalized policies (76 FR 51608). Measure data, including eCQM data, are published on the
We plan to continue assessing the eCQM data submitted in future years and will continue working to ensure that hospitals receive feedback on their validation results aimed at improving transparency and reporting accuracy. We are committed to providing data to patients, consumers, and providers as quickly as possible so they are empowered to make informed decisions
Understanding that it will be important for hospitals and stakeholders alike to know how to find the eCQM data once they are publicly posted, we would convey any updates to the posting locations through routine communication channels to hospitals, vendors, and QIOs, including, but not limited to, issuing memos, emails, and notices on the QualityNet and eCQI Resource Center websites.
We also refer readers to section VIII.D. of the preamble of this final rule for a discussion of a similar proposal in the Medicare Promoting Interoperability Program. We solicited public comment on this proposal.
In the FY 2021 IPPS/LTCH PPS proposed rule, we proposed to begin publicly reporting eCQM data beginning with the eCQM data reported by hospitals for the CY 2021 reporting period/FY 2023 payment determination and for subsequent years (85 FR 32847). These data could be made available to the public as early as the fall of 2022. We stated that measure data, including eCQM data, are published on the
Regarding consumer and hospital interpretation of the eCQM data, we note that there are public resources available to help consumers better understand measurement methods for different types of measures used in the Hospital IQR Program, and we refer readers to general information about chart-abstracted measures on the
We also appreciate commenters' requests for additional information related to eCQM specifications and vendor updates. Under the Hospital IQR Program, hospitals are required to submit data on each specified measure in accordance with the measure's specifications for a particular period of time (84 FR 42501). This submitted data
In addition, in the FY 2010 IPPS/LTCH PPS final rule (74 FR 43881), we established that if a hospital has fewer than 25 eligible cases combined over a measure's reporting period, we would replace the hospital's data with a footnote indicating that the number of cases is too small to reliably determine how well the hospital is performing.
Additionally, although we appreciate commenters' concern about public reporting eCQM data representing fewer than four quarters of data, we disagree that this should inhibit the advancement of public reporting of eCQM data. As stated previously, we believe it is important to provide data to the public as soon as practicable while increasing the amount of eCQM data to be reported to CMS. We believe that beginning to publicly report eCQM data as early as the fall of 2022, while progressively increasing the quarters of reported eCQM data strikes the appropriate balance between the importance of transparency by publicly reporting eCQM data and stakeholder concerns about using sufficient data for publicly reporting eCQM data.
We interpret the commenters' inquiry about “eCQM audits” to refer to eCQM validation. We refer readers to section VIII.A.10.h. of the preamble of this final rule, where we finalized an education review process for validated eCQM data beginning with validation affecting the FY 2023 payment determination and subsequent years, which will provide hospitals with additional analyses of eCQM validation.
We interpret the term “dry run” to reference the dry run provision in the Blueprint for the CMS Measures Management System, utilized during the first use of a measure in a CMS program or first results reporting.
We thank commenters for their recommendation to conduct measure reliability analyses to determine the minimum number of cases needed for public reporting. Validation of CY 2017 reporting period/FY 2019 payment determination data and CY 2018 reporting period/FY 2020 payment determination data has shown that a majority of eCQM data was reported with agreement rates of 80 percent or higher. Our review is based upon an analysis of over 1,200 patient episodes of care submitted by over 190 hospitals per reporting period (85 FR 32846). We refer readers to section VIII.A.10. of this final rule where this is discussed in more detail. We note that in the FY 2010 IPPS/LTCH PPS final rule (74 FR 43881), we established that if a hospital has fewer than 25 eligible cases combined over a measure's reporting period, we would replace the hospital's data with a footnote indicating that the number of cases is too small to reliably
Generally speaking, measure data, including eCQM data, are published on the
After consideration of the public comments, we are finalizing our proposal as proposed to publicly report eCQM data beginning with eCQM data reported by hospitals for the CY 2021 reporting period/FY 2023 payment determination and for subsequent years. As a clarification, we plan to initially publish CY 2021 reporting period/FY 2023 payment determination eCQM data, of which there will be two quarters of data per our finalized policy in section VIII.A.9.e. of this final rule, on
As mentioned above, in the CY 2021 OPPS/ASC proposed rule, we proposed a methodology to calculate the Overall Hospital Quality Star Rating (Overall Star Rating) (85 FR 48996 through 49027). The Overall Star Rating would utilize data collected on hospital inpatient and outpatient measures that are publicly reported on
We refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51650 through 51651), the FY 2014 IPPS/LTCH PPS final rule (78 FR 50836), and 42 CFR 412.140(e) for details on reconsideration and appeal procedures for the FY 2017 payment determination and subsequent years. We did not propose any changes to this policy.
We refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51651 through 51652), the FY 2014 IPPS/LTCH PPS final rule (78 FR 50836 through 50837), the FY 2015 IPPS/LTCH PPS final rule (79 FR 50277), the FY 2016 IPPS/LTCH PPS final rule (80 FR 49713), the FY 2017 IPPS/LTCH PPS final rule (81 FR 57181 through 57182), the FY 2018 IPPS/LTCH PPS final rule (82 FR 38409 through 38411), and 42 CFR 412.140(c)(2) for details on the current Hospital IQR Program ECE policy. We also refer readers to the QualityNet website at:
The PPS-Exempt-Cancer Hospital Quality Reporting (PCHQR) Program is authorized by section 1866(k) of the Act, and it applies to hospitals described in section 1866(d)(1)(B)(v) (referred to as “PPS-Exempt Cancer Hospitals” or “PCHs”). Under the PCHQR Program, PCHs must submit to the Secretary data on quality measures with respect to a program year in a form and manner, and at a time, specified by the Secretary.
For additional background information, including previously finalized measures and other policies for the PCHQR Program, we refer readers to the following final rules: The FY 2013 IPPS/LTCH PPS final rule (77 FR 53556 through 53561); the FY 2014 IPPS/LTCH PPS final rule (78 FR 50838 through 50846); the FY 2015 IPPS/LTCH PPS final rule (79 FR 50277 through 50288); the FY 2016 IPPS/LTCH PPS final rule (80 FR 49713 through 49723); the FY 2017 IPPS/LTCH PPS final rule (81 FR 57182 through 57193); the FY 2018 IPPS/LTCH PPS final rule (82 FR 38411 through 38425); the FY 2019 IPPS/LTCH PPS final rule (83 FR 41609 through 41624); CY 2019 OPPS/ASC final rule with comment period (83 FR 59149 through 59154); and the FY 2020 IPPS/LTCH PPS final rule (84 FR 42509 through 42524).
In the FY 2021 IPPS/LTCH PPS proposed rule, we proposed to incorporate refinements to two existing measures in the PCHQR Program measure set—the Catheter-Associated Urinary Tract Infection (CAUTI) Outcome Measure (NQF #0138) and the Central Line-Associated Bloodstream Infection (CLABSI) Outcome Measure (NQF #0139). While we did not propose to add any new measures or remove any existing measures, we continue to assess the PCHQR Program measure set's alignment with the Meaningful Measures Initiative, which is discussed in more detail in I.A.2. of the preamble of the FY 2019 IPPS/LTCH PPS final rule (83 FR 41147 through 41148).
The table in this section of this rule summarizes the PCHQR Program measure set for the FY 2023 program year.
In the FY 2021 IPPS/LTCH PPS proposed rule, we provided an overview of the history of CAUTI and CLABSI measures in the PCHQR Program (85 FR 32848 through 32849). Specifically, in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53556 through 53559), we adopted the Catheter-associated Urinary Tract Infection (CAUTI) (NQF #0138) and Central line-associated Bloodstream Infection (CLABSI) (NQF #0139) measures for use in the PCHQR Program beginning with the FY 2014 program year, and we refer readers to this rule for a detailed discussion of these measures. In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20503), we proposed to remove both measures from the program because we believed that removing the measures would reduce program costs and complexities associated with the use of these data by patients in decision-making. We stated that we believed the costs, coupled with the high technical and administrative burden on PCHs associated with collecting and reporting the measure data, outweighed the benefits of their
However, after considering the comments we had received on this proposal and other updated information, in the CY 2019 OPPS/ASC final rule (83 FR 59150), we decided to retain both the CAUTI and CLABSI measures in the PCHQR Program. We stated that since the time we made our proposal, we had conducted our own analyses regarding the continued use of the CAUTI and CLABSI measures using updated CDC data. We also stated that although the CDC had previously believed that oncology unit locations, including those in PCHs, had a higher incidence of infections than other types of units in acute care hospitals, the CDC now believes, after controlling for location type, that oncology unit locations in PCHs do not have a higher incidence of infection than oncology units within other acute care hospitals. We stated that the CDC's updated analysis also produced a consistent finding that cancer hospital status was not a significant risk factor in any of the device-associated HAI risk models, including those used for CAUTI and CLABSI. Lastly, we stated that we believe these results indicate that reporting PCH CAUTI and CLABSI performance measure data is just as important as reporting acute care hospital CAUTI and CLABSI performance measure data (83 FR 59151). Based on this updated information, as well as the public comments, we concluded that the importance of emphasizing patient safety in quality care delivery justified retaining the CAUTI and CLABSI measures in the PCHQR Program (83 FR 59151).
We also noted in the CY 2019 OPPS/ASC PPS final rule that the CAUTI and CLABSI measure specifications had been recently updated to use new standard infection ratio (SIR) calculations that can be applied to cancer hospitals, including PCHs. We noted that this updated SIR calculation methodology is different than the methodology we are currently using to calculate the CAUTI and CLABSI measures. Additionally, the use of raw location-stratified rates in the current methodology had created a concern that the CAUTI and CLABSI data calculated under the current methodology might appear to inaccurately show lower performance among PCHs than the performance reported by acute care hospitals that are reporting CAUTI and CLABSI data using the updated methodology (83 FR 59151). We stated that we believed the updated methodology addresses this concern because the updates include rates that are stratified by patient care locations within PCHs, without the use of predictive models or comparisons in the rate calculations. We also stated that we intended to propose to adopt these updated versions of the CAUTI and CLABSI measures, and that we would work closely with the CDC to assess the updated risk adjusted versions of these measures (83 FR 59151).
In the FY 2021 IPPS/LTCH PPS proposed rule, we discussed our proposal to refine the CAUTI and CLABSI measures by adopting the updated SIR calculation methodology. This updated methodology was developed by the CDC and calculates rates that are stratified by patient care locations within PCHs, without the use of predictive models or comparisons in the rate calculations (85 FR 32849 through 32850).
The CDC's National Healthcare Safety Network (NHSN) uses healthcare-associated infection (HAI) incidence data from a prior time period and a standard population of facilities that report data to the NHSN (such as all healthcare facilities of a specified type) to establish a HAI baseline for those facilities, including a HAI baseline for CAUTI and CLABSI.
In 2016, the CDC used 2015 HAI incidence data to update both the source of aggregate data and the risk adjustment methodology used to create the HAI baselines. As a result, the CDC established new HAI baselines for purposes of calculating the SIRs used to calculate HAI measures, including the CAUTI and CLABSI measures.
During its re-baselining effort, the CDC determined that it could generate HAI baselines that produce more accurate SIR calculations for the 17 hospitals that enroll in NHSN as facility type “HOSP–ONC” (11 PCHs and 6 other hospitals that classify themselves as cancer hospitals but are not PCHs for purposes of Medicare) by standardizing the new HAI baselines across infection type and facility type.
The CDC also evaluated what additional oncology-specific patient locations (for example, hematology/oncology ward, medical oncology ICU) should be adjusted for when deriving SIR calculations for hospitals in the acute care risk adjustment model. The CDC considered this because examining patient care location allows for the assessment of which patient populations are at higher risk for CAUTI and CLABSI incidences. Further, stakeholders had previously raised concerns that the omission of a risk adjustment for oncology-specific patient care locations in the SIR calculations could inaccurately appear to show lower performance (that is, higher SIR) on the HAI measures, including CLABSI and CAUTI, by PCHs and other cancer hospitals than other acute care hospitals; adjusting for oncology-specific patient locations as a part of the new risk model mitigates this concern. When the CDC stratified by location within the acute care hospital risk adjustment model, it found that in comparison to non-oncology-specific patient locations, the oncology-specific locations, particularly those designated as oncology units,
We indicated in the FY 2021 IPPS/LTCH PPS proposed rule that the CDC tested the CAUTI and CLABSI measures based on the updated HAI baselines that incorporate the new risk adjustment described above (85 FR 32850). According to the CDC's calculation methodology, when assessing the performance results for the CAUTI or CLABSI measure, a p-value of 0.05 or less was noted to be statistically significant.
In compliance with section 1890A(a)(2) of the Act, we included the updated versions of the CAUTI and CLABSI outcome measures in a publicly available document entitled “2019 Measures Under Consideration Spreadsheet.”
Regarding the CAUTI measure, the MAP indicated that because CAUTIs are the most common HAI, hospitals should continue working to reducing their incidence and prevalence across all inpatient settings. The MAP also determined that even though CAUTI is a chart-abstracted measure that is burdensome to collect, the benefit of collecting data on this measure outweighs that cost.
For the CLABSI measure, the MAP also determined that even though the measure is chart-abstracted and burdensome to collect, the benefit of collecting data on this measure outweighs the cost.
In the FY 2021 IPPS/LTCH PPS proposed rule, we proposed to refine the CAUTI and CLABSI measures by adopting the updated measure specifications that use the new SIR calculation methodology, which calculates measure rates that are stratified by patient care locations (specifically, oncology units) within PCHs (85 FR 32850). We indicated that we believe it is important to continue to measure CAUTI and CLABSI incidence because of the implications these two measures have in the patient safety domain of healthcare. We also believe it is important to provide stratified performance results where appropriate for the cohort of patients with cancer, which is why we believe that applying the CDC's update of the risk-adjustment model (which will ultimately yield more precise SIR results) is appropriate for the CAUTI and CLABSI measures. Implementation of the refined, stratified measures will make the measures more representative of the quality of care provided at PCHs, particularly when performance rates are compared to other acute care hospitals. Further, stratified performance results will more accurately demonstrate the incidence of CAUTI and CLABSI for comparison among PCHs. In addition, implementation of the refined versions would address previous stakeholder requests to use a statistically significant method for public reporting of these measures. Lastly, implementing the refined versions of these measures means that the PCHQR Program would be utilizing the most recently NQF-endorsed versions of these measures.
We invited public comment on our proposal to refine the Catheter-associated Urinary Tract Infection (CAUTI) (NQF #0138) and Central line-associated Bloodstream Infection (CLABSI) (NQF #0139) measures to utilize the updated HAI baselines that incorporate an updated risk adjustment approach, as developed by the CDC, for the FY 2023 program year and subsequent years.
After consideration of the public comments received, we are finalizing our proposal to refine the Catheter-associated Urinary Tract Infection (CAUTI) (NQF #0138) and Central line-associated Bloodstream Infection (CLABSI) (NQF #0139) measures to utilize the updated HAI baselines that incorporate an updated risk adjustment approach, as developed by the CDC, for the FY 2023 program year and subsequent years.
We maintain and periodically update technical specifications for the PCHQR Program measures. The specifications may be found on the QualityNet website at
Under section 1866(k)(4) of the Act, we are required to establish procedures for making the data submitted under the PCHQR Program available to the public. Such procedures must ensure that a PCH has the opportunity to review the data that are going to be made public with respect to that PCH, prior to such data being made public. Section 1866(k)(4) of the Act also provides that the Secretary must report quality measures of process, structure, outcome, patients' perspectives on care, efficiency, and costs of care that relate to services furnished in such hospitals on the CMS website.
In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57191 through 57192), we finalized that although we would continue to use rulemaking to establish what year we would first publicly report data on each measure, we would publish the data as soon as feasible during that year. We also stated that our intent is to make the data available on at least a yearly basis, and that the time period for PCHs to review their data before the data are made public would
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42520 through 42523), we finalized that we would begin to publicly display data on a number of PCH measures as soon as is practicable due to planned website improvements that we stated could delay our ability to begin the public display. In October 2019, we began to publicly report data on the following four HAI measures: (1) Specific Surgical Site Infection (SSI) Outcome Measure (NQF #0753); (2) NHSN Facility-wide Inpatient Hospital-onset Methicillin resistant Staphylococcus aureus Bacteremia Outcome Measure (NQF #1716); (3) NHSN Facility-wide Inpatient Hospital-onset Clostridium difficile Infection (CDI) Outcome Measure (NQF #1717); and (4) NHSN Influenza Vaccination Coverage Among Healthcare Personnel (NQF #0431).
In the table that follows, we summarize our current public display requirements for the PCHQR Program measures. The PCHQR measures' performance data is made publicly available on the Hospital Compare website or its successor.
As described in section VIII.B.3.b. of the preamble of the FY 2021 IPPS/LTCH PPS proposed rule, we proposed to adopt refined versions of the CAUTI and CLABSI measures in the PCQHR Program beginning with the FY 2023 program year (85 FR 32851). We also proposed that we would begin publicly reporting the refined versions of the CAUTI and CLABSI measures in the fall of 2022 and that we would not publicly report the current versions of those measures because, as described above, the refined versions of the measures more accurately capture the quality of care furnished at PCHs (85 FR 32851).
We invited public comment on these proposals.
After consideration of the public comments received, we are finalizing our proposal to begin publicly reporting the refined CAUTI and CLABSI measures in the fall of 2022. We are also finalizing our proposal to not publicly report the current versions of the measures.
Data submission requirements and deadlines for the PCHQR Program are posted on the QualityNet website. We did not propose any updates to our previously finalized data submission requirements and deadlines.
We refer readers to the FY 2019 IPPS/LTCH PPS final rule (83 FR 41623 through 41624), for a discussion of the Extraordinary Circumstances Exceptions (ECE) policy under the PCHQR Program. We did not propose any changes to this policy.
The Long-Term Care Hospital Quality Reporting Program (LTCH QRP) is authorized by section 1886(m)(5) of the Act, and it applies to all hospitals certified by Medicare as long-term care hospitals (LTCHs). Under the LTCH QRP, the Secretary must reduce by 2 percentage points the annual payment update to the LTCH PPS standard Federal rate for discharges for an LTCH during a fiscal year if the LTCH has not complied with the LTCH QRP requirements specified for that fiscal year. For more information on the background for the LTCH QRP, we refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51743 through 51744), the FY 2013 IPPS/LTCH PPS final rule (77 FR 53614), the FY 2014 IPPS/LTCH PPS final rule (78 FR 50853), the FY 2015 IPPS/LTCH PPS final rule (79 FR 50286), the FY 2016 IPPS/LTCH PPS final rule (80 FR 49723 through 49725), the FY 2017 IPPS/LTCH PPS final rule (81 FR 57193), the FY 2018 IPPS/LTCH PPS final rule (82 FR 38425 through 38426), the FY 2019 IPPS/LTCH PPS final rule (83 FR 41624), and the FY 2020 IPPS/LTCH PPS final rule (84 FR 42524).
For a detailed discussion of the considerations we historically use for the selection of LTCH QRP quality, resource use, and other measures, we refer readers to the FY 2016 IPPS/LTCH PPS final rule (80 FR 49728). For further information on how measures are considered for removal, we refer readers to the regulations at 42 CFR 412.560(b)(3).
The LTCH QRP currently has 17 measures for the FY 2022 LTCH QRP, which are set out in the following table:
Furthermore, LTCHs are required to report additional standardized patient assessment data beginning with the FY 2022 LTCH QRP. For more information on the reporting of this additional standardized patient assessment data, we refer readers to the FY 2020 IPPS/LTCH PPS final rule (84 FR 42536 through 42590).
There were no proposals or updates to finalize for the LTCH QRP.
We refer readers to the regulations at 42 CFR 412.560(b) for information regarding the current policies for reporting LTCH QRP data.
For more details about the required reporting periods of measures or standardized patient assessment data during the first and subsequent years upon adoption, please refer to the FY 2020 IPPS/LTCH PPS final rule (84 FR 42588 through 42590).
CMS is not finalizing any policies regarding the public display of measure data at this time.
The proposed rule contained no LTCH QRP proposals. However, we received several comments on the LTCH QRP.
The HITECH Act (Title IV of Division B of the ARRA, together with Title XIII of Division A of the ARRA) authorizes incentive payments under Medicare and Medicaid for the adoption and meaningful use of certified electronic health record technology (CEHRT). Incentive payments under Medicare were available to eligible hospitals and CAHs for certain payment years (as authorized under sections 1886(n) and 1814(l) of the Act, respectively) if they successfully demonstrated meaningful use of CEHRT, which included reporting on clinical quality measures using CEHRT. Incentive payments were available to Medicare Advantage (MA) organizations under section 1853(m)(3) of the Act for certain affiliated hospitals that successfully demonstrate meaningful use of CEHRT. In accordance with the timeframe set forth in the statute, these incentive payments under Medicare generally are no longer available, except for Puerto Rico eligible hospitals. For more information on the Medicare incentive payments available to Puerto Rico eligible hospitals, we refer readers to the FY 2019 IPPS/LTCH PPS final rule (83 FR 41672 through 41675).
Sections 1886(b)(3)(B)(ix) and 1814(l)(4) of the Act also establish downward payment adjustments under Medicare, beginning with FY 2015, for eligible hospitals and CAHs that do not successfully demonstrate meaningful use of CEHRT for certain associated EHR reporting periods. Section 1853(m)(4) of the Act establishes a negative payment adjustment to the monthly prospective payments of a qualifying MA organization if its affiliated eligible hospitals are not meaningful users of CEHRT, beginning in 2015.
Section 1903(a)(3)(F)(i) of the Act establishes 100 percent Federal financial participation (FFP) to States for providing incentive payments to eligible Medicaid providers (described in section 1903(t)(2) of the Act) to adopt, implement, upgrade, and meaningfully use CEHRT. However, we previously established that in accordance with section 1903(t)(5)(D) of the Act, in no case may any Medicaid eligible hospital receive an incentive after CY 2021 (§ 495.310(f), 75 FR 44319). Therefore, December 31, 2021 is the last date that States could make Medicaid Promoting Interoperability Program payments to Medicaid eligible hospitals (other than pursuant to a successful appeal related to CY 2021 or a prior year) (84 FR 42591 through 42592). For additional discussion or context around the discontinuation of the Medicaid Promoting Interoperability Program, we refer readers to the FY 2019 IPPS/LTCH PPS final rule (
Under the definitions of “EHR reporting period” and “EHR reporting period for a payment adjustment year” at 42 CFR 495.4, the EHR reporting period in CY 2021 is a minimum of a continuous 90-day period in CY 2021 for new and returning participants in the Promoting Interoperability Programs. Eligible hospitals and CAHs may select an EHR reporting period of a minimum of any continuous 90-day period in CY 2021 (from January 1, 2021 through December 31, 2021).
For CY 2022, in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32853), we proposed an EHR reporting period of a minimum of any continuous 90-day period in CY 2022 for new and returning participants (eligible hospitals and CAHs) in the Medicare Promoting Interoperability Program. We stated that we believe that adopting a 90-day EHR reporting period in CY 2022 as in CY 2021 would be appropriate because it would provide programmatic consistency for hospital reporting for an additional year. We proposed corresponding changes to the definition of “EHR reporting period for a payment adjustment year” at 42 CFR 495.4. We did not propose to define an EHR reporting period in CY 2022 for the Medicaid Promoting Interoperability Program because the program will end with CY 2021 in accordance with section 1903(t)(5)(D) of the Act (see also 42 CFR 495.310(f)) as described previously. For additional discussion or context around the discontinuation of the Medicaid Promoting Interoperability Program, we refer readers to the FY 2019 IPPS/LTCH PPS final rule (83 FR 41676 through 41677) and the CY 2019 PFS/QPP final rule (83 FR 59704 through 59706).
After consideration of the public comments we received, we are finalizing our proposal that for CY 2022, the EHR reporting period is a minimum of any continuous 90-day period in CY 2022 for new and returning participants (eligible hospitals and CAHs) in the Medicare Promoting Interoperability Program. We are finalizing, as proposed, the corresponding changes to the definition of “EHR reporting period for a payment adjustment year” at 42 CFR 495.4.
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41648 through 41656), we adopted two new opioid measures for the Electronic Prescribing objective; however, we changed certain policies related to those measures in the subsequent FY 2020 IPPS/LTCH PPS final rule (84 FR 42593 through 42596): (1) Query of Prescription Drug Monitoring Program (PDMP), which was optional in CY 2019 and CY 2020 and worth 5 bonus points each year; and (2) Verify Opioid Treatment Agreement, which was optional in CY 2019 but removed entirely from the program starting in CY 2020.
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42595), we finalized that the Query of PDMP measure is optional and eligible for 5 bonus points in CY 2020. We received substantial feedback from health IT vendors and hospitals that the flexibility currently included in the measure presents unintended challenges such as significant burden associated with IT system design and additional development needed to accommodate the measure and any future changes to it. Since publication of the FY 2020 IPPS/LTCH PPS final rule, stakeholders have continued to express concern that it is still too premature to require the Query of PDMP measure and score it based on performance in CY 2021.
We agree with stakeholders that PDMPs are still maturing in their development and use. PDMPs vary among the states and are not linked at this time to one another or to a larger national system.
Stakeholders also mentioned the challenge posed by the frequent lack of integration of PDMPs into the clinical workflow. Historically, health care providers have had to go outside of the EHR in order to separately log in to and access a State PDMP. In addition, stakeholders noted the wide variation in whether PDMP data can be stored in the EHR. By integrating PDMP data into the health record, health care providers can improve clinical decision making by utilizing this information to identify potential opioid use disorders, inform the development of care plans, and develop effective interventions.
ONC recently engaged in an assessment to better understand the current state of policy and technical factors impacting PDMP integration across States. This assessment explored factors like PDMP data integration, standards and hubs used to facilitate interstate PMDP data exchange, access permissions, and laws and regulations governing PDMP data storage. The assessment revealed ambiguous or non-existent policies regarding PDMP placement in health IT systems, interpretation of PDMP data, and PDMP access roles. One-third of hospitals have reported integration of PDMP queries within their EHR workflows.
The SUPPORT for Patients and Communities Act (Pub. L. 115–271),
Section 5042(a) of the SUPPORT for Patients and Communities Act added section 1944 to the Act, titled “Requirements relating to qualified prescription drug monitoring programs and prescribing certain controlled substances.” Subsection (f) of section 1944 of the Act increased Medicaid FFP during FY 2019 and FY 2020 for certain state expenditures to design, develop, or implement a qualified PDMP (and to make subsequent connections to such program). As a condition of this enhanced FFP, states must meet the conditions described in section 1944(f)(2) regarding agreements with contiguous states. There are currently a number of states that have used, or are seeking to use, this enhanced FFP.
Under section 1944(b)(1) of the Act, to be a qualified PDMP, a PDMP must facilitate access by a covered provider to the following information (at a minimum) about a covered individual, in as close to real-time as possible: Information regarding the prescription drug history of a covered individual with respect to controlled substances; the number and type of controlled substances prescribed to and filled for the covered individual during at least the most recent 12-month period; and the name, location, and contact information of each covered provider who prescribed a controlled substance to the covered individual during at the least the most recent 12-month period. Under section 1944(b)(2) of the Act, a qualified PDMP must also facilitate the integration of the information described in section 1944(b)(1) of the Act into the workflow of a covered provider, which may include the electronic system used by the covered provider for prescribing controlled substances. CMS issued additional guidance to states about the enhanced FFP authorized by the SUPPORT for Patients and Communities Act, which can be found at
Additionally, we note that section 7162 of the SUPPORT for Patients and Communities Act supports PDMP integration as part of the CDC's grant programs aimed at efficiency and enhancement by states, including improvement in the intrastate and interstate interoperability of PDMPs.
In support of efforts to expand the use of PDMPs, there are currently a number of federally supported activities underway aimed at developing a more robust and standardized approach to EHR–PDMP integration. Partners including CMS, CDC, ONC, and private sector stakeholders are focused on developing and refining standard-based approaches to enable effective integration into clinical workflows, exploring emerging technical solutions to enhance access and use of PDMP data, and providing technical resources to a variety of stakeholders to advance and scale the interoperability of health IT systems and PDMPs. For instance, stakeholders are working to map the NCPDP SCRIPT standard version 2017071 and the 2015 ASAP Prescription Monitoring Program Web Service standard version 2.1A to the HL7® FHIR® standard version R4.
In addition to monitoring activities which can provide a stronger technical foundation for a measure focused on PDMP use, we also requested comments in the FY 2020 IPPS/LTCH PPS proposed rule on alternative measures designed to advance clinical goals related to the opioid crisis (84 FR 19568 and additional comment responses in the FY 2020 IPPS/LTCH PPS final rule in 84 FR 42593 through 42595). Specifically, we sought public comment on the development of potential measures for consideration for the Promoting Interoperability Program that are based on existing efforts to measure clinical and process improvements specifically related to the opioid epidemic, including opioid quality measures endorsed by the National Quality Forum (NQF) and CDC Quality Improvement (QI) opioid measures based on CDC guidelines around prescribing practices. The latter of these includes the use of electronically-specified CDS to support OUD prevention and treatment best practices and the integration of a PDMP query as a part of specific clinical workflows. We stated that these measures relate to a range of activities that hold promise in combatting the opioid epidemic as part of OUD prevention and treatment best practices, that they can be supported using CEHRT, and that they may include the use of PDMP queries as a tool within the broader clinical workflows. We continue to evaluate the comments received in response to this request for information, and will explore how measures such as those discussed may help participants to better understand the relationship between the measure description and the use of health IT to support the actions of the measures related to opioid use.
We understand that there is wide variation across the country in how health care providers are implementing and integrating PDMP queries into health IT and clinical workflows, and that it could be burdensome for health care providers if we were to narrow the measure to specify a single approach to EHR–PDMP integration at this time. At the same time, we have heard extensive feedback from EHR developers that effectively incorporating the ability to count the number of PDMP queries in the EHR would require more robust certification specifications and standards. These stakeholders stated that health IT developers may face significant cost burdens under the current flexibility allowed for health care providers if they either fully develop numerator and denominator calculations for all the potential use cases and are required to change the specification at a later date. Stakeholders have noted that the costs of additional development will likely be passed on to health care providers without additional benefit as this development would be solely for the purpose of calculating the measure rather than furthering the clinical goal of the measure (for a summary of public comments discussed in last year's final rule, we refer readers to 84 FR 42593 through 42595, continued from last year's proposed rule in 84 FR 19556 through 19558).
Given current efforts to improve the technical foundation for EHR–PDMP integration, the continued implementation of the SUPPORT for Patients and Communities Act (in particular, its provisions specific to Medicaid providers and qualified PDMPs), our ongoing review of alternative measure approaches, and stakeholder concerns as previously discussed about the current readiness across states for implementation of the existing measure, we believe that additional time is needed prior to requiring a Query of PDMP measure for performance-based scoring. While we appreciate the concerns that stakeholders have shared, we believe that this measure can play an important role in helping to address the opioid crisis. Maintaining it as an optional measure with bonus points signals to the hospital and vendor community that this is an important measure which addresses a current gap that can help to spur development and innovation to reduce the barriers and challenges expressed to CMS.
Therefore, we proposed for CY 2021 to maintain the Electronic Prescribing Objective's Query of PDMP measure as optional and worth 5 bonus points, as well as corresponding changes to the regulation at § 495.24(e)(5)(iii)(B) (85 FR 32853 through 32855). Continuing to include the measure as optional in CY 2021 would allow time for further progress around EHR–PDMP efforts minimizing the burden on eligible hospitals and CAHs reporting while still providing an opportunity for capable implementers to report on and earn 5 bonus points for the optional measure. We sought comments on our proposal to maintain the Query of PDMP measure in CY 2021 as optional and worth 5 bonus points.
After consideration of the public comments we received, we are finalizing our proposal for CY 2021 to maintain the Electronic Prescribing Objective's Query of PDMP measure as optional and worth 5 bonus points, as well as finalizing corresponding changes to the regulation at § 495.24(e)(5)(iii)(B) as proposed.
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41659 through 41661), we established a new Support Electronic Referral Loops by Receiving and Incorporating Health Information measure by combining the Request/Accept Summary of Care measure and the Clinical Information Reconciliation measure. In establishing the new measure, we did not change the specifications or actions associated with the two combined measures, which address receiving an electronic summary of care record and conducting reconciliation of the summary of care record. However, the name of the measure includes the word “incorporating,” which is not always an action that is required for purposes of meeting the numerator of the measure. Instead, clinical information reconciliation must be completed using CEHRT for the following three clinical information sets: (1) Medication; (2) Medication Allergy; and (3) Current Problem List. In addition, we established that for cases in which the eligible hospital or CAH determines no update or modification is necessary within the patient record based on the electronic clinical information received, the eligible hospital or CAH may count the reconciliation in the numerator without completing a redundant or duplicate update to the record (83 FR 41661). Thus, we proposed to modify the name of the Support Electronic Referral Loops by Receiving and Incorporating Health Information measure to better reflect the actions required by the numerator and denominator (85 FR 32855). We proposed to replace the word “incorporating” with the word “reconciling” such that the new name would read: Support Electronic Referral Loops by Receiving and Reconciling Health Information measure, and to codify this change at § 495.24(e)(6)(ii)(B). We sought comments on our proposals.
After consideration of the public comments we received, we are finalizing our proposal to modify the name of the Support Electronic Referral Loops by Receiving and Incorporating Health Information measure such that the new name will read: Support Electronic Referral Loops by Receiving and Reconciling Health Information measure. In addition, we are also finalizing the corresponding changes at § 495.24(e)(6)(ii)(B) as proposed.
The following table reflects the objectives and measures as finalized for CY 2021. As discussed in sections VII.D.3 and VII.D.4 in the preamble of this final rule, we are finalizing our proposals for CY 2021 to include: (1) Changing the name of the Support Electronic Referral Loops by Receiving and Incorporating Health Information measure, and (2) the continuation of the optional Query of PDMP measure worth 5 bonus points for CY 2021.
Under sections 1814(l)(3)(A), 1886(n)(3)(A), and 1903(t)(6)(C)(i)(II) of the Act and the definition of “meaningful EHR user” under 42 CFR 495.4, eligible hospitals and CAHs must report on clinical quality measures (CQMs; also referred to as electronic CQMs, or eCQMs) selected by CMS using CEHRT, as part of being a meaningful EHR user under the Medicare and Medicaid Promoting Interoperability Programs. However, as previously established in accordance with section 1903(t)(5)(D) of the Act, in no case may any Medicaid eligible hospital receive an incentive after CY 2021 (§ 495.310(f), 75 FR 44319). Therefore, December 31, 2021 is the last date that states could make Medicaid Promoting Interoperability Program payments to Medicaid eligible hospitals (other than pursuant to a successful appeal related to 2021 or a prior year) (84 FR 42591 through 42592).
The following table lists the previously finalized eCQMs available for eligible hospitals and CAHs to report under the Medicare and Medicaid Promoting Interoperability Programs (84 FR 42597 through 42599) for the reporting period in CY 2021 and subsequent years, including the Safe Use of Opioids—Concurrent Prescribing measure (NQF #3316e), finalized as mandatory for reporting beginning with CY 2022 (84 FR 42598 through 42600).
In the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32856 through 32857), consistent with a similar proposal under the Hospital IQR Program in the same proposed rule (85 FR 32836 through 32837), we proposed to progressively increase the number of quarters for which hospitals are required to report eCQM data, from the current requirement of one self-selected calendar quarter of data, to four calendar quarters of data, over a 3-year period. Specifically, we proposed to require two self-selected calendar quarters of data from CY 2021, three self-selected calendar quarters of data from CY 2022, and four calendar quarters of data beginning with CY 2023. We stated that we believe increasing the number of quarters for which hospitals are required to report eCQM data would produce more comprehensive and reliable quality measure data for patients and providers. Taking an incremental approach over a 3-year period would also give hospitals and their vendors time to plan in advance, build upon, and utilize investments already made in their existing EHR infrastructure. Additionally, reporting multiple quarters of data would provide hospitals with a more continuous stream of information to monitor their levels of performance, as ongoing, timely data analysis can better identify a change in performance that may necessitate investigation, and potentially corrective action. We also refer readers to section VIII.A.9 of the preamble of this final rule for a discussion of similar proposals made for the Hospital IQR Program.
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42599 through 42600), we established the eCQM reporting periods, reporting criteria, and submission periods for CY 2021. We refer readers to that final rule for a more detailed discussion of our previously established final policies. Consistent with our proposal for the Hospital IQR Program in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32856), we proposed to modify the eCQM reporting period in CY 2021 under the Medicare and Medicaid Promoting Interoperability Programs for eligible hospitals and CAHs that report CQMs electronically. Specifically, we proposed to require eligible hospitals and CAHs to report two self-selected calendar quarters of eCQM data from CY 2021, on four self-selected eCQMs from the set of available eCQMs, for CY 2021 as previously established (84 FR 42599 through 42600).
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42600), we established the eCQM reporting periods, reporting criteria, and submission periods for CY 2022. We refer readers to that final rule for a more detailed discussion of our previously established final policies. Consistent with our proposal for the Hospital IQR Program in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32856), we proposed to modify the eCQM reporting period in CY 2022 under the Medicare Promoting Interoperability Program for eligible hospitals and CAHs that report eCQMs electronically. Specifically, we proposed to require eligible hospitals and CAHs to report three self-selected calendar quarters of eCQM data from CY 2022, for each required eCQM as previously established (84 FR 42600): (a) Three self-selected eCQMs from the set of available eCQMs for CY 2022, and (b) the Safe Use of Opioids—Concurrent Prescribing eCQM.
For CY 2023 and each subsequent year, we proposed to require eligible hospitals and CAHs reporting CQMs for the Medicare Promoting Interoperability Program to report 4 calendar quarters of data from CY 2023 and each subsequent year (85 FR 32856 through 32857) for: (a) 3 self-selected eCQMs from the set of available eCQMs for CY 2023 and each subsequent year; and (b) the Safe Use of Opioids—Concurrent Prescribing eCQM (NQF #3316e), for a total of 4 eCQMs. As finalized in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42601 through 42602), attestation is no longer a method for reporting eCQMs for the Medicare Promoting Interoperability Program, beginning with the reporting period in CY 2023, and instead, all eligible hospitals and CAHs are required to submit their eCQM data electronically through reporting methods made available through the Hospital IQR Program. Additionally, we proposed that the submission period for the Medicare Promoting Interoperability Program would be during the 2 months following the close of the respective calendar year. For example, the submission period for CY 2023 would be the 2 months following the close of CY 2023, ending February 28, 2024, and the same 2-month pattern would follow for each subsequent year.
Given these challenges, commenters requested that reporting and submission requirements for the CY 2021 reporting period remain at one self-selected calendar quarter of data so that hospitals may choose the fourth quarter, providing additional time for EHR upgrades. A few commenters expressed concern that the proposal could cause hospitals to lose their entire annual payment update for failing to meet an eCQM mandate that their EHR vendors cannot deliver, due to the pandemic and other competing federal EHR-related mandates. One commenter stated that the COVID–19 PHE's impact on hospital volumes may render data less reliable. Another commenter suggested that CMS continue to monitor the COVID–19 PHE, and the extent to which hospitals have recovered, to inform the exact timeframe to begin increasing eCQM reporting requirements.
Our current policy for eCQM reporting requires hospitals to report only one, self-selected calendar quarter of data for four self-selected eCQMs for the CY 2020 reporting period. We believe that a single quarter of data is not enough to capture trends in performance over time, therefore our goal in proposing to progressively increase the number of quarters of data to be collected over 3 years was to strike an appropriate balance between increasing eCQM reporting and providing hospitals with the necessary time to implement such changes.
With respect to the usefulness and challenges of extracting eCQM data after one quarter rather than requiring two quarters, we believe that our proposal further advances our goal of increasing the use of EHR data for quality measurement and improvement. We believe that reporting on the Safe Use eCQM will provide valuable information in the area of high-risk prescribing to providers, and further our efforts to combat the negative impacts of the opioid crisis. Last, we appreciate that there may be challenges with extracting data for the Safe Use eCQM. Although this measure was developed being mindful that logistically, the implementation of the data extraction process needed to be feasible, we will be considerate of this feedback in future rulemaking.
Regarding the meaningfulness of eCQMs in small, rural hospitals—rural health continues to be one of our top priorities. In 2016, we established an agency-wide Rural Health Council, and in 2017 we launched the Meaningful Measures Initiative and included Improving Access for Rural Communities as an initiative. Additionally in 2017, we tasked the National Quality Forum (NQF) to establish a Measure Applications Partnership (MAP) Rural Health Workgroup to identify a core set of the best available rural-relevant measures to address the needs of the rural population and provide recommendations from a rural perspective regarding measuring and improving access to care.
In response to concerns regarding the future of the impact of the COVID–19 PHE, we will continue to monitor the impact that the COVID–19 PHE has on
For example, eCQMs utilize data from structured fields within the EHR system, while chart-abstracted measures allow data to be collected from unstructured sources such as a clinician's progress notes. For these reasons, we use a validation process to address concerns about reliability and validity of eCQM data. Together, alongside the Hospital IQR Program (as described in section VIII.A.10. of the preamble of this final rule), we are continuously working to improve the eCQM validation process and balance reporting burden. We expect to gain a better understanding of how to continue to increase the accuracy of eCQM data by continuing to analyze and improve upon that process. We do believe that the reporting of additional quarters of data by hospitals will help to increase the reliability of the data, and we also note that measure specifications are typically available about eight months prior to the beginning of the calendar year reporting period.
After consideration of the public comments we received, we are finalizing all of our proposals as proposed to progressively increase, over a 3-year period, the number of calendar
Electronic reporting serves to further the CMS and HHS policy goals to promote quality through performance measurement and, in the long-term, improve the accuracy of the data and reduce reporting burden for providers. It also promotes the continued effort to align the Promoting Interoperability Program with the Hospital IQR Program through simplifying and streamlining quality reporting. We expect that over time, hospitals will continue to leverage EHRs to capture, calculate, and electronically submit quality data, build and refine their EHR systems, and gain more familiarity with reporting eCQM data. As eCQM reporting continues to advance, and hospitals have gained several years of experience with successfully collecting and reporting eCQM data, it is important to further our policy goals of leveraging EHR-based quality measure reporting in order to incentivize data accuracy, promote interoperability, increase transparency, and reduce long-term provider burden by providing public access to the eCQM data being reported.
Section 1886(b)(3)(B)(viii)(VII) of the Act requires the Secretary to report quality measures of process, structure, outcome, patients' perspectives on care, efficiency, and costs of care that relate to services furnished in inpatient settings in hospitals on the internet website of CMS. Section 1886(b)(3)(B)(viii)(VII) of the Act also requires that the Secretary establish procedures for making information regarding measures available to the public after ensuring that a hospital has the opportunity to review its data before they are made public. In the proposed rule, we stated that the current Hospital IQR Program policy is to report data as soon as it is feasible on CMS websites such as the Hospital Compare and/or its successor website after a 30-day preview period (78 FR 50776 through 50778). For additional information, we referred readers to section VIII.12.a. of the proposed rule, the Hospital IQR Program's Public Display Requirements.
Section 1886(n)(4)(B) of the Act requires the Secretary to post on the CMS website, in an easily understandable format, a list of the names of the eligible hospitals and CAHs that are meaningful EHR users, and other relevant data as determined appropriate by the Secretary. We believe other relevant data could include clinical quality measure performance rates, and data intended to improve transparency and reporting accuracy, because such data would enable patients, consumers, and health care providers to make informed decisions about their own, and their patients' healthcare.
Section 1886(n)(4)(B) of the Act also requires the Secretary to ensure that an eligible hospital or CAH has the opportunity to review the other relevant data that are to be made public with respect to the eligible hospital or CAH prior to such data being made public. By publicly reporting clinical quality measure data, this demonstrates our commitment to providing data to patients, consumers, and providers as quickly as possible to assist them in their decision-making.
Therefore, in alignment with our goal to encourage data accuracy and transparency, we proposed to align with the Hospital IQR Program in publicly reporting eCQM data submitted by eligible hospitals and CAHs for the Promoting Interoperability Program starting with the CY 2021 reporting period, and continuing through subsequent years (85 FR 32857). We stated that this data could be made available to the public as early as the fall of CY 2022. We also refer readers to section VIII.A. of the preamble of this final rule for a discussion of a similar proposal under the Hospital IQR Program.
We thank commenters for their recommendations to conduct measure reliability analyses to determine the minimum number of cases needed for public reporting. Validation of CY 2017 and CY 2018 data has shown that a majority of eCQM data was reported with agreement rates of 80 percent or higher. We refer readers to section VIII.A.10 of this final rule where this is discussed in more detail.
After consideration of the public comments we received, we are finalizing our proposal to begin publicly reporting eCQM data submitted by eligible hospitals and CAHs for the Promoting Interoperability Program, beginning with the eCQM data reported for the CY 2021 reporting period and for subsequent years, and we expect to begin publicly reporting the data in the Fall of CY 2022. Hospitals will have the opportunity to review their eCQM data before it is made public, as required by section 1886(n)(4)(B) of the Act, during a 30-day preview period.
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41673 and 41674), we amended § 495.104(c)(5) to specify transition factors under section 1886(n)(2)(E)(i) of the Act for the
• 1 for FY 2018.
• 3/4 for FY 2019.
• 1/2 for FY 2020.
• 1/4 for FY 2021.
In prior rulemaking, we adopted regulatory text at § 495.20 which cross-references ONC's certification criteria under 45 CFR 170.314. We recently identified two typographical errors in § 495.20: specifically, paragraphs (e)(5)(iii) and (l)(11)(ii)(C)(
We received no comments on these proposals and are finalizing the proposed revisions to § 495.104(c)(5)(viii) and §§ 495.20(e)(5)(iii) and (l)(11)(ii)(C)(
In the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32858), we solicited public comment on several areas involving the Promoting Interoperability Program. This included reducing administrative burden, supporting continued alignment with the Quality Payment Program, supporting alignment with the 21st Century Cures Act final rule, advancing interoperability and the exchange of health information, and promoting innovative uses of health IT. We also solicited public comment on potential areas of overlap including: information blocking, transitioning from the Common Clinical Data Set (CCDS) to the United States Core Data for Interoperability (USCDI), finalization of a new certification criterion for a standards-based API using FHIR, and other updates to 2015 Edition health IT certification criteria and the ONC Health IT Certification Program. In maintaining our focus on how promoting interoperability, alignment, and simplification will reduce health care provider burden while allowing flexibility to pursue innovative applications that improve care delivery, we further solicited comment on how Medicare can best support these areas of overlap.
Although we are not summarizing and responding to the comments we received in this final rule, we would like to bring attention to ONC's 21st Century Cures Act final rule (85 FR 25642 through 25961), specifically, the finalized updates to the 2015 Edition certification criteria and the ONC Certification Program. As these updates impact certification criteria referenced in the CEHRT definitions for the Promoting Interoperability Program and the MIPS Promoting Interoperability performance category, we proposed to align with these updates in the CY 2021 PFS proposed rule (85 FR 50265 through 50272), where we invite our readers to review and provide public comment.
We would like to thank commenters for the feedback, support, and responses we have received. We will continue to take all feedback into account as we develop future policies for the Promoting Interoperability Program.
CMS' Quality Improvement Organization (QIO) Program is part of the HHS' national quality strategy for providing quality and patient centered care to Medicare beneficiaries. The mission of the QIO Program is to improve the effectiveness, efficiency, economy, and quality of services delivered to Medicare beneficiaries. We identify the core functions of the QIO Program as: (1) Improving quality of care for beneficiaries; (2) protecting the integrity of the Medicare Trust Fund by ensuring that Medicare pays only for services and goods that are reasonable and necessary and that are provided in the most appropriate setting; and (3) protecting beneficiaries by expeditiously addressing individual concerns (such as beneficiary complaints, provider-based notice appeals, violations of the Emergency Medical Treatment and Labor Act (EMTALA), and other related responsibilities). The QIO Program is an important resource in our effort to improve quality and efficiency of care for Medicare beneficiaries.
A QIO is an organization comprised of health quality experts, clinicians, and consumers organized to improve the quality of care delivered to people with Medicare. QIOs work under the direction of CMS, to improve the quality of healthcare for all Medicare beneficiaries, and to support the Medicare program.
Current law authorizes the QIOs to have access to the records of providers, suppliers, and practitioners under Medicare in order to perform their functions. For example, section 1154(a)(7)(C) of the Act requires QIOs, to the extent necessary and appropriate, to examine the pertinent records of any practitioner or provider of health care services that is providing services for which payment may be made under the Medicare program. Section 1156(a)(3) of the Act requires that any person who provides health care services payable under Medicare assure that services or items ordered or provided are supported by evidence of the medical necessity and quality as may reasonably be required by a reviewing QIO in the exercise of its responsibilities. Our regulations at 42 CFR 476.78(b) provide that health care providers that submit Medicare claims must cooperate in the assumption and conduct of QIO reviews. Under 42 CFR 476.78(b)(2), providers (defined broadly to include any health care facility, institution, or organization involved in the delivery of Medicare-covered services) and practitioners (defined broadly to include an individual credentialed within a recognized health care discipline and involved in providing the services of that discipline to patients) must provide patient care data and other pertinent data to the QIO when the QIO is collecting review information. In practice, this typically includes providing the QIO with copies of medical records for Medicare beneficiaries. In addition, under 42 CFR 480.111, QIOs are authorized to have access to and obtain records and information pertinent to the health care services furnished to Medicare patients, held by any institution or practitioner in the QIO area; QIOs may require the institution or practitioner to provide copies of such records or information to the QIO. In some cases, this access to information may include information from the records of non-Medicare patients.
While § 480.111 does not explicitly require submission of electronic patient
In 2011, we established the Medicare and Medicaid EHR Incentive Programs (now known as the Promoting Interoperability programs) to encourage eligible professionals, eligible hospitals, and critical access hospitals (CAHs) to adopt, implement, upgrade, and demonstrate meaningful use of certified electronic health record technology (CEHRT). Beginning in 2019, all eligible professionals, eligible hospitals, and CAHs are required to use CEHRT to meet the requirements of the Medicare and Medicaid Promoting Interoperability Programs. Requirements for eligible hospitals, and CAHs that submit an attestation to CMS under the Medicare Promoting Interoperability Program were updated in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41634 through 41677). Based on the National Center for Health Statistics' 2017 National Electronic Health Records Survey, 97 percent of hospitals and 80 percent of office based physicians have adopted certified EHRs. The use of certified EHRs would enable healthcare providers to electronically submit patientrecords to the QIOs. See:
In § 476.1, “provider” is defined as a health care facility, institution, or organization, including but not limited to a hospital, involved in the delivery of health care services for which payment may be made in whole or in part under Title XVIII of the Act. The term “practitioner” means an individual credentialed within a recognized health care discipline and involved in providing the services of that discipline to patients. The regulations define “QIO review” as a review performed in fulfillment of a contract with CMS, either by the QIO or its subcontractors. The definitions specific to 42 CFR part 480 do not explicitly define the terms institution or practitioner but the context makes it clear that these terms are references to health care providers that are facilities and individual practitioners. The changes we are implementing in this final rule address submissions of patient records by all types of health care providers to QIOs and reimbursement for those submissions.
In this final rule, we amend §§ 412.115, 413.355, 476.78, 480.111, and 484.265 to mandate providers and practitioners submit patient records to Beneficiary and Family Centered Care Quality Improvement Organizations (BFCC–QIOs) in an electronic format. This proposal would also update the procedures and reimbursement rates for patient records providers and practitioners furnish to QIOs. We define the term “patient record” at § 476.78(e)(1) as all patient care data and other pertinent data or information relating to care or services provided to an individual patient, in the possession of the provider or practitioner, as requested by a BFCC–QIO for the purpose of performing one or more QIO functions. Providers in this context would include an institution. As discussed in more detail later in this section, we understand that QIOs request and receive primarily (if not only) records and information that is about or related to the health care provided to specific individuals. This broad definition would include any information relevant or pertinent to a particular individual (or services or Medicare-covered benefits provided to an individual) that is requested by a QIO is part of the patient record for that individual, even if the information is not necessarily part of what is traditionally understood as a medical record. We received no public comment on this definition of the term “patient record” and how we use the term defined this way as the basis for reimbursement for submission of electronic patient records.
Under section 1866(a)(1)(F) of the Act, CMS is required to reimburse hospitals for the cost of providing patient records to the QIOs for QIO functions as discussed in this final rule. Based on similar requirements applicable to other providers and the history of litigation related to this provision, we subsequently applied this requirement to additional providers and suppliers under Medicare. The provisions governing reimbursement for sending patient records to the QIOs is codified at 42 CFR 476.78 and 42 CFR 480.111. In this final rule, we are finalizing the following changes to the reimbursement requirements:
• Patient records that are required to be provided to a QIO under § 476.78(b)(2) must be delivered in electronic format, unless a QIO approves a waiver. Providers and practitioners who lack the capability to submit patient records in an electronic format may only submit patient records by facsimile or photocopying and mailing, after the QIO approves a waiver. Initial waiver requests by those providers that are required to execute a written agreement with a QIO are expected to be made at the time the provider executes a written agreement with the QIO. Other providers and practitioners who are not required to execute a written agreement with a QIO may request a waiver by giving the QIO notice of their lack of capability to submit patient records in electronic format.
• We establish reimbursement rates of $3.00 per patient record that is submitted to the QIO in electronic format and $0.15 per page for requested patient records submitted by facsimile or by photocopying and mailing (plus the cost of first class postage for mailed photocopies), after a waiver is approved by the QIO.
• We establish that these reimbursement rates are applicable to patient records submitted to a QIO in accordance with §§ 412.115, 413.355, 476.78, 480.111, and 484.265.
We believe these changes bring the procedures and associated reimbursement rates for submission of patient records to a QIO up to date with CMS policies for promoting use of electronic health records and burden reduction.
These changes are applicable to all providers and practitioners providing patient records to QIOs for purpose of QIO reviews under § 476.78. In addition, these requirements are applicable to institutions and practitioners submitting records and information to the QIOs in accordance with § 480.111. Specifically, such
We proposed in §§ 412.115(c), 413.355, and 484.265 to revise the current text which provides for an additional payment to be made, respectively, to hospitals, skilled nursing facilities and home health agencies in accordance with § 476.78 for the costs of photocopying and mailing medical records requested by a QIO. Specifically, we proposed to revise these provisions to permit an additional payment to a hospital, skilled nursing facility, or home health agency in accordance with § 476.78 for the costs of sending requested patient records to the QIO in electronic format, by facsimile, or by photocopying and mailing. These changes ensure that reimbursement is permitted for all healthcare providers and practitioners, on the same basis and at the same rates as authorized for the submission of requested patient records to the QIO under our proposed revisions to § 476.78.
The previously adopted regulation at § 476.78(c) described a photocopying reimbursement methodology for prospective payment system providers and included a step-by-step analysis of how CMS calculates provider costs of photocopying. We believe that including this description of how CMS determines a rate for reimbursement for photocopying patient records is no longer necessary in light of changes in technology and procedure, and proposed to remove the step-by-step analysis from § 476.78(c). We expect that up to 20 percent of providers will seek waivers allowing them to submit patient records by facsimile or photocopying and mailing if CMS authorizes reimbursement for the submission of patient records in an electronic format, and that that number would decrease further over time. This estimate of the number of affected entities that will submit waiver requests is based on the fact that according to the 2017 Office of National Coordinator (ONC) and Center for Disease Control (CDC) provider and practitioner survey of EHR adoption and use of Certified EHR technology, 99 percent of hospitals and 76 percent of office based clinicians have adopted certified EHR technology. See:
This assumption is further supported by the number of providers that currently have access to CMS's esMD portal, which eliminates the need for healthcare providers to submit medical documentation to CMS's medical review contractors (such as QIOs and Regional Audit Contractors) by facsimile or photocopying and mailing. Therefore, we expect that future updates to the calculation of photocopying reimbursement rate would be of decreasing concern to the majority of stakeholders.
At § 476.78(c), we proposed that information that is required to be delivered to a QIO by a provider or a practitioner under § 476.78 must be delivered in an electronic format using a mechanism specified by the requesting QIO. We proposed that in the absence of a mechanism specified by the requesting QIO, the requested records may be submitted using any CMS approved secure mechanism. This includes mechanisms such as: secure file transfer (SFT), managed file transfer (MTF), Electronic Submission of Medical Documentation System (esMD), or CMS-approved internet portal, or CMS-approved physical medium for submitting electronic records. Under our proposal, CMS will provide a list of approved mechanisms for submission of records and information to the QIO in an electronic format when the QIO contacts the provider to conduct a review, or when a written agreement between the QIO and provider is executed. We proposed to address the amount of reimbursement in new paragraph (e) of § 476.78, as discussed later in this section. CMS would not permit the QIOs to reimburse for any patient record submitted by facsimile or by photocopying and mailing, if the provider or practitioner in question does not have an approved waiver.
We proposed to redesignate existing § 476.78(d) as § 476.78(f), with revisions to be consistent with our proposed reimbursement rates. We proposed to create a new provision at § 476.78(d) to establish a process for practitioners and providers to request waivers of the requirements for the electronic submission of requested patient records to the QIOs under proposed § 476.78(c). A QIO-approved waiver would afford a provider or practitioner who is not capable of submitting patient records to its QIO in an electronic format the opportunity to continue submitting patient records using facsimile or by photocopying and mailing. We proposed that providers who are required to execute a written agreement with a QIO, but which lack the capability to submit requested patient records in electronic format to the requesting QIO, must request a waiver of the requirement to submit records in an electronic format to the QIO. A request for a waiver by providers who are required to execute a written agreement with the QIO, must generally be made to the QIO when executing a written agreement with the QIO. However, where such a provider's lack of capability arises after the written agreement is executed, we proposed that the provider could request a waiver by notifying the QIO that they lack the capability to submit patient records in electronic format. We also proposed, at § 476.78(d)(2)(ii), that the waiver would become part of the written agreement between the QIO and the provider. Upon approval of a waiver, a provider or practitioner may submit requested patient records by facsimile or photocopying and mailing. We note that the current regulations do not specifically provide for reimbursement for patient records submitted to the QIO by facsimile, but in order to encourage efficiency in patient record transmission, CMS has historically interpreted the provisions governing reimbursement for patient records submitted to the QIOs through photocopying and mailing to also authorize reimbursement for the submission of patient records by facsimile. We proposed to specifically incorporate our historic interpretation into the regulatory framework. We solicited comment on these proposals, including the requirement that the request for a waiver must generally be made during execution of the written agreement.
Similarly, we proposed that providers, practitioners and institutions subject to § 476.78 or § 480.111 that are not required to execute a written agreement with the QIO, may also request a waiver of the requirement to submit records in electronic format to the QIO, by notifying the QIO that they lack the capability to submit patient records in an electronic format. Upon approval of the waiver, a provider or practitioner may submit requested patient records and information by photocopying and mailing. We solicited comment on this proposal, including
We proposed to establish these waiver processes because we recognize that some practitioners and providers may lack the capacity to submit records to the QIOs in an electronic format. However, these providers and practitioners are still required to comply with QIO requests for records. We believe the waiver request process would not add extra burden on the providers and practitioners because they can request a waiver simply by notifying the QIO that they lack the capability to submit patient records in an electronic format, either when executing a written agreement with the QIO in accordance with § 476.78(a) or when they are contacted by the QIO to request patient records. Under our proposal, such waiver requests could be made by whatever means the provider or practitioner uses to communicate with the QIO. We invited comment on these proposals.
We also proposed to add a new paragraph (e) to § 476.78. In § 476.78(e)(1), we proposed a definition of the term “patient record” for purposes of reimbursement for submitting patient records to the QIO for one or more QIO functions. In § 476.78(e)(2), we proposed to authorize QIOs to reimburse providers and practitioners for submitting patient records, requested by a QIO for the purpose of carrying out one or more QIO functions with the proposed rates of reimbursement based on the electronic format of submission. The QIOs could not reimburse for any patient record submitted by facsimile or by photocopying and mailing without an approved waiver. Each of these reimbursement rates were calculated to reflect the costs associated with submitting a patient record, including labor and supplies. Proposed § 476.78(e)(2) would provide that a QIO could reimburse a provider or practitioner for requested patient records submitted in an electronic format, at the rate of $3.00 per record. We proposed that § 476.78(e)(3) will provide that a QIO may reimburse a provider or practitioner, with an approved waiver in place, for requested patient records submitted by facsimile or photocopying and mailing at the rate of $0.15 per page, plus the cost of first class postage for patient records submitted via photocopying and mailing. We discuss the methodology, we proposed to use to calculate these payment rates in section IX.A.2.b. of the preamble of this final rule.
For purposes of QIO reimbursement under § 476.78(e), we proposed to define a “patient record” at § 476.78(e)(1) as all patient care data and any other pertinent data or information relating to care or services provided to an individual patient in the possession of the provider or practitioner, as requested by a QIO, for the purpose of performing one or more QIO functions. We proposed to interpret and use this definition of patient record broadly. For example, this definition of “patient record” would include the policies and established operating procedures of a health care provider, to the extent that that information is pertinent to an individual patient or the services or Medicare-covered benefits provided to an individual patient, and the QIO requests that information. We also proposed at § 476.78(e)(4) that the QIOs will only be permitted to reimburse a practitioner or providers once for each patient record submitted, for each request made by a QIO. Each request from a QIO would be reimbursed separately at the rates specified in § 476.78(e), including for records that had already been provided in response to a previous request. However, only one reimbursement would be provided by the QIO for each patient record submitted, per request, even if a particular patient record is submitted to the QIO using multiple different formats, in fragments, or more than once in response to a particular request.
We proposed to revise the requirements applicable to institutions and practitioners submitting records and information to the QIOs in accordance with § 480.111. Specifically, we proposed to require such institutions and practitioners to conform with the requirement applicable to providers and practitioners under § 476.78(c) and (d). By the cross-references in the regulation text, we proposed to permit reimbursement by the QIOs to institutions and practitioners for providing records and information to the QIOs under § 480.111 in the same manner and rates as would apply to providers and practitioners under proposed § 476.78(e). In our proposal, the reimbursement rates proposed under § 476.78(e) will also apply to institutions and practitioners subject to § 480.111. We proposed to replace the current language in§ 480.111(d) governing the reimbursement by the QIO for requested patient records with a provision that refers to the reimbursement rates in § 476.78(e).
Therefore, if these changes are finalized, reimbursement for patient records submitted under § 480.111 would be consistent with reimbursement under § 476.78. This proposal would provide a consistent level of reimbursement from submission of patient records to the QIOs, across all health care providers and practitioners, that submit patient records to the QIO under §§ 476.78 and 480.111. The goal of our proposal was to put all QIO reimbursement for patient records in the same section of the regulations, so that QIOs, providers, and practitioners know where to find the relevant provisions. This proposal would also help to reduce the risk of inconsistencies in policy application due to duplication of related QIO regulations in multiple sections.
We received no comments on the definition of the term “patient record” for purposes of reimbursement by a QIO at 476.78 (e)(1) when submitted for one or more required QIO activities; the requirement for QIOs to reimburse providers and practitioners once per request for the submission of a patient record at 476.78 (e)(4). We are finalizing these changes as proposed without modification.
We proposed redesignating the existing provisions previously under § 476.78 (d) to a new paragraph: § 476.78(f). We proposed revisions to the text of proposed redesignated § 476.78(f) to provide greater consistency with our proposed reimbursement requirements; the proposed revisions to § 476.78(b)(2)(ii) to make electronic submission the default method of submission and mandate that all providers and practitioners who provide patient records to the QIO to submit them in electronic format within 14 calendar days of a request, unless they have an approved waiver. In addition, the requirements for submitting patient records to the QIO in an electronic format unless they obtain an approved waiver from the QIO and the ability for the QIO to reimburse providers for electronic submission of patient records are applicable to all providers and practitioners under §§ 412.115, 413.355; 476.78, 480.111, and 484.265. Accordingly, we are finalizing these provisions as proposed, without modification.
Currently § 476.78 requires providers and practitioners who are subject to QIO review activities under 42 CFR part 476 to submit requested patient care data and other pertinent data and information to the QIO. We proposed to require those submissions be made in electronic format in revised § 476.78(c).
Currently, § 476.78(b)(2)(ii) requires providers and practitioners send secure transmission of an electronic version of medical information to the QIO, if available, and subject to the QIO's ability to support receipt and transmission of the electronic version of patient records. Because most providers and all QIOs have demonstrated the ability to send and receive patient records in electronic format, we proposed to mandate providers and practitioners to submit requested patient records and information to the QIO in electronic format.
Our interoperability programs, quality reporting programs, and other programs are now requiring electronic submission of patient care data and information to CMS and its contractors. The Promoting Interoperability program has been successful in encouraging widespread adoption of EHRs by providers and practitioners. By participation in these CMS data transfer programs, providers, practitioners, and QIOs have demonstrated the capability to collect, store, and safely transmit EHR data electronically. Based on our years of experience administering the Medicare and Medicaid EHR Incentive and Promoting Interoperability programs, we believe that most providers and practitioners are now able to safely communicate patient's medical records electronically to QIOs. This is evidenced by the increased number of providers, practitioners, and QIOs that currently participate in the use of esMD, Managed File Transfer (MFT), and other related electronic data communication methods.
On September 15, 2011, we implemented the esMD system for programs requiring the review of medical documentation and patient records such as: Medicare Fee for service payment appeals, prior authorization requests, and durable medical equipment requests. The esMD system is used by providers on a voluntary basis to transmit medical documentation to review contractors electronically. This medical documentation (including patient records) is used by CMS contractors to review claims and to verify providers' compliance with Medicare rules for documentation and payment. Medicare providers and review contractors believe that using the esMD system results in cost savings and increased efficiencies, as well as improve payment turnaround time, and reduce the administrative burden associated with medical documentation requests and responses. By 2017, about 60,579 providers had access and used esMD to send medical records, and up to 2.5 million medical records were transmitted from providers to Medicare contractors. See 2017 esMD Annual Report:
Managed File Transfer (MFT) refers to a software or a service that manages the secure transfer of data from one computer to another through a network (for example, the internet). MFT software is marketed to corporate enterprises as an alternative to using ad-hoc file transfer solutions. MFT is currently available to providers and practitioners, and QIOs currently use MFT to transmit data to its clinical peer reviewers. MFT provides another good option for providers and practitioners to submit records and information securely to QIOs.
Given numerous improvements in electronic data communication capabilities among both providers and QIOs, and the expansion in access to electronic data communication technology, we believe it is in the best interest of the Medicare program for CMS to support electronic data communication between the QIOs and providers and practitioners. We proposed to require providers and practitioners to provide patient records to the QIO electronically beginning in FY 2021 and for subsequent years. Our proposal provided for a waiver for providers and practitioners that lack the capability to submit patient records in electronic format. Lacking the capability to submit patient records in electronic format may have a number of causes, such as the records not being in an electronic format or readily convertible to an electronic format or the provider or practitioner suffering a loss of the necessary resources to submit records through the QIO-approved or CMS-approved mechanism (such as because of a power outage). The intent of this policy change is to incentivize health care providers and practitioners subject to § 476.78 to use the most efficient mechanisms available to submit required data to the QIOs for review activities, in order to minimize the time and expense required to satisfy their responsibilities under § 476.78(b), and thereby minimize the expense CMS incurs in the administering the QIO program. A complete discussion of the anticipated impact of these proposals can be found section I.H.11. of Appendix A to this final rule.
We received no comments on our proposal to require providers and practitioners to submit patient records in an electronic format under § 476.78 (c) unless they have an approved waiver from a QIO pursuant to § 476.78(d); the process for providers and practitioners to obtain a waiver from the requirement to submit patient records to the QIO in an electronic format under § 476.78(d); and the applicability of these requirements to providers practitioners and institutions under §§ 412.115, 413.355; 476.78, 480.111, and 484.265.
We proposed to permit providers and practitioners who cannot submit requested patient records and information in electronic format to request a waiver under § 476.78(d). Under our proposal, any provider or practitioner that lacks the capability to submit patient records and information to the QIO in electronic format must obtain a waiver to be exempted from the requirement of submitting patient records and information in electronic format. Upon approval of the waiver, the provider or practitioner can submit requested patient records and information to QIO by facsimile or first class mail. We also proposed that requests for waivers by providers that are required to execute a written agreement with the QIO must generally be made to the QIO when executing the written agreement. Those providers and practitioners that are
After the waiver is approved a provider or practitioner may send requested patient records and information by facsimile or first class mail. The QIOs may reimburse providers and practitioners with approved waivers for requested patient records submitted by facsimile or by photocopying and mailing, as proposed in § 476.78(e)(3). We proposed that a waiver would be approved by the QIO after the provider or practitioner has
We received no comments on the proposed waiver process at § 476.78(d) for exempting providers and practitioners from the requirement to submit patient records to the QIO in an electronic format, or on limiting reimbursement of providers and practitioners under § 476.78(e)(3) for the submission of patient records to the QIO through photocopying and mailing or by facsimile to circumstances in which a provider or practitioner has obtained an approved waiver from the electronic submission requirements under § 476.78(d). As a result, we are finalizing the proposed changes at § 476.78(d) and § 476.78(e)(3) without modification.
We proposed at § 476.78(e)(2) to authorize the QIOs to reimburse providers and practitioners, for submitting requested patient records to the QIO in an electronic format, starting in FY 2021. The regulation previously did not authorize or set a rate for reimbursement when providers submit patient records to the QIOs in an electronic format. We believe the lack of reimbursement for the submission of requested patient records in an electronic format discouraged providers and practitioners from sending patient records in an electronic format, which is a more efficient and cost effective method for transmitting patient records than facsimile or photocopying and mailing. This lack of reimbursement for electronic submission of patient records did not align with other CMS programs and policies that seek to incentivize the use of electronic records and the electronic transmission of information such as the Promoting Interoperability Program. We believe this change in regulation, allowing QIOs to reimburse providers and practitioners for submitting patient records in electronic format, would encourage more practitioners and providers to do so.
In calculating the rate of reimbursement for submission of patient records in an electronic format, we took into consideration the labor rate and materials cost associated with submitting patient records in an electronic format. We proposed to follow steps similar to those used in CMS' methodology for calculating reimbursement for photocopying patient records for the QIOs. We calculated the proposed reimbursement rate for patient records submitted in electronic format as follows:
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Using this methodology, we calculated the reimbursement for submitting records electronically to QIO as follows:
Labor costs were calculated by adding the annual salary of a medical records clerk with the costs of fringe benefits, and dividing that sum with the number of patient records that can reasonably be expected to be processed in a year.
In this final rule, we will continue to use the salary of a Federal GS–5 midlevel secretary as representative of a medical records clerk's salary. We will take into account increases in the payment rate for a midlevel secretary in the federal government for the CY 2020. Using the salary level for an experienced midlevel (GS–5 step 5) secretary in the Federal government as representative of that of a medical records clerk, the annual salary of the medical records clerk is estimated to be $39,573 according to the Office of Personnel Management's 2020 General Schedule pay scale, with locality adjustment for the rest of the United States. In calculating the fringe benefits applicable to a medical records clerk, we used OMB Circular A–76 to calculate the annual fringe benefit cost, based on 36.25 percent of the GS–5 salary. The estimated annual fringe benefit cost is therefore $14,345 ($39,573 * 36.25 percent). Adding the fringe benefit cost, the estimated total annual salary of a medical records clerk is $53,918. Assuming a full time equivalent of 2080 hours per year and divide the annual salary by the number of hours worked ($53,918/2080 hours) in a year, the total salary per hour of a medical records clerk would be $26 per hour.
We assume that an average patient record request by QIO will be contained in a single electronic file that can be classified as one electronic record. This assumption is based on CMS' experience with current QIO transfer of electronic patient records to OMHA and the DAB. We estimated that it will take a medical record clerk an average of 5 minutes to search, retrieve, process, and submit a requested patient record in electronic format. Using this estimate we calculate that a medical records clerk could search for, retrieve, process, and submitted a total of 12 medical records per hour.
We estimate a medical records clerk is active and productive for a total of 1,430 hours per year (about 5.5 productive hours per day). We took into account the time spent by the medical records clerk at rest and lunch, and time away from work on annual vacation, sick, and holiday leave. To calculate the cost of one active productive hour we divide the estimated cost for annual salary and fringe benefits by the total number of active productive hours per year. We estimated the cost of one active productive hour at $38 per hour ($53,918/1430 hours).
We estimated that there would be no cost for supplies directly attributable to searching, downloading, and submitting patient records to the QIO.
We estimated total cost for submitting a patient record to the QIO at $3 per record. This calculation was derived by dividing the total productive hour cost of $38 by the number of patient records that can processed in an hour, which is 12 records ($38/12 records = 3.17).
We invited public comment on this proposed methodology for calculating the rate of reimbursement for processing patient records in an electronic format. In addition, we invited public comment on alternative methodologies for determining more appropriate reimbursement rate for the submission of patient records to the QIOs in an electronic format, and we intend to finalize our policy in this final rule based upon the public comments received.
We received no comments regarding our proposals under § 476.78(e)(2) to allow QIOs to reimburse providers or practitioners for the electronic submission of patient records, or the methodology or content used to calculate the $3.00 reimbursement rate for the electronic submission of patient records. Therefore we are finalizing our proposals for the regulation at § 476.78(e)(2) allowing QIOs to reimburse providers and practitioners at a flat rate of $3.00 per requested patient record as proposed and without modification.
We proposed that the QIOs would reimburse providers with approved waivers for submitting patient record by photocopying and mailing. We proposed at § 476.78(e)(3) to increase the reimbursement rate for submitting patient records by photocopying and mailing from $0.12 per page to $0.15 per page. We are updating this payment rate in accordance with CMS's commitment to periodically revise the photocopying reimbursement rate. This rate adjustment is fair, reasonable, and meets the current labor and material cost articulated in the established formula for calculating photocopying reimbursement rate. We proposed to use the following formula for updating the rate of reimbursement for photocopying and mailing records to QIO as follows:
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We used this methodology to determine what specific rate to propose for the reimbursement for sending patient records by photocopying and mailing patient records. We proposed to increase the per-page reimbursement rate to $0.15 for photocopying patient records. We calculated the proposed photocopying reimbursement rate by updating the salary, fringe benefits, and supply figures associated with photocopying and submitting patient records to the QIO. In accordance with this methodology we considered the following factors in calculating the proposed new rate:
Labor costs for photocopying patient records were calculated by adding the annual salary of a photocopy machine operator with the costs of fringe benefits, and dividing that sum by the number of pages that can reasonably be expected to be photocopied in 1 year. We proposed to continue to rely upon the salary of a Federal GS–5 midlevel secretary as representative of a photocopy machine operator's salary. Using the salary level for an experienced (GS–5) midlevel secretary in the Federal government as representative of that of a photocopy machine operator, the annual salary of the photocopy machine operator is estimated to be $39,573, according to the Office of Personnel Management's 2020 General Schedule pay scale. This estimate included the locality pay adjustment for the rest of the United States. In calculating the fringe benefit of we used OMB Circular A–76 to calculate the annual fringe benefit cost, based on 36.25 percent of the GS–5 salary. The annual fringe benefit cost is $14,345 ($39,573 * 36.25 percent). Adding the fringe benefit, the estimated total annual salary of the photocopying operator is estimated at: $53,918. To determine the per-page labor cost, the total of salary ($39,573) and fringe benefits ($14,345) costs, which amount to $53,918, was divided by 624,000 pages, the number of photocopies a photocopy machine operator can make in 1 year. The estimated labor cost for photocopying 1 page of patient records is $0.08 ($53,918/624,000 pages).
We estimated the total number of pages that a photocopy machine operator can photocopy per year based on hand feeding of documents into a photocopying machine. We recognize that modern technologies exist which support faster photocopying, such as through automatic paper feeds. We are aware that using an automatic paper feeds can greatly increase the number of pages that can be photocopied per minutes, and as a result, greatly decrease the cost of photocopying per page. We assume that not all providers and practitioners has access to modern technology or uses modern photocopier capable of automatic paper feed. Therefore, we would calculate the number of page a photocopy machine operator can photocopy, using the manual paper feed estimate. In calculating the number of pages that can be photocopied per hour using a manual feed, we took into consideration that recent improvements in photocopying machine technology has improved the speed of photocopier up to 8 pages per minute. In order to account for time spent by the photocopy machine operator in search and retrieval tasks, and time away from work on annual vacation, sick, and holiday leave, the total number of work hours per year is estimated at 1,300 (an average of 5 productive hours per day), resulting in a total of 624,000 (1,300 hour × 60 minutes × 8 pages) pages per year.
We proposed a total estimated supply cost of $0.07 per page, based on a per-page paper cost of $0.06 and a per-page toner and developer cost of $0.01 per page. The supply cost include the cost of photocopying paper and toner cartridge. Using the market survey cost for these materials we estimated the average cost, using the average price and quality at the GSA material supplies rate, we estimated that copier paper cost of $0.06 per page for paper and $0.01 per page for photocopy machine toner. The paper cost was based on a cost of $32.49 per case for recycled white photocopier paper of 5,000 sheets in a case. The costs of photocopier toner that yield 37,000 copies was estimated at $54.99 per toner cartridge. We calculated these costs using estimates of the costs for recycled photocopier paper and toner cartridges contained in the GSA supply catalogue.
We estimate total cost of photocopying at $0.15 per page. This calculation was derived by adding the total estimated labor cost of $0.8 per page and total cost of photocopying supplies of $0.07 per page. Consistent with our policy and generally accepted mathematics principles, we chose to round our calculations to nearest decimal. We believe this decision is both reasonable and supportable. We invited public comment on this proposed methodology for calculation of the rate for reimbursement for sending patient records and information by photocopying. In addition, we invited public comment on alternative methodologies for determining a more appropriate photocopying reimbursement rate and intend to finalize a policy based upon the public comments received.
After consideration of the public comment received, we are finalizing the updated reimbursement rate for the submission of patient records to the QIOs via photocopying and mailing, of $0.15 per page for photocopying plus first class postage for providers with approved waivers from the requirement to submit patient records in electronic format, without modification.
We proposed at § 476.78(e)(3) to reimburse providers and practitioners with approved waivers that submit patient records to the QIO by facsimile at the rate of $0.15 per page. The current regulations do not specifically provide for reimbursement for patient records submitted to the QIO by facsimile, but CMS has historically interpreted the provisions governing reimbursement for patient records submitted to the QIOs through photocopying and mailing to also authorize reimbursement for the submission of patient records by facsimile. We are now proposing to specifically incorporate our historic interpretation into the regulatory framework. According to this proposal the QIOs would continue to provide for reimbursement for patient records submitted to the QIO via facsimile, using a rate estimated based on the costs associated with submitting patient records to the QIO by facsimile. We believe the rate we proposed is fair, reasonable, and reflects current labor and material costs associated with sending patient records to the QIOs by facsimile. We calculated the reimbursement for submitting patient records by facsimile to the QIO as follows:
•
•
•
We used this methodology to determine the specific rate of reimbursement we proposed for submitting patient records to the QIO by facsimile. Similar to our methodology for calculating a fair and appropriate reimbursement rate for submitting records to the QIO via photocopying and mailing, we calculated the proposed reimbursement rate for sending patient records to the QIO by facsimile as follows:
Labor costs were calculated by adding the annual salary of a facsimile machine operator with the costs of fringe benefits, and dividing that sum by the number of pages that a single facsimile operator can reasonably be expected to submit in a year. We proposed to rely upon the salary of a Federal GS–5 midlevel secretary as representative of a facsimile machine operator's salary. Using the salary level for an experienced (GS–5) midlevel secretary in the Federal government as representative of that of a facsimile machine operator, the annual salary of the facsimile operator is estimated to be $39,573 according to the Office of Personnel Management's 2020 General Schedule pay scale, including the locality adjustment for the rest of the United States. In calculating the cost of fringe benefits we used OMB Circular A–76 to calculate the annual fringe benefit cost, based on 36.25 percent of the GS–5 salary. The annual estimated fringe benefit cost is $14,345 ($39,573 * 36.25 percent). With fringe benefits, we estimated total annual salary of the facsimile operator at $53,918.
We estimated the total number of pages that a facsimile machine operator could submit per year based on hand feeding of documents into facsimile machine. We recognize that several modern technologies exist which support faster faxing, such as through automatic paper feeds or faxing over the internet. These technologies greatly increase the number of pages that can be submitted by facsimile on an hourly basis, and as a result, greatly decrease per page cost of submitting patient records by facsimile. However, we took into consideration the fact that not all providers and practitioners have access to the internet or modernized facsimile machines. Therefore, we proposed to calculate the per page reimbursement rate using the manual paper feed as our guide. We estimated that a facsimile machine operator using a manual feed can submit 5 pages of patient records to the QIO in 1 minute. This estimate does not account for any delay in transmission due to poor connectivity or machine fault. In order to account for time spent by the facsimile machine operator in search and retrieval tasks, and time away from work on annual vacation, sick, and holiday leave, we estimated the total number of work
To determine the per-page labor cost for submitting patient records to the QIO via facsimile, we divided the total salary ($39,573) and fringe benefits ($14,345) costs, $53,918, by 390,000, the number of copies a facsimile operator can submit in a year, resulting in an estimated labor cost of $0.14 per page ($53,918/390,000 pages).
We proposed to reimburse the cost of a dedicated telephone line used for a facsimile machine at the rate of $29.99 per month, for an estimated total cost of $359.88 per year. Our estimate does not take into consideration that multiple facsimile machines can use on telephone line, and that a telephone line can be used for other purposes than transmitting records via facsimile. We estimated that 1 cent per page ($359.88/390,000 pages) will reflect the cost of a dedicated telephone line used for facsimile service, based on estimated the estimated 390,000 pages of patient records we expect a facsimile machine operator could submit in a year. We estimated the cost of telephone line using the average per month cost for a single business telephone line per month based on an average drawn from comparison of major telecommunications service provider rates. We estimate that there is no reimbursable paper or material cost associated with sending patient records to the QIO by facsimile, as CMS does not reimburse providers and suppliers for the cost of machinery and overhead costs for submitting patient records to the QIOs.
We estimated the total cost of or submitting patient records by facsimile to the QIO at $0.15 per page. This estimate was calculated by adding the total estimated labor cost of $0.14 per page, and total cost of a dedicated telephone line at $0.01 per page. Consistent with our policy and generally accepted mathematics principles, we chose to round our calculations to nearest decimal. We believe this decision is both reasonable and supportable. We invited public comment on this proposed methodology for calculating the rate for reimbursement for submitting patient records by facsimile. In addition, we invited public comment on alternative methodologies for determining an appropriate facsimile reimbursement rate and intend to finalize our policy based upon the public comments received.
After consideration of the public comment received, we are finalizing the updated reimbursement rate for the submission of patient records to the QIOs via facsimile of $0.15 per page for providers with approved waivers from the requirement to submit patient records in electronic format at § 476.78(e)(3), without modification.
Congress created the Provider Reimbursement Review Board (PRRB or Board) in 1972 to furnish providers with an independent forum for resolving payment disputes typically arising from certain Medicare Part A final determinations (usually cost report audit appeals). (See 42 U.S.C. 1395oo and 42 CFR 405.1801 and 405.1840 through 405.1873.) The Board has the full power and authority to make rules and establish procedures, not inconsistent with the law, regulations, and CMS Rulings, that are necessary or appropriate to carry out its function. (See 42 U.S.C. 1395oo(e) and 42 CFR 405.1868(a).)
On average, the PRRB receives approximately 3,000 new appeals annually. The PRRB's docket is unique and complex, so it is imperative that the Board manage its docket in the most efficient manner possible. For example, an individual provider appeal may involve one or more issues; in contrast, a group appeal involves multiple providers appealing a common issue. (See 42 U.S.C. 1395oo(b) and 42 CFR 405.1837.) In addition, many providers or issues may be transferred between the cases to create a complex web of interrelated appeals. In light of these complexities, it is imperative that the Board continue to improve the efficiencies of its processes.
Until mid-2018, appeal documents (including documents such as appeal requests, transfer requests, and position papers) could only be filed with the PRRB on paper. Over the past decade, CMS and the Board have received feedback from its stakeholders requesting an electronic filing system. On August 16, 2018, the CMS Office of Hearings (OH) and the Board released the OH Case and Document Management System (OH CDMS). OH CDMS is a web-based portal where providers can file appeals and all parties can manage their cases. Besides instantaneously accepting submissions electronically, OH CDMS releases outgoing electronic correspondence and Board decisions as well. OH CDMS enables providers and their representatives to manage their cases in real time, and it allows parties to view all documents officially filed through the system (including viewing opposing parties' submissions). When a party makes a submission, whether submitting a new appeal or taking an action on an existing case, there is an immediate system notification that confirms the submission was made. All parties on the case will then receive an email confirming the date and time of delivery. Internally, the system also serves as a daily workflow management system for the PRRB and its staff and aids the PRRB in strategically managing its docket in a more efficient manner.
The feedback we have received from active users of OH CDMS has been largely positive. We have also incorporated user suggestions to refine the system. OH CDMS offers a Help Desk, available each business day, to assist users with technical questions that may arise.
To support the use of the electronic filing system, we proposed technical changes throughout the regulations at 42 CFR part 405, subpart R. First, we proposed to update the definitions of “date of receipt” and “reviewing entity” at 42 CFR 405.1801(a) to indicate that submissions to an electronic filing system are considered received on the date of electronic delivery. We also proposed to add a new definition of “in writing or written” that indicates either of these terms means a hard copy or electronic submission. We believe these are common sense technical changes that reflect current practice and understanding. We note that we did not propose to revise the requirement in § 405.1801(a) that the date of receipt by a party or affected nonparty of documents involved in proceedings before a reviewing entity, including the Board, is presumed to be 5 days after the date of issuance. Therefore, regardless of whether the Board issues a decision electronically or by some other means, the 5-day presumption regarding receipt by a party would continue to apply. We also proposed technical changes throughout the subpart to replace references related to hard copy documents such as “mail” and “hand delivery” with terms that apply to both hard copy and electronic submissions. We sought comments on these changes.
We also proposed to update 42 CFR 405.1857, related to subpoenas, so that it generally conforms to the technical changes we are proposing. However, we proposed adding the following statement to this section, “If the subpoena request is being sent to a nonparty subject to the subpoena, then the subpoena must be sent by certified mail.” This change is to ensure that the subpoena rule is in accordance with section 205(d) of the Act (Issuance of subpoenas in administrative proceedings).
As stated earlier in this preamble, the Board has the full power and authority to make rules and establish procedures, not inconsistent with the law, regulations, and CMS Rulings, that are necessary or appropriate to carry out its function. (See 42 U.S.C. 1395oo(e) and 42 CFR 405.1868(a).) It is critically important that the PRRB docket records be fully populated within OH CDMS so that the Board and its stakeholders can optimally realize the technological benefits and efficiencies of OH CDMS. Therefore, we are proposing to amend the regulations at 42 CFR 405.1843 (Parties to proceedings in a Board appeal) to make clear that parties to a Board appeal shall familiarize themselves with the instructions for handling a PRRB appeal, including any and all requirements related to the electronic or online filing of documents for future mandatory filing. This change to require electronic submissions would transform the PRRB's docket to a more efficient and less costly paperless environment, and will support a better continuity of operations posture. Accordingly, no earlier than FY 2021, the PRRB may require that all new submissions (in new and pending appeals) be filed electronically using OH CDMS. This requirement would be reflected in updated Board instructions, which are currently published at
Because the Board plans to wait until at least FY 2021 to potentially require electronic filings, we believe that stakeholders would have ample time necessary to register and start using the system to the extent they have not already done so on a voluntary basis. Stakeholders can access the Electronic Filing web page located at
It has already been approximately 21 months since the system became operational and available to stakeholders. In this regard, we note the following:
• Many providers started using the system immediately after OH CDMS was launched.
• OH CDMS now has over 800 registered users, and continues to grow. We believe that this number of users is largely representative of the cohort of stakeholders that will use OH CDMS.
• Over 75 percent of all new appeals have been filed electronically by providers using the system.
• All government contractors that participate in PRRB appeals (including Medicare Administrative Contractors (MACs), the Cost Report Audit and Appeals contractor (CRAA), and the Appeals Support Contractor (ASC)) use the system.
Nevertheless, to provide additional notice to stakeholders, the PRRB would provide at least 120 calendar days' notice (through its instructions) before the exact date that electronic filing would become mandatory. Thus, under the final rule, the earliest the PRRB could publish such instructions would be October 1, 2020 and, as a result, the earliest effective date for mandatory usage of the system for PRRB appeals submissions would be November 30, 2020.
We note that making use of OH CDMS mandatory for PRRB appeals is consistent with recent revisions updating the Medicare Geographic Classification Review Board (MGCRB) regulations that similarly permit the MGCRB to require the use of OH CDMS through its instructions. The MGCRB regulatory change was published in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56928 (August 22, 2016)) and the requirement to file electronically was effective for the 2020 reclassification cycle. The transition to mandatory electronic filing of MGCRB applications went smoothly, and we received positive feedback regarding OH CDMS from the user community.
Finally, we note that the provisions governing contractor hearing officer appeals, Administrative and Judicial Review and reopenings are also found in part 405 subpart R. However, we did not propose changes to the submission procedures for these processes.
The Covid–19 public health emergency has highlighted the need to have all documents submitted electronically to the PRRB. CMS has maximized telework for the past several months, and while PRRB staff have not been able to access any mail during that time, the PRRB has been able to successfully continue operations largely because it may access the records that have been filed electronically using OH CDMS. Likewise, the need to transition away from paper records, which are vulnerable to risk of fire, flood, loss etc., has become increasingly obvious. Finally, the Federal Government as a whole is moving towards all-electronic records by 2022.
In the proposed rule, we specifically stated we were not proposing any change in the regulation text defining the “date of receipt.” (“We note that we are not proposing to revise the requirement in § 405.1801(a) that the date of receipt by a party or affected nonparty of documents involved in proceedings before a reviewing entity, including the Board, is presumed to be 5 days after the date of issuance. Therefore, regardless of whether the Board issues a decision electronically or by some other means, the 5 day presumption regarding receipt by a party would continue to apply.” 85 FR 32460, 32865 (May 20, 2020)). We proposed to make limited technical changes to the regulation text to reflect that parties before the Board and the Board itself now file or issue documents in Board cases electronically.
Congress has vested in the Secretary broad rulemaking authority to administer the Medicare program.”
After consideration of the public comments we received, we are finalizing our FY 2021 proposal to modify regulations in 42 CFR 405 Subpart R to allow the PRRB to mandate electronic filing of appeals. We are modifying our proposal, however, to give 120 days' notice prior to mandatory use of OH CDMS taking effect, rather than the 60 days' notice that was proposed.
Under the Medicare program, beneficiaries may be responsible for payments of premiums, copayments, deductibles (including blood deductibles), and coinsurance amounts that are related to covered services (42 CFR 409.80 through 409.89). The Medicare program recognizes that a beneficiary's failure to pay a deductible or coinsurance amount could lead to non-Medicare patients bearing the related costs of covered Medicare services, a result that is barred by the statutory prohibition on the cross-subsidization of the Medicare program by non-Medicare patients, as set out at section 1861(v)(1)(A)(i) of the Act (
Medicare pays beneficiaries' unpaid deductible and coinsurance amounts for covered services if such services are reimbursed by the program on the basis of reasonable cost or paid under a cost-based prospective payment system. Thus, the following amounts are not included as allowable bad debts under Medicare:
• Unpaid Medicare deductible and coinsurance amounts associated with furnishing non-covered services and services furnished to non-Medicare patients.
• Unpaid Medicare premiums and Medicare copayments
• Unpaid Medicare deductible and coinsurance amounts associated with any covered services paid by the program under a fee schedule or under a reasonable charge-based methodology including Program fee schedule payments made to physicians (and payments to providers on behalf of provider-based physicians) for professional services and fee schedule payments made to other practitioners.
• Unpaid Medicare deductible and coinsurance amounts associated with covered services paid for under a contractual capitated rate-based plan, such as but not limited to, a Medicare Advantage plan.
• Unpaid Medicare deductible and coinsurance amounts written off to charity care.
• Unpaid Medicare deductible and coinsurance amounts written off to a contractual allowance account.
In accordance with section 1861(v)(1) of the Act and our regulations at § 413.89, Medicare pays some of the uncollectible deductible and coinsurance amounts to certain providers, suppliers and other entities (hereinafter collectively referred to as “providers”) eligible to receive reimbursement for bad debt of Medicare beneficiaries. Sections 1815(a) and 1833(e) of the Act state that no Medicare payments will be made to a provider unless it has furnished information requested by the Secretary to determine payment amounts due under the Medicare program. To determine if bad debt amounts are allowable, providers must meet the requirements at § 413.89, and Chapter 3, Bad Debts, Charity, and Courtesy Allowances, of the Provider Reimbursement Manual (PRM) (CMS Pub. 15–1) (hereinafter referred to as PRM),
The reimbursement of Medicare bad debt was not originally statutorily mandated; rather, it was first promulgated by CMS
• The debt must be related to covered services and derived from deductible and coinsurance amounts.
• The provider must be able to establish that reasonable collection efforts were made.
• The debt was actually uncollectible when claimed as worthless.
• Sound business judgment established that there was no likelihood of recovery at any time in the future.
In 1987, Congress enacted legislation that implemented a moratorium prohibiting the Secretary and contractors from making changes to Medicare bad debt reimbursement policies that were in effect on August 1, 1987 for hospitals. This is typically referred to as the “Bad Debt Moratorium.” (
Because the Bad Debt Moratorium is no longer in existence, we believe it is appropriate to clarify certain Medicare bad debt policies that have been the subject of litigation, and generated interest and questions from stakeholders over the past several years. Hence, in the FY 2021 IPPS proposed rule, we proposed to clarify, update and codify certain longstanding Medicare bad debt principles into the regulations by revising § 413.89, “Bad debts, charity, and courtesy allowances.” We also solicited comments from stakeholders that we could consider to finalize a process to accept alternate documentation to the Medicaid remittance advice (RA) to determine a state's cost sharing liability for dual eligible beneficiaries in instances where a state has a Medicare cost sharing liability but does not issue the provider a Medicaid RA due to the state's non-recognition of a Medicare provider for Medicare crossover cost sharing determinations. Additionally, we proposed to recognize the new Accounting Standards Update—Topic 606 for revenue recognition and classification of Medicare bad debts. We also proposed technical corrections to the incorrect cross references in 42 CFR 412.622 and 417.536 to refer to the Medicare bad debt reimbursement regulation at § 413.89.
We proposed that the clarification and codification of our longstanding Medicare bad debt policies, where indicated herein, be effective for cost reporting periods beginning before, on, and after the effective date of this rule, because of the important public interest it would serve to do so as set forth in section 1871(e)(1)(A)(ii) of the Act. Our specific proposals for revising our regulations, the public comments received, and implementation decisions are discussed in this section of this rule.
Providers are permitted to collect unpaid Medicare cost sharing amounts from beneficiaries, unless beneficiaries have been determined to be categorically or medically needy by State Medicaid Agencies to receive medical assistance from Medicaid, or determined to be indigent by the provider for Medicare bad debt purposes. If a beneficiary's Medicare cost sharing remains unpaid, in order to claim reimbursement from Medicare for the bad debt, providers must demonstrate that they have first made a reasonable effort to collect the beneficiary's unpaid deductible and/or coinsurance amounts. (See § 413.89(e)(2) and the PRM § 310.) This reasonable effort to collect the unpaid deductible and coinsurance amounts is, in part, based on the provider applying sound business judgment and has been a longstanding Medicare bad debt policy requirement articulated in the PRM since 1968. The PRM § 310 describes a “reasonable collection effort” and sets forth how providers must effectuate the reasonable collection effort, as a precondition to reimbursement of a provider's bad debt. We note that the provider's required collection efforts set forth in PRM § 310 apply only to non-indigent beneficiaries; the provider's required collection efforts are different for beneficiaries who have been determined by the provider to be indigent, including medically indigent, or beneficiaries enrolled in Medicaid. In the proposed rule, we proposed to clarify and codify the distinction between non-indigent beneficiaries and indigent beneficiaries for Medicare bad debt purposes.
Specifically, we proposed to amend § 413.89(e)(2) by adding a new paragraph (e)(2)(i) to define, for Medicare bad debt purposes, a non-indigent beneficiary as a beneficiary who has not been determined to be categorically or medically needy by a State Medicaid Agency to receive medical assistance from Medicaid, and has not been determined to be indigent by the provider for Medicare bad debt purposes.
These proposals would be effective for cost reporting periods beginning before, on, and after the effective date of this rule because the difference in collection efforts required by a provider for indigent and non-indigent beneficiaries has existed since the promulgation of Medicare bad debt policy and the definition of a non-indigent beneficiary codifies the existing meaning of the term.
Our longstanding bad debt policies have existed in Medicare guidance, including the PRM, for several decades and providers and beneficiaries are
After consideration of the public comments we received, we are finalizing our proposal to amend § 413.89(e)(2) by adding a new paragraph (e)(2)(i) to define, for Medicare bad debt purposes, a non-indigent beneficiary as a beneficiary who has not been determined to be categorically or medically needy by a State Medicaid Agency to receive medical assistance from Medicaid, and has not been determined to be indigent by the provider for Medicare bad debt purposes. This provision will be effective for cost reporting periods beginning before, on, and after the effective date of this rule.
Under Medicare bad debt policy, a provider is required to demonstrate that it has made a reasonable effort to collect beneficiaries' unpaid deductibles and coinsurance amounts. PRM § 310 sets forth that to be considered a reasonable collection effort, a provider's effort to collect Medicare deductible and coinsurance amounts must be similar to the effort the provider puts forth to collect comparable amounts from non-Medicare patients. It must involve the issuance of a bill on or shortly after discharge or death of the beneficiary to the party responsible for the patient's personal financial obligations. It also includes other actions such as subsequent billings, collection letters and telephone calls or personal contacts with this party which constitute a genuine, rather than a token, collection effort. The provider's collection effort may include using or threatening to use court action to obtain payment.
Generally, providers will have financial incentives to issue bills to patients as soon as possible to collect the outstanding debt and remove it from their financial records, or present beneficiaries' unpaid deductible and coinsurance amounts to Medicare after a reasonable collection effort period for reimbursement of the Medicare reimbursable amount.
Over the past several years, we have received feedback from stakeholders indicating that “shortly after” in PRM § 310 is too vague, as well as inquiries as to what timeframe “shortly after” means for providers to comply with the reasonable collection effort. Stakeholders have suggested that “shortly after” could be anywhere from 30 days to a year following the discharge or death of the beneficiary. The Merriam Webster definition of “short(ly)”
We believe that a timeframe of 30 or 60 days would be too short because it may not allow providers with varying billing practices the ability to issue the bill within that timeframe. A timeframe of 90 or 120 days would afford greater flexibility, as we have found this to be in the upper parameters of most providers' billing practices for the issuances of bills to patients.
In addition to the queries over the definition of “shortly after,” stakeholders have questioned whether the benchmark event for the issuance of the bill should be the “discharge or death of the beneficiary,” or some other event. Generally, Medicare fee for service claims must be filed with the appropriate Medicare claims processing contractor no later than 12 months, or 1 calendar year, after the date the services were furnished (42 CFR 424.44). For institutional providers that have a span of dates of services (that is, from X date through Y date), the “through” date (that is, the last day of service) is used as the date of service for the 12 month (or 1 calendar year) timeframe for a provider to timely submit a bill (CMS Pub. 100–04, section 70.4). Following the processing of the claim, the provider receives a Medicare remittance advice evidencing the claim processing. Because providers have 12 months from the date of service to timely submit a bill to Medicare, we believe that requiring a provider to issue a bill for the beneficiary's unpaid cost sharing following the “discharge or death of the beneficiary” is a much shorter timeframe and does not afford flexibility to the provider when the provider has a much longer timeframe of 12 months from the date a service was provided to bill Medicare in accordance with the billing requirements. We note that providers usually issue a bill to a beneficiary, or the party who is financially responsible for the beneficiary's personal financial obligations, within 120 days of death or discharge. We believe that a more flexible option could be to require the provider to issue a bill for Medicare cost sharing no later than 120 days following the provider's receipt of the Medicare remittance advice for the processed claim, because this is similar to providers' usual billing timeframes, or some other event as discussed herein.
We have received suggestions from stakeholders that the benchmark event for the provider to issue a bill to the beneficiary for Medicare cost sharing should be after the provider's receipt of payment from the beneficiary's secondary payer,
Longstanding Medicare bad debt policy also requires that a provider's reasonable collection effort include other actions such as subsequent billings, collection letters and telephone calls or personal contacts with this party which constitute a genuine, rather than token, collection effort.” Additionally, a provider must furnish documentation to its contractor that includes the provider's bad debt collection policy which describes the collection process for Medicare and non-Medicare patients; the beneficiary's account history documents which show the dates of various collection actions such as the issuance of bills to the beneficiary, follow-up collection letters, reports of telephone calls and personal contact, etc.; and the beneficiary's file with copies of the bill(s) and follow-up notices.
Therefore, we proposed to amend § 413.89(e)(2) by adding a new paragraph (e)(2)(i)(A) to specify the reasonable collection effort requirement for a non-indigent beneficiary must be similar to the effort the provider, and/or the collection agency acting on the provider's behalf, puts forth to collect comparable amounts from non-Medicare patients. It must involve the issuance of a bill to the beneficiary or the party responsible for the beneficiary's personal financial obligations on or before 120 days after: (1) The date of the Medicare remittance advice; or (2) the date of the remittance advice from the beneficiary's secondary payer, if any; whichever is latest. A provider's reasonable collection effort also includes other actions such as subsequent billings, collection letters and telephone calls or personal contacts with this party which constitute a genuine, rather than token, collection effort. Additionally, a provider must maintain and, upon request, furnish documentation to its contractor that includes the provider's bad debt collection policy which describes the collection process for Medicare and non-Medicare patients; the beneficiary's account history documents which show the dates of various collection actions such as the issuance of bills to the beneficiary, follow-up collection letters, reports of telephone calls and personal contact, etc.; and the beneficiary's file with copies of the bill(s) and follow-up notices.
We proposed that these revisions, except for § 413.89(e)(2)(i)(A)(
We also proposed that § 413.89(e)(2)(i)(A)(
After consideration of the public comments we received, we are finalizing our proposal to amend § 413.89(e)(2) by adding a new paragraph (e)(2)(i)(A)(1) through (4) to specify the reasonable collection effort requirement for a non-indigent beneficiary must be similar to the effort the provider, and/or the collection agency acting on the provider's behalf, puts forth to collect comparable amounts from non-Medicare patients. For cost reporting periods beginning before October 1, 2020, a provider's collection effort must involve the issuance of a bill to the beneficiary or the party responsible for the beneficiary's personal financial obligations on or shortly after discharge or death of the beneficiary. For cost
Under Medicare bad debt policy, PRM § 310.2 sets forth a “presumption of noncollectibility,” which provides that if after reasonable and customary attempts to collect a bill, the debt remains unpaid more than 120 days from the date the first bill is mailed to the beneficiary, the debt may be deemed uncollectible.
This means that a provider must make reasonable and customary attempts to collect a bill for at least 120 days from (and including) the date the first bill is mailed to the beneficiary (or the party responsible for the beneficiary's personal financial obligations), including when a provider uses a collection agency to collect a bill. If the debt remains unpaid on the 121st day from the date the first bill is mailed to the beneficiary, the provider can cease collection efforts and presume that the account is non-collectible, and designate the unpaid deductible and coinsurance amounts as an uncollectible bad debt.
Over the past several years, questions have arisen from stakeholders with regard to the effect on the collection effort when a provider receives partial payments during the 120-day collection effort time period. We have always intended that when a partial payment is received within the required 120-day collection effort period, the collection effort is not completed and the 120-day time period restarts on the day the partial payment is received. The language in the PRM § 310.2 supports this interpretation, as it sets forth “if, after 120 days, a payment is not received, the unpaid amount can be written off.” We have implemented a policy that if, within the 120 days, a partial payment is received, the remaining uncollected amount cannot be written off to Medicare bad debt because the collection effort is active and ongoing by way of the response from the beneficiary submitting a payment. The partial payment received evidences the beneficiary's willingness to pay the debt, at least in part, and the provider must further engage with the beneficiary and follow up, by way of continuing the collection effort and sending additional collection letters or bills to the beneficiary for another 120-day collection effort time period. It is reasonable to place a date of finality on the collection effort time period; hence, the 120-day minimum collection time period. However, when partial payments are received within the 120-day time period, it is reasonable to presume the remaining unpaid amount is collectible and expect the provider to continue the collection effort instead of presuming it to be non-collectible and requesting Medicare to reimburse the provider for what the beneficiary is actively engaging to pay. This constitutes a reasonable collection effort as required by § 413.89(e)(2).
Requiring the 120-day collection effort timeframe to start anew when a partial payment is received during the 120 days is not burdensome to the provider and requires little additional resources from the provider because the account is still open on the provider's accounting books, and has not yet been written off as a bad debt. Additionally, because “uncollectible deductibles and coinsurance amounts are recognized as allowable bad debts in the reporting period in which the debts are determined to be worthless,” (PRM § 314), the provider can claim the unpaid amounts as a Medicare bad debt after the additional 120-day collection effort time period, provided that no additional payment is received that would require an extension of the 120-day collection effort time period again.
We proposed to amend § 413.89(e)(2) by adding a new paragraph (e)(2)(i)(A)(
We also proposed to clarify and codify into the regulations our longstanding policy regarding the reporting periods and recovery of bad debts, which specifies required procedures for when a provider recovers (that is, receives a payment in the current year) an amount that was previously claimed and paid as a Medicare bad debt, in a prior cost reporting period. In some cases an amount written off as a bad debt and reimbursed by the program in a prior cost reporting period may be recovered in a subsequent accounting period; in such situations, the recovered amount must be used to reduce the provider's reimbursable costs in the period in which the amount is recovered. However, the amount of such reduction in the period of recovery must not exceed the actual amount reimbursed by the program for the related bad debt in the applicable prior cost reporting period. Because this is has been our longstanding policy as set forth in the PRM and the regulations for several decades, we proposed to clarify this policy in the regulations to also apply to cost reporting periods beginning before, on and after the effective date of this final rule. We also proposed to amend § 413.89(f) by adding language to specify that, effective for cost reporting periods beginning before, on and after October 1, 2020, the deductible and coinsurance amounts uncollected from beneficiaries are to be written off and recognized as allowable bad debts in the cost reporting period in which the accounts are deemed to be worthless. Any payment on the account made by the beneficiary, or a responsible party, after the write-off date but before the end of the cost reporting period, must be used to reduce the final bad debt for the account claimed in that cost report.
After consideration of the public comments we received, we are finalizing our proposal to amend § 413.89(e)(2) by adding a new paragraph (e)(2)(i)(A)(5)(
Under Medicare bad debt policy, Medicare regulations at § 413.89(e)(2) require that providers engage in reasonable collection efforts. Our manual guidance currently states that, “[t]o be considered a reasonable collection effort, a provider's effort to collect Medicare deductible and coinsurance amounts must be similar to the effort the provider puts forth to collect comparable amounts from non-Medicare patients.” PRM § 310. As such, a provider's dissimilar debt collection practices for Medicare and non-Medicare patient accounts do not constitute a provider's “reasonable collection effort” to claim reimbursement from Medicare for a bad debt, whether the collection effort from the provider is an in-house collection effort or if the provider elects to refer bad debt accounts to a collection agency for an outside collection effort. This policy has been the subject of dispute by stakeholders in the past and we believe that a clarification of the policy is necessary with incorporation of the PRM guidance into the regulations.
If a provider elects to refer its non-Medicare accounts to a collection agency, the provider must similarly refer its Medicare accounts of “like amount.” The PRM § 310.A states that where a collection agency is used, Medicare expects the provider to refer all uncollected patient charges of like amount to the agency without regard to class of patient. The “like amount” requirement may include uncollected charges above a specified minimum amount. Therefore, if a provider refers to a collection agency its uncollected non-Medicare patient charges which in amount are comparable to the individual Medicare deductible and coinsurance amounts due the provider from its Medicare patient, Medicare requires the provider to also refer its uncollected Medicare deductible and coinsurance amounts to the collection agency.
When the provider uses a collection agency to perform a reasonable collection effort on its behalf, the provider must ensure that the collection agency's collection effort is similar to the effort the collection agency puts forth to collect comparable amounts from non-Medicare patients. This means that for similar, comparable amounts of the collection accounts, the collection agency must use similar collection practices for both accounts.
The collection agency's collection effort can include subsequent billings, collection letters, and telephone calls or personal contacts with the party who is financially responsible for the beneficiary's personal financial obligation which constitute a genuine, rather than a token, collection effort. The collection agency's collection effort may also include using or threatening to use court action to obtain payment. Where the collection agency does not follow the reasonable collection effort requirement, Medicare does not recognize the fees as an allowable administrative cost. Collection accounts that remain at a collection agency, for whatever reason, including accounts that are monitored passively by the collection agency, cannot be claimed by the provider as a Medicare bad debt. This is because during the period the unpaid account remains at the
The fee charged by the collection agency is its charge for providing the collection service and is not considered a Medicare bad debt. Where a provider uses the services of a collection agency and the collection agency performs a reasonable collection effort, Medicare recognizes the fees the collection agency charges the provider as an allowable administrative cost. When a collection agency obtains payment of an account receivable, the gross amount collected reduces the patient's account receivable by the same amount and must be credited to the patient's account. The collection fee deducted by the agency is charged to administrative costs.
The provider sends a beneficiary's account of $400 to the collection agency and the collection agency's fee for its service is 30 percent of the collected amount. If the collection agency collects $220 from the beneficiary, the collection agency keeps $66 (30 percent of $220) as its fee for the collection services and remits $154 ($220 less $66) to the provider. The provider records the full amount collected by the collection agency ($220) in the beneficiary's account receivable and records the collection fee ($66) in administrative costs. Once the collection agency completes the required collection efforts on this account, returns the account back to the provider and the provider deems the account worthless, the provider can claim on its cost report the amount of $180 ($400 less $220) as a Medicare bad debt (subject to further statutorily mandated reductions as set forth in § 413.89(h)). The provider cannot claim the $66 collection agency fee as a Medicare bad debt.
The provider sends a beneficiary's account of $400 to the collection agency and the collection agency's flat fee is $100 per account for its services. If the collection agency collects $250 from the beneficiary, the collection agency keeps $100 as its fee for the collection services and remits $150 ($250 less $100) to the provider. The provider records the full amount collected by the collection agency ($250) in the beneficiary's account receivable and records the collection fee ($100) in administrative costs. Once the collection agency completes the required collection effort on this account, returns the account back to the provider and the provider deems the account worthless, the provider can claim on its cost report the amount of $150 ($400 less $250) as a Medicare bad debt (subject to further statutory mandated reductions as set forth in § 413.89(h)). The provider cannot claim the $100 collection agency fee as a Medicare bad debt.
Therefore, we proposed to amend § 413.89(e)(2) by adding a new paragraph (e)(2)(i)(A) to specify that a provider's effort to collect Medicare deductible and coinsurance amounts must be similar to the effort the provider puts forth to collect comparable amounts from non-Medicare patients. A provider's dissimilar debt collection practices for Medicare and non-Medicare patient accounts do not constitute a reasonable collection effort to claim reimbursement from Medicare for a bad debt, whether the collection effort from the provider is an in-house collection effort or if the provider elects to refer bad debt accounts to a collection agency for an outside collection effort. A provider may use a collection agency to perform a reasonable collection effort on its behalf. The provider must ensure that the collection agency's collection effort is similar to the effort the collection agency puts forth to collect comparable amounts from non-Medicare patients. The collection agency's collection effort can include subsequent billings, collection letters, and telephone calls or personal contacts with the responsible party which constitute a genuine, rather than a token, collection effort. The collection agency's collection effort may include using or threatening to use court action to obtain payment. The fee charged by the collection agency is its charge for providing the collection service and is not considered a Medicare bad debt. Where a provider uses the services of a collection agency and the collection agency performs a reasonable collection effort, Medicare recognizes the fees the collection agency charges the provider as an allowable administrative cost. Where the collection agency does not follow the reasonable collection effort requirement, Medicare does not recognize the fees as an allowable administrative cost. Collection accounts that remain at a collection agency, for whatever reason, including accounts that are monitored passively by the collection agency, cannot be claimed by the provider as a Medicare bad debt. When a collection agency obtains payment of an account receivable, the gross amount collected reduces the patient's account receivable by the same amount and must be credited to the patient's account. The collection fee deducted by the agency is charged to administrative costs.
These revisions would be effective for cost reporting periods beginning before, on and after the effective date of this final rule because we are clarifying and codifying our longstanding policy.
After consideration of the public comments we received, we are finalizing our proposal to amend § 413.89(e)(2) by adding a new paragraph (e)(2)(i)(A) to specify that a provider's effort to collect Medicare deductible and coinsurance amounts must be similar to the effort the provider puts forth to collect comparable amounts from non-Medicare patients.
Medicare's longstanding bad debt policy requires that as part of a provider's reasonable collection effort for beneficiaries, including non-indigent beneficiaries, the provider must maintain and, upon request, furnish to the Medicare contractor documentation of the provider's collection effort, whether the provider performs the collection effort in house or whether the provider uses a collection agency to perform the required collection effort on the provider's behalf. PRM § 310.B. The documentation of the collection effort must include: The provider's bad debt collection policy which describes the collection process for Medicare and non-Medicare patients; and the patient account history documents which show the dates of various collection actions such as the issuance of bills, follow-up collection letters, reports of telephone calls and personal contact, etc. Unpaid deductible and coinsurance amounts without collection effort documentation are not allowable bad debts.
Therefore, we proposed to amend § 413.89(e)(2) by adding a new paragraph (e)(2)(i)(A)(
Because these are clarifications of codifications of longstanding Medicare bad debt policy, these policies would be effective for cost reporting periods beginning before, on and after the effective date of the final rule.
After consideration of the public comments we received, we are finalizing our proposal to amend § 413.89(e)(2) by adding a new paragraph (e)(2)(i)(A)(6) to specify the requirements a provider must follow in order to document the provider's reasonable collection effort for non-indigent beneficiaries. Specifically, providers must maintain and, upon request, furnish verifiable documentation to its contractor that includes all of the following: (
Under PRM § 312, a provider may determine a beneficiary to be indigent for purposes of claiming a beneficiary's unpaid deductible and/or coinsurance amounts as a Medicare bad debt. A provider can determine a beneficiary's indigence in one of two ways: (1) When the beneficiary is eligible for Medicaid as either a categorically or medically needy individual (that is, a dual eligible Medicare beneficiary); or (2) the provider determines a non-dual eligible Medicare beneficiary, to be indigent by applying the provider's customary methods for determining a patient to be indigent under the evaluation criteria in PRM § 312. A. through D. Once indigence is determined by the provider, and the provider concludes that there has been no improvement in the beneficiary's financial condition, the debt may be deemed uncollectible without the provider having to collect the unpaid Medicare cost sharing liability from beneficiaries by applying the requirements set forth in PRM § 310 for non-indigent beneficiaries.
Over the past several years, the criteria set forth in PRM § 312 regarding the determination of indigence have been the subject of litigation as questions have been raised as to whether the criteria are mandatory. In the proposed rule, we proposed to clarify and codify our longstanding policy and criteria set forth in PRM § 312 A. through D. (setting for the requirements for a facility's determination of indigency).
Stakeholders have questioned why PRM § 312.B requires that the beneficiary's total resources be considered when a provider evaluates a beneficiary's indigence. We believe that each beneficiary's unique total resources must be evaluated to determine whether a beneficiary is indigent. This evaluation must include, but is not limited to, an analysis of assets (only those convertible to cash, and
Therefore, we proposed to amend § 413.89(e)(2) by adding new paragraph (e)(2)(ii) to define an indigent non-dual eligible beneficiary as a Medicare beneficiary who is determined to be indigent by the provider and not eligible for Medicaid as categorically or medically needy. We also proposed to amend § 413.89(e)(2) by adding new paragraph (e)(2)(ii)(A) to specify that to determine a beneficiary to be an indigent non-dual eligible beneficiary, the provider must apply its customary methods for determining whether the beneficiary is indigent under the following requirements: (1) The beneficiary's indigence must be determined by the provider, not by the beneficiary; that is, a beneficiary's signed declaration of their inability to pay their medical bills and/or deductibles and coinsurance amounts cannot be considered proof of indigence; (2) the provider must take into account a beneficiary's total resources which include, but are not limited to, an analysis of assets (only those convertible to cash and unnecessary for the beneficiary's daily living), liabilities, and income and expenses. While a provider must take into account a beneficiary's total resources in determining indigence, any extenuating circumstances that would affect the determination of the beneficiary's indigence must also be considered; and (3) the provider must determine that no source other than the beneficiary (for example, a legal guardian) would be legally responsible for the beneficiary's medical bill.
We also proposed to amend § 413.89(e)(2) by adding new paragraph (e)(2)(ii)(B) to specify that as part of its determination of indigence, the provider must maintain and furnish, upon request to its Medicare contractor, documentation (for example, a Policy for Determination of Indigence) describing the method by which indigence or medical indigence is determined and the beneficiary-specific documentation which supports the provider's documentation of each beneficiary's indigence or medical indigence. Once indigence is determined and the provider concludes that there has been no improvement in the beneficiary's financial status, the bad debt may be deemed uncollectible without applying a collection effort. Unpaid deductible and coinsurance amounts without the provider's documentation of its determination of indigence will not be considered as allowable bad debts.
We proposed that these revisions would be effective for cost reporting periods beginning before, on and after the effective date of this rule because they are clarifications and codifications of longstanding Medicare policies.
After consideration of the public comments we received, we are finalizing Medicare bad debt indigence policies applicable to indigent non-dual eligible beneficiaries by amending § 413.89(e)(2) by adding new paragraph (e)(2)(ii) to define an indigent non-dual eligible beneficiary as a Medicare beneficiary who is determined to be indigent by the provider and not eligible for Medicaid as categorically or medically needy. We are not finalizing our proposal to add new paragraph (e)(2)(ii)(A), which would have required a provider to evaluate a beneficiary's liabilities and expenses to determine indigence. Instead, new paragraph (e)(2)(ii)(A) specifies that in order to conclude that a beneficiary is an indigent non-dual eligible beneficiary, the provider: (1) Must not use a beneficiary's declaration of their inability to pay their medical bills or deductibles and coinsurance amounts as sole proof of indigence or medical indigence, (2) Must take into account the analysis of both the beneficiary's assets (only those convertible to cash and unnecessary for the beneficiary's daily living) and income, (3) May consider extenuating circumstances that would affect the determination of the beneficiary's indigence or medical indigence which may include an analysis of both the beneficiary's liabilities and expenses, if indigence is unable to be determined under (ii)(A)(2), (4) Must determine that no source other than the beneficiary would be legally responsible for the beneficiary's medical bill, such as a legal guardian or State Medicaid program, and (5) Must maintain and, upon request, furnish its Medicare contractor with the provider's indigence determination policy describing the method by which indigence or medical indigence is determined and all the verifiable beneficiary specific documentation which supports the provider's determination of each beneficiary's indigence or medical indigence. We believe that this policy finalization will reduce burden to providers when determining a beneficiary's indigence. We will evaluate the burden estimates for the recordkeeping requirements in all applicable cost reports, such as OMB Control No. 0938–0050 (Hospitals and Health Care Complex Cost Report), and if these recordkeeping activities have not been accounted for we will revise the ICR(s) via a Paperwork Reduction Act notice. We are not finalizing our proposal to amend § 413.89(e)(2) by adding new paragraph (e)(2)(ii)(B), as proposed, to require that once indigence is determined and the provider concludes that there has been no improvement in the beneficiary's financial status, the bad debt may be deemed uncollectible without applying a collection effort. Instead, we are amending § 413.89(e)(2) by adding new paragraph (e)(2)(ii)(B) to specify that once indigence is determined, the bad debt may be deemed uncollectible without applying a collection effort. Unpaid deductible and coinsurance amounts without the provider's documentation of its determination of indigence will not be considered as allowable bad debts. We believe that this policy finalization will reduce burden to providers when determining a beneficiary's indigence.
In the proposed rule, we proposed that our proposals would be effective for cost reporting periods beginning before, on and after the effective date of this rule because our proposals were clarifications and codifications of longstanding Medicare policies. However, because of the changes to the policies we are finalizing after consideration of public comments, we are finalizing these policies with an effective date for cost reporting periods beginning on or after October 1, 2020.
Dual eligible beneficiaries are Medicare beneficiaries who are enrolled in Medicare (either Part A, Part B, or both), and are also enrolled in “full Medicaid” coverage and/or the Medicare Savings Program (MSP).
Section 1902(a)(10)(E) of the Act directs State Medicaid Agencies to pay providers for QMB cost sharing amounts as defined in section 1905(p)(3) of the Act. Under section 1905(p)(3) of the Act, “Medicare cost sharing” includes costs incurred with respect to a QMB, “without regard to whether the costs incurred were for items and services for which medical assistance is otherwise available under the plan.” The “Medicare cost sharing” includes Medicare Part A and B coinsurance and deductibles. Section 1902(n)(2) of the Act permits the State to limit payment for QMB cost sharing to the amount necessary to provide a total payment to the provider (including Medicare, Medicaid, required nominal Medicaid copayments, and third party payments) equal to the amount a State would have paid for the service under the State plan.
State Medicaid Management Information Systems (MMIS), funded under section 1903(a)(3) of the Act, are required, as an express condition of a State receiving enhanced federal matching funds for the design, development, installation and administration of their MMIS systems, to process Medicare crossover
A State's requirement to determine its cost sharing liability for QMBs was also set forth at section 3490.14(A) of the State Medicaid Manual (SMM) (CMS Pub. 45); Payment of Medicare Part A and Part B Deductibles and Coinsurance—State Agency Responsibility, when paper claims were submitted by Medicare providers to the State to determine its cost sharing liability. Specifically, section 3490.14(A)(l) and (2) of the SMM required the State Agency to provide, through the State Plan, the payment rates applicable for services that are either covered or not covered by the State Plan, in order to determine the amount of Medicare coinsurance and deductibles that the State was responsible to pay. Because a QMB's financial situation and Medicaid eligibility status may change over the course of a very short period of time and the State is required to maintain the most current patient eligibility and financial information, the State is in the best position to fulfill its statutory requirement and make the most accurate determination of its cost sharing liability for any unpaid Medicare deductibles and coinsurance.
Providers are prohibited under section 1902(n)(3) of the Act from seeking to collect payment from a QMB for Medicare deductibles or coinsurance, even if the Medicaid State plan's cost sharing liability is less than the total amount of the Medicare deductibles and coinsurance. Medicare may reimburse providers who provide Medicare covered services to dual eligible beneficiaries the difference between beneficiaries' unpaid Medicare cost sharing and the State's Medicare cost sharing liability for the beneficiary, up to the allowable Medicare bad debt amount if the provider has made a reasonable collection effort. To satisfy the reasonable collection effort, a provider that has furnished services to a dual eligible beneficiary must determine whether the State's Title XIX Medicaid Program (or a local welfare agency, if applicable) is responsible to pay all or a portion of the beneficiary's Medicare deductible and/or coinsurance amounts. A provider satisfies this by billing the State or State designee such as a Medicaid managed care organization (MCO), to determine any Medicare cost sharing amounts for which the State may be liable to the provider. This is known as the “must-bill policy” for dual eligible beneficiaries and is outlined in PRM §§ 312 and 322.
In accordance with PRM § 312, providers seeking Medicare reimbursement for bad debts for dual eligible beneficiaries' cost sharing are required to: (1) Bill the State Medicaid program to determine that no source other than the patient would be legally responsible for the patient's medical bill; for example, title XIX, local welfare agency and guardian (the “must bill requirement”); and (2) obtain and submit to the Contractor, a Medicaid RA from the State Medicaid program (the “RA requirement”). The must-bill policy and the RA requirement to document the States' cost sharing liability are both longstanding policies of CMS, as shown in PRM §§ 312 and 322 themselves: Administrative decisions applying the policies; and section 4499, exhibit 15.08 of the Medicare Intermediary Manual (CMS Pub. 13–4) (December 1985).
It has always been our position that the must-bill policy and the RA requirement are necessary to ensure that the provider obtains contemporaneous documentation that can be maintained in the usual course of the provider's business as required by § 413.20(a). The historical background of the RA requirement is also set forth in PRM § 322, Medicare Bad Debts Under State Welfare Programs.
Thus, when Medicare certified providers provide services to QMBs and claim bad debt to Medicare for unpaid cost sharing amounts, Medicare bad debt policy requires providers to bill the State and submit to their contractors the Medicaid RA as documentation to evidence the State's liability for dual eligible beneficiaries' deductible and/or coinsurance amounts. If a provider does not bill the State and submit the Medicaid RA to Medicare with its claim for bad debt reimbursement for dual eligible beneficiaries, the result is that unpaid deductible and coinsurance amounts cannot be included as an allowable Medicare bad debt.
In 2003, the Medicare “must bill” and RA requirements were upheld by the 9th Circuit Court of Appeals in
In October 2004, we issued a newsletter that reiterated and clarified the contents of the JSM by stating that in instances where the State owes none or only a portion of the dual eligible patient's deductible or copayment, the unpaid liability for the bad debt is not reimbursable to the provider by Medicare until the provider bills the State, and the State refuses payment (with a State Remittance Advice).
In order to satisfy the regulatory requirement that a bad debt is uncollectible, the provider must bill the State Medicaid Agency and receive a Medicaid RA that contains a formal denial from the State or a statement setting forth the State's cost sharing liability. A State's failure to process a bill for determination of its cost sharing equates to a provider's failure to determine the cost sharing liability of the State. The burden remains on the provider to work with the State to determine the State's cost sharing amounts. This burden is not transferred to the Medicare program, and the Medicare program has no duty to determine a State's cost sharing liability. A provider cannot substitute an estimate of the State's cost sharing liability for the Medicaid RA, as this does not satisfy the regulatory requirement of demonstrating that the bad debt is uncollectible. Any amount that the State is obligated to pay, either by statute or under the terms of its approved Medicaid State plan, will not be included as an allowable Medicare bad debt, regardless of whether the State actually pays its obligated amount to the provider. However, the deductible and/or coinsurance amount, or any portion thereof, that the State is not obligated to pay and which remains unpaid by the beneficiary can be included as an allowable Medicare bad debt.
Prior to the implementation of automated claims processing, section
Some States' noncompliance with the statutory requirement to process Medicare crossover claims and produce a Medicaid RA have resulted in numerous appeals filed by providers whose claims for reimbursement of unpaid Medicare cost sharing from services provided to dual eligible beneficiaries were denied for Medicare bad debt reimbursement because the State did not process the Medicare crossover claim and issue a Medicaid RA to the provider.
In 2013, CMS attempted to address States' non-compliance with the Federal statutory requirements at sections 1902(a)(10)(E), 1902(n) and 1903(a)(3) of the Act, by issuing an Informational Bulletin,
We continue to believe that the best documentation to evidence States' cost sharing liability for a dual eligible beneficiary is the Medicaid RA, and that the Medicare requirements for the provider to bill the State and submit the RA to its contractor should remain. Where the State processes a Medicare crossover claim and issues a Medicaid RA to the provider that details the State's Medicare cost sharing liability, we believe that providers must continue to provide the Medicaid RA in order to claim Medicare bad debt. Therefore, we proposed that the provider must bill that State and submit the Medicaid RA to Medicare to evidence the State's Medicare cost sharing liability, so that any State Medicare cost sharing liability can be deducted from the Medicare bad debt reimbursement.
Consistent with this proposal, we proposed to amend § 413.89(e)(2) by adding a new paragraph (e)(2)(iii) to clarify and codify that that, effective for cost reporting periods beginning on and before the effective date of this rule, to be considered a reasonable collection effort, a provider that has furnished services to a dual eligible beneficiary must determine whether the State's Title XIX Medicaid Program (or a local welfare agency, if applicable) is responsible to pay all or a portion of the beneficiary's Medicare deductible and/or coinsurance amounts. To make this determination, the provider must submit a bill to its Medicaid/title XIX agency (or to its local welfare agency) to determine the State's cost sharing obligation to pay all or a portion of the applicable Medicare deductible and coinsurance. (This is effectuated by the provider submitting a bill to Medicare for payment and the MAC administering the payment process automatically `crosses over' the bill to the applicable Medicaid/title XIX agency for determination of the State's obligation, if any, toward the cost sharing.) The provider must then submit to its contractor a Medicaid RA reflecting the State's payment decision. Any amount that the State is obligated to pay, either by statute or under the terms of its approved Medicaid State plan, will not be included as an allowable Medicare bad debt, regardless of whether the State actually pays its obligated amount to the provider. However, the Medicare deductible and/or coinsurance amount, or any portion thereof that the State is not obligated to pay, can be included as an allowable Medicare bad debt. A provider's failure to bill the State and produce to its Medicare contractor documentation, including the RA reflecting the State's verification that it processed a bill to determine its liability, will result in unpaid deductible and coinsurance amounts not being included as an allowable Medicare bad debt. Unpaid deductible and coinsurance amounts without collection effort documentation will not be considered as allowable bad debts.
We proposed that these revisions be effective for cost reporting periods beginning before, on and after the effective date of this rule because they clarify and codify our longstanding policy to require that the provider effectuate a reasonable collection effort by billing the party (state) responsible for the Medicare cost sharing of the beneficiary. The result of the provider billing the State and the State processing the Medicare crossover claim is the provider's receipt of the Medicaid RA which is necessary to evidence the State's Medicare cost sharing liability.
Although the best documentation to evidence a State's Medicare cost sharing liability for a dual eligible beneficiary is the Medicaid RA, we acknowledged that challenges exist for providers when States do not comply with the Federal statutory requirements. So as not to disadvantage providers in States that are not in compliance with the Federal statute, we considered alternatives for providers to comply with the “must bill” policy and still evidence a State's cost sharing liability (or absence thereof) for dual eligible beneficiaries when a State does not process a Medicare crossover claim and issue a Medicaid RA to providers that could be finalized in the final rule. For example, alternative documentation to a Medicaid RA could be obtained by providers from a State that demonstrates it will not enroll the provider in Medicaid, or a certain class of a type of provider, for the limited purpose of processing a claim for determining cost sharing liability. Providers could obtain alternative documentation to a RA such as a State Medicaid notification where the State has no legal obligation to pay the beneficiary's Medicare cost sharing. In a State that has a Medicare cost sharing liability for a beneficiary's service, the Medicaid State Plan may set forth the Medicare cost sharing liability for particular services. Alternatively, in a State that has a Medicare cost sharing liability for a beneficiary's service, the provider could obtain alternative documentation to a Medicaid RA that sets forth the State's Medicare cost sharing liability that would then be deducted from the provider's Medicare bad debt reimbursement. In addition to verifying the state's cost sharing liability, it will also be important that
Some commenters cited
We believe that under (1), as previously detailed, the State's Medicaid notification stating that the State has no legal obligation to pay the provider for the beneficiary's Medicare cost sharing, or documentation evidencing the provider's inability to enroll in Medicaid for purposes of processing a Medicare crossover cost sharing claim, must be through no fault or deficiency of the provider. This means that if the provider could have enrolled as a Medicaid provider, but chose not to do so for reasons such as inconvenience or a business decision, the evidence of non-enrollment would be an impermissible document to accept as an alternate to the Medicaid RA acceptance. However, if the provider was not recognized by the State Medicaid Agency as a Medicaid provider type, then documentation evidencing that the State Medicaid Agency does not recognize the provider as a Medicaid provider type for purposes of processing a Medicare crossover cost sharing claim would be sufficient to evidence the State's notification of no obligation to pay the beneficiary's Medicare cost sharing. We understand that in some states it may be difficult to supply evidence that the state will not enroll a specific provider type. Medicare contractors will have to afford providers flexibility in producing acceptable evidence. We encourage states to consider separate enrollment pathways for Medicare providers that seek to enroll in Medicaid solely for the purposes of processing Medicare crossover claims for dually eligible beneficiaries.
We also believe that under (2), as previously detailed, documentation setting forth the State's liability for the Medicare cost sharing, or lack thereof, can be produced by the provider, in part, from the State Plan documents and may also include other documents such as state and state contractor fee schedules or payment rates, or other documents the provider produces that can be verified by the contractor. We note that the process of documenting the State's liability for Medicare cost sharing may entail a comparison of the Medicare and Medicaid rates for certain services, as well as documentation from the Medicaid State plan on whether the state uses a lesser-of methodology for that service type. We believe that ascertaining the State's cost sharing liability amount may result from a collaborative effort between the provider, state, and the Medicare contractor. Medicare contractors will afford providers flexibility in producing documentation acceptable to evidence the State's Medicare cost sharing in the absence of a Medicaid RA.
Regarding (3), as previously detailed and noted by some commenters, documentation verifying the beneficiary's eligibility for Medicaid for the date of service could take the form of an eligibility report from a state's eligibility verification system. For example, for QMBs the provider can query the CMS HIPAA Eligibility Transaction System (HETS), or for Medicare claims processed on or after October 2, 2017, provide a Medicare remittance advice showing the QMB status.
Medicare contractors will afford providers flexibility in producing acceptable evidence of the beneficiary's eligibility for Medicaid for the date of service. We will work with the providers, states, and Medicare contractors on guidelines for acceptable alternative documentation to the Medicaid RA. We believe that codifying an alternate documentation policy and applying it retroactively will serve an important public policy interest by providing clarity, cost effective relief and burden reduction to providers with cases currently pending before the PRRB.
After consideration of the public comments we received, we are finalizing our proposal to codify our longstanding Medicare must bill bad debt policy with respect to QMB dual eligible beneficiaries to require that the provider must bill the State for the QMB's Medicare cost sharing and
The principles of cost reimbursement require that providers maintain sufficient financial records and statistical data for proper determination of costs payable under the program (see § 413.20(a)). Additionally, providers must use standardized definitions and follow accounting, statistical, and reporting practices that are widely accepted in the hospital and related fields (see § 413.20(a)). Medicare accounting standards follow the general accounting standards unless the Secretary declares otherwise on a particular matter (see § 413.20(a)). The regulations at § 413.89(c) provide that the normal accounting treatment for bad debts, charity, and courtesy allowances represent reductions in revenue. The failure to collect charges for services furnished does not add to the cost of providing the services. Such costs have already been incurred in the production of the services. In this regard, providers are required to record bad debts and uncollectible accounts as a direct reduction of net patient revenue rather than an operating expense in their financial records.
Additionally, PRM § 314, “Accounting Period for Bad Debts”, provides further guidance to providers for the accounting treatment of Medicare bad debts and sets forth that “Uncollectible deductibles and coinsurance amounts are recognized as allowable bad debts in the reporting period in which the debts are determined to be worthless. Allowable bad debts must be related to specific amounts which have been determined to be uncollectible. Since bad debts are uncollectible accounts receivable and notes receivable, the provider should have the usual accounts receivable records-ledger cards and source documents to support its claim for a bad debt for each account included” (PRM § 314). PRM § 320 sets forth methods of determining bad debt expense, where “accounts receivable are analyzed and a determination made as to specific accounts which are deemed uncollectible. The amounts deemed to be uncollectible are charged to an expense account for uncollectible accounts. The amounts charged to the expense account for bad debts should be adequately identified as to those which represent deductible and coinsurance amounts applicable to beneficiaries and those which are applicable to other than beneficiaries or which are for other than covered services. Those bad debts which are applicable to beneficiaries for uncollectible deductible and coinsurance amounts are included in the calculation of reimbursable bad debts.”
The Financial Accounting Standards Board's (FASB) Accounting Standards Update (ASU) 2014–09, Revenue from Contracts with Customers (Topic 606), (hereinafter “ASU Topic 606”), was published in May 2014 with the first implementation period in 2018. Under the ASU Topic 606, there are changes in the national accounting standard for revenue recognition of patient-related bad debts and uncollectible accounts, as well as changes to terminology regarding bad debts. These changes are for all industries and organizations nationwide, including the healthcare sector and providers. Under the ASU Topic 606, an amount representing a bad debt would generally no longer be reported separately as an operating expense in the provider's financial statements, but would generally be treated as an “implicit price concession,” and included as a reduction in patient revenue. Additionally, under the ASU Topic 606 standards, bad debts treated as “implicit price concessions” are now considered to be “reductions in patient revenue” instead of “uncollectible accounts receivable and notes receivable” in accordance with the current language in PRM § 316. Additionally, under the ASU Topic 606 standards, the provider should have the usual “accounting recordations for the reductions in revenue” instead of “accounts receivable records ledger cards” as set forth in the current language in PRM § 316.
Although ASU Topic 606 requires different reporting for providers and terminology for bad debts (also known as implicit price concessions), there is no change in the required criteria a provider must meet to qualify a beneficiary's bad debt account for Medicare bad debt reimbursement under § 413.89. Therefore, we proposed to recognize the ASU Topic 606 terminology in § 413.89. Specifically, we proposed to recognize that bad debts, also known as “implicit price concessions,” are amounts considered to be uncollectible from accounts that were created or acquired in providing services. “Implicit price concessions” are designations for uncollectible claims arising from the furnishing of services, and may be collectible in money in the relatively near future and are recorded in the provider's accounting records as a component of net patient revenue.
We proposed to amend § 413.89(b)(1) by adding new paragraph (b)(1)(i) to specify that for cost reporting periods beginning before October 1, 2020, bad debts are amounts considered to be uncollectible from accounts and notes receivable that were created or acquired in providing services. “Accounts receivable” and “notes receivable” are designations for claims arising from the furnishing of services, and are collectible in money in the relatively near future. Consistent with this proposal, we are also proposing to amend § 413.89(b)(1) by adding new paragraph (b)(1)(ii) to specify that for cost reporting periods beginning on or after October 1, 2020, bad debts, also known as “implicit price concessions,” are amounts considered to be
We note that we did not propose to adopt this policy retroactively and that providers might or might not have already changed their accounting terminology to coincide with the ASU Topic 606 standards. Nor is the policy we are finalizing a longstanding Medicare policy that we are merely clarifying. As a result, we have not determined that failing to apply this provision retroactively would be contrary to the public interest.
After consideration of the public comments we received, we are finalizing our proposal to amend § 413.89(c) by adding new paragraph (c)(1) to specify that effective for cost reporting periods beginning before October 1, 2020 bad debts, charity, and courtesy allowances represent reductions in revenue. We also finalizing our proposal to amend § 413.89(c) by adding new paragraph (c)(2) to specify that, effective for cost reporting periods beginning on or after October 1, 2020, bad debts (also known as “implicit price concessions)” charity, and courtesy allowances represent reductions in revenue.
Medicare regulations require providers to follow standardized definitions, accounting, statistics, and reporting practices that are widely accepted in the hospital and related fields. PRM § 320 sets forth methods of determining bad debt expense, where accounts receivable are analyzed and a determination made as to specific accounts which are deemed uncollectible. The amounts deemed to be uncollectible are charged to an expense account for uncollectible accounts. The amounts charged to the expense account for bad debts should be adequately identified as amounts that represent deductible and coinsurance amounts applicable to Medicare beneficiaries, including QMBs, amounts that are applicable to non-beneficiaries, or amounts that are for other than covered services. Those bad debts which are applicable to Medicare beneficiaries, including QMBs, for uncollectible deductible and coinsurance amounts are included in the calculation of reimbursable bad debts.”
Based on recent questions received, it appears that many providers are not accurate in their accounting classification method of writing-off a beneficiary's deductible and coinsurance amounts for Medicare-Medicaid crossover claims, by incorrectly writing off Medicare-Medicaid crossover bad debts to a contractual allowance account. Contractual allowances, also known as contractual adjustments, are the difference between what a healthcare provider bills for the service rendered versus what it will contractually be paid (or should be paid) based on the terms of its contracts with third-party insurers and/or government programs.
The April 4, 2019 Medicare Learning Network Special Edition (MLN SE) article served to remind providers of Medicare's longstanding policy with regard to the provider's proper reporting of Medicare bad debts for cost reporting periods beginning before October 1, 2019. The MLN SE also served as a notification to providers but also provided flexibility by allowing providers to report contractual allowance amounts as a bad debt, as long as 413.89 requirements are met, for cost reporting periods beginning before October 1, 2019. The MLN SE also served to remind providers of the expectation for proper reporting of Medicare bad debts and that following the flexibility notice period, reporting Medicare bad debts as a contractual allowance was no longer permissible for cost reporting periods on or after October 1, 2019.
In the proposed rule, we proposed to clarify that Medicare bad debts must not be written off to a contractual allowance account but must be charged to an expense account for uncollectible accounts (bad debt or implicit price concession). Consistent with this proposal, we proposed to amend § 413.89(c) by adding paragraph (c)(3) to specify that, effective for cost reporting periods beginning on or after October 1, 2020, Medicare bad debts must not be written off to a contractual allowance account but must be charged to an expense account for uncollectible accounts (bad debt or implicit price concession).
We believe the April 4, 2019 MLN SE article served as a notification to providers and provided flexibility by allowing providers to report contractual allowance amounts as a bad debt, as long as 413.89 requirements are met, for cost reporting periods beginning before October 1, 2019. The MLN SE notification also served to remind providers that compliance with the longstanding Medicare bad debt policy in § 320 of the PRM for cost reporting periods beginning on or after October 1, 2019 is required, so that bad debts are written off to an expense account, and not a contractual allowance account. Because we are now adopting the implicit price concession terminology effective for cost reporting periods beginning on or after October 1, 2020, for Medicare bad debt purposes, the bad debt must be recorded in the provider's accounting records as a component of net patient revenue. We are not codifying this retroactively because we believe that all providers should have equal understanding and footing as we move forward with the standardized definitions, accounting and reporting practices and the intersection with the new implicit price concession standards.
After consideration of the public comments we received, we are revising our proposal to amend § 413.89(c) by adding paragraph (c)(3)(i) to specify that, for cost reporting periods beginning before October 1, 2020, Medicare bad debts must not be written off to a contractual allowance account but must be charged to an expense account for uncollectible accounts. We are also revising our proposal to amend § 413.89(c) by adding paragraph (c)(3)(ii) to specify that, for cost reporting periods beginning on or after October 1, 2020, Medicare bad debts must not be written off to a contractual allowance account but must be charged to an uncollectible receivables account that results in a reduction in revenue. We are not applying a retroactive effective date to this proposal for the same reasons as previously discussed regarding the effective date of ASU Topic 606.
A technical correction is required for 42 CFR 412.622(b)(2)(i) which incorrectly refers to 42 CFR 413.80 instead of the correct citation of § 413.89, which is the regulation that sets forth rules pertaining to the bad debts of Medicare beneficiaries.
A technical correction is also required for 42 CFR 417.536(g) which incorrectly refers to § 413.80 instead of the correct citation of § 413.89, which sets forth that bad debts, charity, and courtesy allowances are deductions from revenue and are not to be included in allowable costs.
We received no comments on the proposal to make technical corrections to the citations in § 412.622(b)(2)(i) and § 417.536(g), and therefore are finalizing these citation corrections without modification.
Under section 1886(e)(4)(B) of the Act, the Secretary must consider MedPAC's recommendations regarding hospital inpatient payments. Under section 1886(e)(5) of the Act, the Secretary must publish in the annual proposed and final IPPS rules the Secretary's recommendations regarding MedPAC's recommendations. We have reviewed MedPAC's March 2020 “Report to the Congress: Medicare Payment Policy” and have given the recommendations in the report consideration in conjunction with the policies set forth in this final rule. MedPAC recommendations for the IPPS for FY 2021 are addressed in Appendix B to this final rule.
For further information relating specifically to the MedPAC reports or to obtain a copy of the reports, contact MedPAC at (202) 653–7226, or visit MedPAC's website at:
IPPS-related data are available on the internet for public use. The data can be found on the CMS website at:
Commenters interested in discussing any data files used in construction of this final rule should contact Michael Treitel at (410) 786–4552.
Under the Paperwork Reduction Act (PRA) of 1995, we are required to provide 60-day notice in the
• The need for the information collection and its usefulness in carrying out the proper functions of our agency.
• The accuracy of our estimate of the information collection burden.
• The quality, utility, and clarity of the information to be collected.
• Recommendations to minimize the information collection burden on the affected public, including automated collection techniques.
In the FY 2021 IPPS/LTCH PPS proposed rule, we solicited public comment on each of these issues for the following sections of this document that contain information collection requirements (ICRs).
As stated earlier in section IX.B.3 of the preamble of this final rule, we are finalizing our proposal to amend the regulations at 42 CFR 405.1801 through 405.1889 to allow the PRRB to make use of the system mandatory in PRRB appeals. Proposed § 405.1801 states that except for subpoena requests being sent to a nonparty pursuant to § 405.1857(c), the reviewing entity may prescribe the method(s) by which a party must make a submission, including the requirement to use an electronic filing system for submission of documents. Proposed amendments to the regulations at 42 CFR 405.1843 make clear that parties to a Board appeal must familiarize themselves with the instructions for handling a PRRB appeal, including any and all requirements related to the electronic or online filing of documents for future mandatory filing.
The burden associated with the requirements as discussed in this section is the time and effort necessary to review instructions and register for the electronic submission system as well as the time and effort to gather develop and submit various documents associated with a PRRB appeal. While these requirements impose burden, we believe the requirements are exempt from the PRA in accordance with the implementing regulations of the PRA at 5 1320.4(a)(2). Information collected during the conduct of a criminal investigation or civil action or during the conduct of an administrative action, investigation, or audit involving an agency against specific individuals or entities is not subject to the PRA.
As discussed in section II.D. of the preamble of this final rule, the public may request changes to the MS–DRG classifications to reflect changes in treatment patterns, technology, and any other factors that may change the relative use of hospital resources. The burden associated with requesting changes to the MS–DRG classifications will be discussed in a forthcoming information collection request, which is currently under development. However, upon completion of the ICR, we will publish the required 60-day and 30-day notices to solicit public comments in accordance with the requirements of the PRA.
In section IV.K. of the preamble of this final rule, we note that we did not propose the removal or adoption of any new measures into the Hospital Readmissions Reduction Program. All six of the Hospital Readmissions Reduction Program's measures are claims-based measures. We do not believe that continuing to use these claims-based measures creates or reduces any burden for hospitals because they will continue to be collected using Medicare FFS claims that hospitals are already submitting to the Medicare program for payment purposes. We did not receive any comments regarding the ICRs for the Hospital Readmissions Reduction Program and therefore are finalizing without modification.
In section IV.L. of the preamble of this final rule, we provide newly established performance standards for the Hospital VBP Program for certain measures for the FY 2023, FY 2024, FY 2025, and FY 2026 program years. We do not believe that updating program performance standards will create or reduce any burden for hospitals. Data submissions for the Hospital VBP Program are associated with the Hospital Inpatient Quality Reporting Program under OMB control number 0938–1022, the National Healthcare Safety Network under OMB control number 0920–0666, and the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey under OMB control number 0938–0981. Because the FY 2023 Hospital VBP Program will use data that are also used to calculate quality measures in other programs and Medicare fee-for-service claims data that hospitals are already submitting to CMS for payment purposes, the program does not anticipate any change in burden associated with this final rule.
After consideration of the public comments we received, we are finalizing this provision without modification.
In section IV.M. of the preamble of this final rule, we discuss proposed requirements for the HAC Reduction Program. In this final rule, we are not removing any measures or adopting any new measures into the HAC Reduction Program. The HAC Reduction Program has adopted six measures. We do not believe that the claims-based CMS PSI 90 measure in the HAC Reduction Program creates or reduces any burden for hospitals because it is collected using Medicare FFS claims hospitals are already submitting to the Medicare program for payment purposes. We note the burden associated with collecting and submitting data for the HAI measures (CAUTI, CLABSI, Colon and Abdominal Hysterectomy SSI, MRSA bactermia, and CDI) via the NHSN system is captured under a separate OMB control number, 0920–0666 (expiration November 30, 2021), and therefore will not impact our burden estimates.
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41478 through 41484), we finalized our policy to validate NHSN HAI measures under the HAC Reduction Program, which will require hospitals to submit validation templates for the NHSN HAI measures beginning with Q3 CY 2020 discharges. OMB has currently approved these 43,200 hours of burden and approximately $1.6 million under OMB control number 0938–1352 (expiration date January 31, 2021), accounting for information collection burden experienced by up to 600 IPPS hospitals selected for validation under the HAC Reduction Program for the FY 2023 program year and each subsequent year.
In section IV.M.6. of the preamble of this final rule, we finalized changing the pool of hospitals selected for validation under the HAC Reduction Program from up to 600 hospitals to up to 400 hospitals, as similarly proposed under
We previously estimated a reporting burden of 80 hours (20 hours per record × 1 record per hospital per quarter × 4 quarters) per hospital selected for validation per year to submit the CLABSI and CAUTI templates, and 64 hours (16 hours per record × 1 record per hospital per quarter × 4 quarters) per hospital selected for validation per year to submit the MRSA and CDI templates for a total of 43,200 hours ([80 hours × 300 hospitals] + [64 hours × 300 hospitals]). We estimate a new total burden of 28,800 hours ([80 hours per hospital to submit CLABSI and CAUTI templates × 200 hospitals selected for validation] + [64 hours per hospital to submit MRSA and CDI templates × 200 hospitals selected for validation]), reflecting a total burden decrease of 14,400 hours (43,200 hours − 28,800 hours), and a new total burden cost of approximately $1,117,440 (28,800 hours × $38.80 per hour
The Hospital IQR Program (formerly referred to as the Reporting Hospital Quality Data for Annual Payment Update (RHQDAPU) Program) was originally established to implement section 501(b) of the MMA, Public Law 108–173. OMB has currently approved 1,612,710 hours of burden and approximately $60.7 million under OMB control number 0938–1022, accounting for information collection burden experienced by approximately 3,300 IPPS hospitals and 1,100 non-IPPS hospitals for the FY 2022 payment determination. In this final rule, we describe the burden changes with regard to collection of information under OMB control number 0938–1022 (expiration date December 31, 2022) for IPPS hospitals due to the finalized proposals in this final rule.
In section VIII.A.5.b. of the preamble to this final rule, we are finalizing a policy to progressively increase the numbers of quarters of eCQM data reported, from one self-selected quarter of data to four quarters of data over a 3-year period, by requiring hospitals to report two quarters of data for the CY 2021 reporting period/FY 2023 payment determination, three quarters of data for the CY 2022 reporting period/FY 2024 payment determination, and four quarters of data beginning with the CY 2023 reporting period/FY 2025 payment determination and for subsequent years. We expect these policies will increase our collection of information burden estimates. Details on these policies as well as the expected burden changes are discussed further in this section of this rule.
In section VIII.A. of the preamble to this final rule, we are finalizing the proposal to begin public display of eCQM data beginning with data reported by hospitals for the CY 2021 reporting period and for subsequent years. As discussed further in this final rule, we do not expect this policy to affect our information collection burden estimates.
In section VIII.A.11. of the preamble to this final rule, we also are finalizing proposals to streamline validation processes under the Hospital IQR Program. We are finalizing proposals to: (1) Update the quarters of data required for validation for both chart-abstracted measures and eCQMs; (2) expand targeting criteria to include hospital selection for eCQMs; (3) change the validation pool from 800 hospitals to 400 hospitals; (4) remove the current exclusions for eCQM validation selection, (5) require electronic file submissions for chart-abstracted measure data; (6) align the eCQM and chart-abstracted measure scoring processes; and (7) update the educational review process to address eCQM validation results. As discussed further in this final rule, we expect our finalized proposal to align the hospital selection process will increase our information collection burden estimates. We do not expect the other finalized validation proposals to affect our information collection burden estimates. Details on these policies as well as the expected burden changes are discussed further in this section of this rule.
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42602 through 42605), we estimated that reporting measures for the Hospital IQR Program could be accomplished by staff with a median hourly wage of $18.83 per hour. We note that since then, more recent wage data have become available, and we are updating the wage rate used in these calculations in this final rule. The most recent data from the Bureau of Labor Statistics reflects a median hourly wage of $19.40 per hour for a Medical Records and Health Information Technician professional.
In the FY 2020 IPPS/LTCH PPS final rule, we finalized eCQM reporting and submission requirements such that hospitals submit one, self-selected calendar quarter of data for four eCQMs for the CYs 2020 and 2021 reporting periods/FYs 2022 and 2023 payment determinations (84 FR 42503) and one, self-selected calendar quarter of data for three self-selected eCQMs and the Safe Use of Opioids—Concurrent Prescribing
In sections VIII.A.10.e.(1). through (4). of the preamble to this final rule, we are finalizing our proposal to progressively increase the number of quarters of eCQM data reported, from one self-selected quarter of data to four quarters of data over a 3-year period, by requiring hospitals to report: (1) Two quarters of data for the CY 2021 reporting period/FY 2023 payment determination, while continuing to require hospitals to report four self-selected eCQMs; (2) three quarters of data for the CY 2022 reporting period/FY 2024 payment determination, while continuing to report three self-selected eCQMs and the Safe Use of Opioids—Concurrent Prescribing eCQM ; and (3) four quarters of data beginning with the CY 2023 reporting period/FY 2025 payment determination and for subsequent years, while continuing to require hospitals to report three self-selected eCQMs and the Safe Use of Opioids—Concurrent Prescribing eCQM. We believe there would be a progressive increase to the burden estimate over the 3-year period due to these proposed policies.
We previously estimated the information collection burden associated with the eCQM reporting and submission requirements to be 40 minutes per hospital per year (10 minutes × 4 eCQMs × 1 quarter = 40 minutes), or 0.67 hours per hospital per year (40 minutes/60). We estimated a total annual burden of 2,200 hours across all IPPS hospitals (0.67 hours × 3,300 IPPS hospitals). Using the updated wage estimate as described previously, we estimate this to represent a total annual cost of $85,360 ($38.80 hourly wage × 2,200 annual hours) across all IPPS hospitals. Based on our proposal to progressively increase the number of quarters of data reported, from one self-selected quarter of data to four quarters of data over a 3-year period, we estimate an annual burden increase of 2,200 hours and $85,360 for all participating IPPS hospitals for each of the CY 2021 reporting period/FY 2023 payment determination, CY 2022 reporting period/FY 2024 payment determination, and CY 2023 reporting period/FY 2025 payment determination. By increasing the number of quarters of eCQM data required to be reported by hospitals from one self-selected quarter of data to two quarters of data, then to three quarters of data, and finally to four quarters of data, respectively, we estimate a total increase of 6,600 hours (2,200 hours + 2,200 hours + 2,200 hours) and $256,080 ($85,360 + $85,360 + $85,360) across a 3-year period for all participating IPPS hospitals.
In section VIII.A.13.b. of the preamble to this final rule, we are finalizing a policy to begin public display of eCQM data beginning with data reported by hospitals for the CY 2021 reporting period and for subsequent years. Because hospitals would not have any additional information collection requirements, we believe there would be no change to the information collection burden estimate due to this policy, but acknowledge that there are other types of burden associated with this proposal. For example, there is burden associated with the optional reviewing of hospital-specific reports during the public reporting preview period; however, we believe this burden is nominal because hospitals already review these reports with respect to other types of measures for the Hospital IQR Program.
In section VIII.A.11. of the preamble to this final rule, we are finalizing proposals to make several changes to streamline the validation process. We are finalizing our proposals to: (1) Require the use of electronic file submissions via a CMS-approved secure file transmission process and no longer allow the submission of paper copies of medical records or copies on digital portable media such as CD, DVD, or flash drive, beginning with validation of Q1 2021 data affecting the FY 2024 payment determination; (2) combine the validation processes for chart-abstracted measures and eCQMs by: (a) Aligning data submission quarters, with the validation quarters affecting the FY 2023 payment determination serving as a transition year before being fully aligned as to validation quarters affecting the FY 2024 payment determination; (b) combining hospital selection, including: (i) Reducing the pool of hospitals randomly selected for chart-abstracted measure validation, and (ii) integrating and applying targeting criteria for eCQM validation, beginning with validation affecting the FY 2024 payment determination; (c) removing previous exclusion criteria; and (d) combining scoring processes by providing one combined validation score for the validation of chart-abstracted measures and eCQMs with the eCQM portion of the combined score weighted at zero, beginning with validation affecting the FY 2024 payment determination; and (3) formalize the process for conducting educational reviews for eCQM validation in alignment with current processes for providing feedback for chart-abstracted validation results, beginning with eCQM validation affecting the FY 2023 payment determination.
As noted in the FY 2017 IPPS/LTCH IPPS final rule (81 FR 57261), we have been reimbursing hospitals directly for expenses associated with submission of medical records for data validation; specifically, we reimburse hospitals at 12 cents per photocopied page; for hospitals providing medical records digitally via a rewritable disc, such as encrypted CD–ROMs, DVDs, or flash drives, we reimburse hospitals at a rate of 40 cents per disc, along with $3.00 per record; and for hospitals providing medical records as electronic files submitted via secure file transmission, we reimburse hospitals at $3.00 per record. In addition, in the FY 2017 IPPS/LTCH IPPS final rule (81 FR 57261), we finalized that for eCQM validation, we reimburse hospitals at $3.00 per record for providing medical records as electronic files submitted via secure file transmission (paper copies and digital portable media are not accepted for eCQM validation). Because we directly reimburse, we do not anticipate any net change in information collection burden associated with our finalized proposal to require electronic file submissions of medical records via secure file transmission for hospitals selected for chart-abstracted measures validation; hospitals would continue to be reimbursed at $3.00 per record.
We do not anticipate any net change in information collection burden associated with our finalized proposals to align the data submission quarters, to combine the hospital selection process by reducing the pool of hospitals randomly selected for validation for chart-abstracted measures from 400 hospitals to up to 200 hospitals, or to combine the scoring processes to provide one combined validation score for the validation of chart-abstracted measures and eCQMs. However, we refer readers to section I.K. of Appendix A of this final rule for a discussion of how our finalized proposals to align the validation processes for chart-abstracted measures and eCQMs may have the potential to reduce burden other than information collection burden. In addition, we do not anticipate any
We previously estimated the information collection burden associated with eCQM validation to be 80 minutes per record, or approximately 11 hours per hospital per year (80 minutes per record × 8 records × 1 quarter/60 = 10.67 hours) (81 FR 57261). We estimated a total annual burden of approximately 2,200 hours across 200 IPPS hospitals selected for eCQM validation each year (11 hours × 200 IPPS hospitals). Using the updated wage estimate as described previously, we estimate this to represent a total annual cost of $85,360 (2,200 hours × $38.80) across 200 hospitals.
The previous estimate of 80 minutes per record was based on our limited experience working with voluntary hospital participants during the eCQM validation pilot conducted in 2015 (79 FR 50269 through 50272). For the validation pilot, participating hospitals attended a 30-minute pre-briefing session and had to install CMS-approved software that allowed our Clinical Data Abstraction Center (CDAC) contractor to remotely view isolated records in real-time under hospital supervision in order to compare all abstracted data with QRDA Category I file data and summarize the results of the real-time session (79 FR 50270). Since this 2015 pilot, the eCQM validation process that we have implemented under the Hospital IQR Program has been significantly streamlined so that we no longer need hospitals to allow remote access to the CDAC contractor to view records in real-time under each hospital's supervision nor for them to engage in discussions with our contractor during the process. Instead, hospitals selected for eCQM validation are required to submit timely and complete copies of medical records on eCQMs selected for validation to CMS by submitting records in PDF file format within 30 calendar days following the medical records request date listed on the CDAC request form via the QualityNet secure file transmission process (81 FR 57179).
Based on this updated process, as well as hospitals having gained several years of experience using EHRs, we are revising our previous estimate from 80 minutes per record to 10 minutes per record. This is the amount of time we estimate is needed for hospitals to create PDF files and to electronically submit each medical record to us via the CMS-approved secure file transmission process. The estimate of 10 minutes per record is similar to our estimate of 10 minutes per eCQM per quarter in submitting QRDA Category I files via the QualityNet secure portal (81 FR 57260). We note that as mentioned previously, hospitals will still be reimbursed at $3.00 per record (81 FR 57261).
In addition, we anticipate that our finalized proposal to progressively increase the number of quarters of eCQM data reported, from one self-selected quarter of data to four quarters of data over a 3-year period, would similarly increase the total number of quarters of data from which cases would be selected for eCQM validation over a 3-year period. We also anticipate that our finalized proposal to combine the hospital selection process such that the Hospital IQR Program would validate a pool of up to 400 hospitals across measure types (up to 200 hospitals would be randomly selected and up to 200 hospitals would be selected using targeting criteria) would increase the number of hospitals selected for eCQM validation from up to 200 hospitals to up to 400 hospitals. Therefore, we estimate the following burden changes over a 3-year period using the revised estimate of 10 minutes (0.1667 hours) per record as discussed previously. For eCQM validation of CY 2021 data affecting the FY 2024 payment determination, we estimate a total burden of 1,067 hours across 400 IPPS hospitals selected for eCQM validation (0.1667 hours × 2 quarters × 8 cases × 400 IPPS hospitals) and $41,400 (1,067 hours × 38.80). This reflects a total burden decrease of 1,133 hours (2,200 hours − 1,067 hours) and $43,960 ($85,360 − $41,400) compared to our previous burden estimate for eCQM validation affecting the FY 2024 payment determination. For eCQM validation of CY 2022 data affecting the FY 2025 payment determination, we estimate a total burden of 1,600 hours across 400 IPPS hospitals selected for eCQM validation (0.1667 hours × 3 quarters × 8 cases × 400 IPPS hospitals) and $62,080 (1,600 hours × $38.80). This reflects a total burden decrease of 600 hours (2,200 hours − 1,600 hours) and $23,280 ($85,360 − $62,080) compared to our previous burden estimate for eCQM validation affecting the FY 2025 payment determination. For eCQM validation of CY 2023 data affecting the FY 2026 payment determination, and for subsequent years, we estimate a total burden of 2,133 hours across 400 IPPS hospitals selected for eCQM validation (0.1667 hours × 4 quarters × 8 cases × 400 IPPS hospitals) and $82,760 (2,133 hours × $38.80). This reflects a total burden decrease of 67 hours (2,200 hours − 2,133 hours) and $2,600 ($85,360 − $82,760) compared to our previous burden estimate for eCQM validation affecting the FY 2026 payment determination and subsequent years.
In summary, under OMB control number 0938–1022, we estimate that the policies finalized in this final rule will result in an increase of 6,533 hours (6,660 − 67 hours) for 3,300 IPPS hospitals across a 4-year period from the CY 2021 reporting period/FY 2023 payment determination through the CY 2024 reporting period/FY 2026 payment determination. The total cost increase related to this information collection is approximately $253,480 (6,533 hours × $38.80) (which also reflects use of an updated hourly wage rate as previously discussed). The tables summarize the total burden changes for each respective FY payment determination compared to our currently approved information collection burden estimates (the table for the FY 2026 payment determination reflects the cumulative burden changes). We will submit the revised information collection estimates to OMB for approval under OMB control number 0938–1022.
A number of commenters expressed concern about an increase in burden related to our eCQM related proposals to increase the number of required reporting quarters for eCQM data and our proposal to begin publicly reporting eCQM data.
We believe the long-term benefits associated with reporting a full year of electronic data will outweigh the burdens and that increasing the number of quarters for which hospitals are required to report eCQM data will produce more comprehensive and reliable quality information for patients and providers. We stated our intention in the FY 2018 IPPS/LTCH PPS final rule to gradually transition toward more robust eCQM reporting (82 FR 38356). We reiterated this stated goal to incrementally increase the use of EHR data for quality measurement in a subsequent final rule (84 FR 42502). We believe that taking an incremental approach to increasing eCQM reporting over a 3-year period will help to ease the burdens associated with reporting larger amounts of data and will provide hospitals and vendors with additional time to plan and sufficiently allocate resources for more robust eCQM reporting. For a detailed discussion of comments we received on the information collection burden associated with the finalization of these proposals, please see section VIII.A.10 of the preamble of this final rule. We believe the finalization of these proposals effectively balances the burdens associated with increased reporting of eCQM data and the benefits of providing that quality data to patients and consumers.
As discussed in section VIII.B. of the preamble of this final rule, section 1866(k)(1) of the Act requires, for purposes of FY 2014 and each subsequent fiscal year, that a hospital described in section 1886(d)(1)(B)(v) of the Act (a PPS-exempt cancer hospital, or a PCH) submit data in accordance with section 1866(k)(2) of the Act with respect to such fiscal year. There is no financial impact to PCH Medicare payment if a PCH does not participate.
As discussed in section VIII.B.3. of the preamble of this final rule, we are finalizing our proposal to adopt refined versions of two existing measures: Catheter-associated Urinary Tract Infection (CAUTI) and Central Line-associated Bloodstream Infection (CLABSI), beginning with the FY 2023 program year. The refined versions of the measure incorporate an updated SIR calculation methodology developed by the Centers for Disease Control and Prevention (CDC) that calculates rates stratified by patient care locations within PCHs, without the use of predictive models or comparisons in the rate calculations. We do not estimate any net change in burden hours for the PCHQR Program for the FY 2023 program year because there would be no change in the data submission requirements for PCHs. We note that burden estimates for these CDC NHSN measures are submitted separately under OMB control number 0920–0666.
The PCHQR Program measure set would continue to consist of 15 measures for the FY 2023 program year. The most recent data from the Bureau of Labor Statistics reflects a median hourly wage of $19.40 (previously $18.83).
We received no comments in response to the burden estimates specifically discussed above. Thus, we are finalizing them without modification.
In section VIII.D. of the preamble of this final rule, we discuss several finalized proposals for the Medicare and Medicaid Promoting Interoperability Programs. OMB has currently approved 623,562 total burden hours and approximately $61 million under OMB control number 0938–1278, accounting for information collection burden experienced by approximately 3,300 eligible hospitals and CAHs (serving Medicare-only and dual eligible beneficiaries) that attest to CMS under the Medicare Promoting Interoperability Program. The collection of information burden analysis in this final rule focuses on eligible hospitals and CAHs that attest to the objectives and measures, and report CQMs, under the Medicare Promoting Interoperability Program for the reporting period in CY 2021.
In section VIII.D.3.b. of the preamble of this final rule, we are finalizing the following changes for eligible hospitals and CAHs that attest to CMS under the Medicare Promoting Interoperability Program: (1) An EHR reporting period of a minimum of any continuous 90-day period in CY 2022 for new and returning participants (eligible hospitals and CAHs); (2) to maintain the Electronic Prescribing Objective's Query of PDMP measure as optional and worth 5 bonus points in CY 2021; (3) to modify the name of the Support Electronic Referral Loops by Receiving and Incorporating Health Information measure; (4) to progressively increase the number of quarters for which hospitals are required to report eCQM data, from the current requirement of one self-selected calendar quarter of data, to four calendar quarters of data, over a 3-year period. Specifically, we propose to require: (a) 2 self-selected calendar quarters of data for the CY 2021 reporting period; (b) 3 self-selected calendar quarters of data for the CY 2022 reporting period; and (c) 4 calendar quarters of data beginning with the CY 2023 reporting period, where the submission period for the Medicare Promoting Interoperability Program will be the 2 months following the close of the respective calendar year; (5) to begin publicly reporting eCQM performance data beginning with the eCQM data reported by eligible hospitals and CAHs for the reporting period in CY 2021 on the
In the Medicare and Medicaid Programs; Electronic Health Record Incentive Program—Stage 3 and Modifications to Meaningful Use in 2015 Through 2017 final rule (80 FR 62917), we estimated it will take an individual provider or designee approximately 10 minutes to attest to each objective and associated measure that requires a numerator and denominator to be generated. The measures that require a “yes/no” response will take approximately one minute to complete. We estimated that the Security Risk Analysis measure will take approximately 6 hours for an individual provider or designee to complete (we note this measure is still part of the program, but is not subject to performance-based scoring). We continue to believe these are appropriate burden estimates for reporting and have used this methodology in our collection of information burden estimates for this final rule.
Given the proposals, we estimated a total burden estimate of 6 hours 31 minutes per respondent (6.5 hours) which remains unchanged from the FY 2020 IPPS/LTCH PPS final rule (84 FR 42044).
In the Medicare and Medicaid Programs; Electronic Health Record Incentive Program—Stage 3 and Modifications to Meaningful Use in 2015 Through 2017 final rule (80 FR 62917), we estimated a mean hourly rate of $63.46 for the staff involved in attesting to EHR technology, meaningful use objectives and associated measures, and electronically submitting the clinical quality measures. We had previously used the mean hourly rate of $68.22 for the necessary staff involved in attesting to the objectives and measures under 42 CFR 495.24(e) in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42609), however, this rate has since been updated to $69.34 for the FY 2021 final rule based upon recently-released 2018 data from the Bureau of Labor Statistics (BLS).
We are finalizing these provisions as proposed, therefore, we do not estimate any net change in burden hours for the Medicare Promoting Interoperability Program for CY 2021, as there is no substantive change in measures or data submission requirements for eligible hospitals and CAHs in our proposals. However, we discovered an incorrect mathematical calculation in last year's final rule and are correcting it in the table that follows. The correction we are providing in following table is that 3,300 responses multiplied by 6.5 burden hours equals 21,450 total annual burden hours (a decrease in 44 hours from what was mistakenly reported last year). While we reiterate that the provisions included in this rule do not contribute to additional or reduced burden hours, please note that the correction of this error will update subsequent burden calculations detailed later in this section.
As previously stated, recent data from the BLS reflects a median hourly staff wage of $69.34 (previously $68.22). Consequently, while our proposal will not yield a net change in burden hours, the change in labor wage will cause an increase in burden cost for the program. Therefore, using the updated estimate of total annual burden hours of 21,450 burden hours across 3,300 responses to data collection and submissions for the program objectives' measures, we estimate a total annual labor cost of $1,487,343 (21,450 hours × $69.34 per hour) for the CY 2021 EHR reporting period. The burden hours associated with these reporting requirements is currently approved under OMB control number 0938–1278. The updated burden cost, based solely on the increase in labor wages, will be revised and submitted to OMB.
As no measures have been removed nor introduced since last year's final rule, but are mainly continuations of current policies, we do not consider the finalized proposals included in this section to change the program. That being said, the numerical-correction of the total annual burden hours and an updated BLS hourly labor cost of reporting will impact the program's total cost. Thus, the Collection Burden's Total Cost for CY 2021 of $1,487,343 is an increase of $24,024 from last year's final rule.
We did not receive comments on to the information collection requirement discussed in this section.
In section IX.A. of this final rule, we discuss the changes we are finalizing relating to the submission of patient records to the QIOs in an electronic format by providers and practitioners in accordance with § 476.78 and by institutions and practitioners in accordance with § 480.111. These patient records must be submitted to the QIOs for purposes of one or more QIO functions. As a result, the collection and review of such records by the QIOs constitutes an audit, investigation or administrative action as specified in section 1154(a) of the Act. Therefore, we believe these collection requirements are not subject to the PRA as stipulated under 5 CFR 1320.4(a)(2).
Section IV.P. of the preamble of this final rule discusses the collection of market-based payment rate information by MS–DRG on the Medicare cost report for cost reporting periods ending on or after January 1, 2021. Hospitals would report the median payer-specific negotiated charge by MS–DRG for payers that are MA organizations. We proposed to collect this market-based information on new form CMS–2552–10, Worksheet S–12. The required cost report reporting changes to accomplish this will be in more detail in the Information Collection Request approved under OMB No. 0938–0050, which is subject to a separate comment solicitation.
We believe reporting this market based information will be less burdensome for hospitals given that hospitals are required, beginning in CY 2021, to make public their payer-specific negotiated charges for the same service packages under the requirements we finalized in the Hospital Price Transparency final rule. The market-based rate information we are finalizing to collect on the Medicare cost report would be the median of the payer-specific negotiated charges for every MS–DRG, that the hospital has negotiated with its MA organizations. We believe that because hospitals are already required to publically report the payer-specific negotiated charge information that they will use to calculate these medians, the additional calculation and reporting of the median payer-specific negotiated charge will be less burdensome for hospitals.
Burden hours estimate the time (number of hours) required for each IPPS hospital to complete ongoing data gathering and recordkeeping tasks, search existing data resources, review instructions, and complete the Form CMS–2552–10, Worksheet S–12. The most recent data from the System for Tracking Audit and Reimbursement, an internal CMS data system maintained by the Office of Financial Management (OFM), reports that 3,189 hospitals, the current number of Medicare certified IPPS hospitals, file Form CMS–2552–10 annually.
In section IV.P.2.c. of the preamble to this final rule, we finalized that subsection (d) hospitals in the 50 states and DC, as defined at section 1886(d)(1)(B) of the Act, and subsection (d) Puerto Rico hospitals, as defined under section 1886(d)(9)(A) of the Act, would be required to report the median payer-specific negotiated charge information, as proposed. Hospitals that do not negotiate payment rates and only receive non-negotiated payments for service would be exempted from this definition. Hospitals that are exempted from this policy include, Critical Access Hospitals (CAHs), hospitals in Maryland, which are currently paid under the Maryland Total Cost of Care Model, during the performance period of that Model, hospitals operated by an Indian Health Program as defined in section 4(12) of the Indian Health Care Improvement Act, and federally owned and operated facilities, and non-subsection (d) hospitals. Based on this policy, we estimate that 3,189 hospitals would be required to comply with this market-based data collection requirement.
Based on our understanding of the resources necessary to report this information, we estimate an average annual burden per hospital of 20 hours (5 hours for recordkeeping and 15 hours for reporting) for the Worksheet S–12. This represents an increase of 5 hours over the burden estimate provided within the proposed rule, based on feedback from commenters that additional effort would be necessary to crosswalk inpatient discharges to an MS–DRG, specifically if a hospital is not familiar with the MS–DRG classification system, for use in calculating the median payer-specific negotiated charges. The burden is minimized because the median payer-specific negotiated charge data collected on the Worksheet S–12 is based on payer-specific data already maintained by the hospital. We believe that since hospitals assign the underlying ICD–10–CM principal diagnosis, and any other secondary diagnosis codes and ICD–10–PCS procedure codes, which determine how patients are assigned to an MS–DRG, that hospitals are able to associate those items and services to MS–DRGs for each discharge. Additionally, hospitals that are not as familiar with MS–DRGs have access to the most current publically available version of the CMS Grouper used to group ICD–10 codes to MS–DRGs, and are able to use this software to uniformly group inpatient items and services to MS–DRGs, either initially by proactively using the same Grouper version used by CMS, or retrospectively after an inpatient hospital stay, but prior to submitting this information on the hospital cost report.
We estimated the total annual burden hours as follows: 3,189 hospitals times 20 hours per hospital equals 63,780 annual burden hours.
The 5 hours for recordkeeping include hours for bookkeeping, accounting and auditing clerks; the 15 hours for reporting include accounting and audit professionals' activities. We believe the basic median calculation would be captured within the recordkeeping portion of this assessment.
Based on the most recent Bureau of Labor Statistics (BLS) in its 2019 Occupation Outlook Handbook, the mean hourly wage for Category 43–3031 (bookkeeping, accounting and auditing clerks) is $20.65 (
The mean hourly wage for Category 13–2011 (accounting and audit professionals) is $38.23 (
We believe that because hospitals are already required to publically report the payer-specific negotiated charge information that they will use to calculate these medians, the additional calculation and reporting of the median payer-specific negotiated charge will be less burdensome for hospitals than if hospitals did not already have this information compiled. The Hospital Price Transparency final rule required that hospitals establish, update, and make public via the internet standard charges in two different ways: (1) A single machine-readable file with a list of standard charges (including gross charges, payer-specific negotiated charges, de-identified minimum negotiated charges, de-identified maximum negotiated charges, and discounted cash prices) for all items and services including service packages identified by MS–DRG; and (2) standard charges (including payer-specific negotiated charges, discounted cash prices, de-identified minimum negotiated charges, de-identified maximum negotiated charges) in a consumer-friendly manner for as many of the 70 CMS-specified shoppable services that are provided by the hospital, and as many additional hospital-selected shoppable services as is necessary for a combined total of at least 300 shoppable services. We note that the data collection requirement in this final rule would apply to a smaller subset of hospitals as compared to the public reporting requirements under the Hospital Price Transparency final rule.
In total, the Hospital Price Transparency final rule estimated in the first year of public reporting, it would take a hospital an estimated 150 hours at a cost of $11,898.60 per hospital
In this final rule, we finalized the requirement for hospitals to calculate and report on the Medicare cost report the median payer-specific negotiated charge by MS–DRG using the payer-specific negotiated charge data that hospitals are required to make public under the Hospital Price Transparency final rule. Therefore, the burden associated with establishing and updating the payer-specific negotiated charges has already been assumed. Specifically, given that the payer-specific negotiated charge is one of the five types of standard charges (gross charges, payer-specific negotiated charges, de-identified minimum negotiated charges, de-identified maximum negotiated charges, and discounted cash prices) that the Hospital Price Transparency final rule requires that hospitals estimate, update and make public, we believe that a fraction of the estimated 80 hours of burden associated with gathering, compiling, and posting, that required information in the form and manner specified in the Hospital Price Transparency final rule, would support the reporting efforts in this final rule. We heard from commenters that additional effort would be necessary to crosswalk discharges to an MS–DRG, specifically if a hospital is not familiar with the MS–DRG classification system, for use in calculating the median payer-specific negotiated charges. In recognition of this additional effort, we have increased the burden hours associated with reporting the median payer-specific negotiated charge. However, we note that much of the burden associated with gathering and compiling the payer-specific negotiated charge is captured initially in the Hospital Price Transparency burden estimate provided in that final rule. We refer readers to the Hospital Price Transparency final rule for the full burden assessment analysis for the requirements set forth within that final rule (84 FR 65524).
We maintain that the estimated burden associated with completing the Worksheet S–12 would be 20 hours (5 hours for recordkeeping and 15 hours for reporting), given the minimized burden since hospitals would already have collected the payer-specific negotiated charge data and would only then need to calculate the median payer-specific negotiated charge by MS–DRG for payers that are MA organizations.
Further instructions for the reporting and complying with this market-based data collection requirement on the Medicare cost report will be discussed in a forthcoming revision of the ICR request currently approved under OMB control number 0938–0050, expiration date March 31, 2022.
The following chart reflects the total burden and associated costs for the provisions included in this final rule.
We are committed to ensuring that we fulfill our statutory obligation to update the IPPS and LTCH PPS as required by law and we have worked 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. In addition, the Administrative Procedure Act, (5 U.S.C. 553(d)), ordinarily requires a 30-day delay in the effective date of a final rule from the date of its public availability in the
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
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.
The COVID–19 PHE has required the agency to divert energy and personnel resources that would otherwise have been used to complete this IPPS and LTCH PPS payment rule to other priority matters, including three interim final rules necessary because of the PHE. (See 85 FR 19230 (April 6, 2020); 85 FR 27550 (May 8, 2020); and the interim final rule scheduled to appear in the September 2, 2020
Administrative practice and procedure, Health facilities, Health professions, Kidney diseases, Medical devices, Medicare, Reporting and recordkeeping requirements, Rural areas, X-rays.
Administrative practice and procedure, Health facilities, Medicare, Puerto Rico, Reporting and recordkeeping requirements.
Health facilities, Kidney diseases, Medicare, Puerto Rico, Reporting and recordkeeping requirements.
Administrative practice and procedure, Grant programs—health, Health care, Health insurance, Health maintenance organizations (HMO), Loan programs—health, Medicare, Reporting and recordkeeping requirements.
Grant programs—health, Health care, Health facilities, Health professions, Quality Improvement Organizations (QIOs), Reporting and recordkeeping requirements.
Health care, Health professions, Health records, Penalties, Privacy, Quality Improvement Organizations (QIOs), Reporting and recordkeeping requirements.
Health facilities, Health professions, Medicare, Reporting and recordkeeping requirements.
Administrative practice and procedure, Health facilities, Health maintenance organizations (HMO), Health professions, Health records, Medicaid, Medicare, Penalties, Privacy, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare and Medicaid Services amends 42 CFR chapter IV as set forth below:
42 U.S.C. 263a, 405(a), 1302, 1320b-12, 1395x, 1395y(a), 1395ff, 1395hh, 1395kk, 1395rr, and 1395ww(k).
The revisions and addition read as follows:
(a) * * *
(1) * * *
(ii) For purposes of a contractor hearing, if no contractor hearing officer is appointed (or none is currently presiding), the date of receipt of materials sent to the contractor hearing officer (as permitted under paragraph (d) of this section) is presumed to be, as applicable, the date that the contractor stamps “Received” on the materials, or the date of electronic delivery.
(2)
(iii) Of electronic delivery.
(d)
The addition reads as follows:
(a) * * *
(2) All parties to a Board appeal are to familiarize themselves with the instructions for handling a Provider Reimbursement Review Board (PRRB) appeal, including any and all requirements related to the electronic/online filing of documents.
The revision reads as follows:
(c) * * *
(1)
42 U.S.C. 1302 and 1395hh.
(a) * * *
(1) This part implements sections 1886(d) and (g) of the Act by establishing a prospective payment system for the operating costs of inpatient hospital services furnished to Medicare beneficiaries in cost reporting periods beginning on or after October 1, 1983, and a prospective payment system for the capital-related costs of inpatient hospital services furnished to Medicare beneficiaries in cost reporting periods beginning on or after October 1, 1991.
(i) Under these prospective payment systems, payment for the operating and capital-related costs of inpatient hospital services furnished by hospitals subject to the systems (generally, short-term, acute-care hospitals) is made on the basis of prospectively determined rates and applied on a per discharge basis.
(ii) Payment for other costs related to inpatient hospital services (organ acquisition costs incurred by hospitals with approved organ transplantation centers, the costs of qualified nonphysician anesthetist's services, as described in § 412.113(c), direct costs of approved nursing and allied health educational programs, costs related to hematopoietic stem cell acquisition for the purpose of an allogeneic hematopoietic stem cell transplant as described in § 412.113(e)) is made on a reasonable cost basis.
(iii) Payment for the direct costs of graduate medical education is made on a per resident amount basis in accordance with §§ 413.75 through 413.83 of this chapter.
(iv) Additional payments are made for outlier cases, bad debts, indirect medical education costs, and for serving a disproportionate share of low-income patients.
(v) Under either prospective payment system, a hospital may keep the difference between its prospective payment rate and its operating or capital-related costs incurred in furnishing inpatient services, and the hospital is at risk for inpatient operating or inpatient capital-related costs that exceed its payment rate.
(e) * * *
(6) For cost reporting periods beginning on or after October 1, 2020, the costs of allogenic hematopoietic stem cell acquisition, as described in § 412.113(e), for the purpose of an allogeneic hematopoietic stem cell transplant.
(e) * * *
(5) CMS makes an adjustment to the standardized amount to ensure that the reasonable cost based payments for allogeneic hematopoietic stem cell acquisition costs are made in a manner so that aggregate payments to hospitals are not affected.
(a)
(b)
(c)
(c) * * *
(1) A new medical device is part of the Food and Drug Administration's (FDA) Breakthrough Devices Program and has received marketing authorization for the indication covered by the Breakthrough Device designation.
(d)
(ii) For discharges occurring on or after October 1, 2021, a new medical product is approved under FDA's Limited Population Pathway for Antibacterial and Antifungal Drugs (LPAD) and used for the indication approved under the LPAD pathway.
(e)
(2) Except as provided for in paragraph (e)(3) of this section, CMS
(3) A technology for which an application is submitted under an alternative pathway for certain antimicrobial products under paragraph (d) of this section that does not receive FDA marketing authorization by the July 1 deadline specified in paragraph (e)(2) of this section may be conditionally approved for the new technology add-on payment for a particular fiscal year, effective for discharges beginning in the first quarter after FDA marketing authorization is granted, provided that FDA marketing authorization is granted before July 1 of the fiscal year for which the applicant applied for new technology add-on payments.
The revisions read as follows:
(a) * * *
(2) * * *
(ii) * * *
(B) For a medical product designated by FDA as a Qualified Infectious Disease Product or, for discharges occurring on or after October 1, 2020, for a product approved under FDA's Limited Population Pathway for Antibacterial and Antifungal Drugs, if the costs of the discharge (determined by applying the operating cost-to-charge ratios as described in § 412.84(h)) exceed the full DRG payment, an additional amount equal to the lesser of—
(b) * * *
(2)
(i) 65 percent of the estimated costs of the new medical service or technology;
(ii) For a medical product designated by FDA as a Qualified Infectious Disease Product, 75 percent of the estimated costs of the new medical service or technology; or
(iii) For discharges occurring on or after October 1, 2020, for a product approved under FDA's Limited Population Pathway for Antibacterial and Antifungal Drugs, 75 percent of the estimated costs of the new medical service or technology.
(c)* * *
(3) The term
(c) * * *
(2) * * *
(iii) If the hospital's cost reporting period that began during the same fiscal year as the cost reporting periods used to compute the regional median discharges under paragraph (i) of this section is for less than 12 months or longer than 12 months, the hospital's number of discharges for that cost reporting period will be annualized to estimate the total number of discharges for a 12-month cost reporting period.
(a)
(1) MS–DRG 019 (Simultaneous Pancreas/Kidney Transplant with Hemodialysis).
(2) MS–DRGs 650 and 651 (Kidney Transplant with Hemodialysis with MCC, without MCC, respectively).
(3) MS–DRGs 682, 683, and 684 (Renal Failure with MCC, with CC, without CC/MCC, respectively).
The additions read as follows:
(g) * * *
(1) * * *
(iii) * * *
(C) * * *
(
(
(e)
(1) An allogeneic hematopoietic stem cell transplant is the intravenous infusion of hematopoietic cells derived from bone marrow, peripheral blood stem cells, or cord blood, but not including embryonic stem cells, of a donor to an individual that are or may be used to restore hematopoietic function in such individual having an inherited or acquired deficiency or defect.
(2) Allogeneic hematopoietic stem cell acquisition costs recognized under this paragraph (e) are costs of acquiring hematopoietic stem cells from a donor. These costs are as follows:
(i) Registry fees from a national donor registry described in 42 U.S.C. 274k, if applicable, for stem cells from an unrelated donor.
(ii) Tissue typing of donor and recipient.
(iii) Donor evaluation.
(iv) Physician pre-admission/pre-procedure donor evaluation services.
(v) Costs associated with the collection procedure (for example, general routine and special care services, procedure/operating room and other ancillary services, apheresis services), and transportation costs of stem cells if the recipient hospital incurred or paid such costs.
(vi) Post-operative/post-procedure evaluation of donor.
(vii) Preparation and processing of stem cells derived from bone marrow, peripheral blood stem cells, or cord blood (but not including embryonic stem cells).
(3) A subsection (d) hospital that furnishes inpatient allogeneic hematopoietic stem cell transplants is required to hold all allogeneic hematopoietic stem cell acquisition charges and bill them to Medicare using the appropriate revenue code, when the transplant occurs.
(4) A subsection (d) hospital must maintain an itemized statement that identifies, for all costs defined in paragraph (e)(2) of this section, the services furnished in collecting hematopoietic stem cells including all invoices or statements for purchased services for all donors and their service charges. Records must be for the person receiving the services (donor or recipient; for all donor sources, the hospital must identify the prospective recipient), and the recipient's Medicare beneficiary identification number.
(c)
(1) The applicable period for FY 2022 is the 3-year period from July 1, 2017 through June 30, 2020; and
(2) Beginning with the FY 2023 program year, the applicable period is the 3-year period advanced by 1-year from the prior year's period from which data are collected in order to calculate excess readmission ratios and adjustments under the Hospital Readmissions Reduction Program, unless otherwise specified by the Secretary.
(1) The applicable period for FY 2022—
(i) For the CMS PSI 90 measure, is the 24-month period from July 1, 2018 through June 30, 2020; and
(ii) For the CDC NHSN HAI measures, is the 24-month period from January 1, 2019 through December 31, 2020.
(2) Beginning with the FY 2023 program year, the applicable period is the 24-month period advanced by 1-year from the prior fiscal year's period from which data are collected in order to calculate the total hospital-acquired condition score under the Hospital-Acquired Condition Reduction Program, unless otherwise specified by the Secretary.
(d) * * *
(2) * * *
(ii) * * *
(A) For hospital-specific data, the hospital must provide a weighted 3-year average of its average hourly wages using data from the CMS hospital wage survey used to construct the wage index in effect for prospective payment purposes.
(
(
(b)
(1) The hospital's request for review must be in writing and sent to the Administrator, in care of the Office of the Attorney Advisor. The request must be received by the Administrator within 15 days after the date the MGCRB issues its decision. The hospital must also submit an electronic copy of its request for review to CMS's Hospital and Ambulatory Policy Group.
(f)
(c) * * *
(3) * * *
(xvii)
(b) * * *
(2) * * *
(i) Bad debts of Medicare beneficiaries, as provided in § 413.89 of this chapter; and
42 U.S.C. 1302, 1395d(d), 1395f(b), 1395g, 1395l(a), (i), and (n), 1395x(v), 1395hh, 1395rr, 1395tt, and 1395ww.
(d) * * *
(3)(i) The provider must furnish the contractor—
(A) Upon request, copies of patient service charge schedules and changes thereto as they are put into effect; and
(B) Its median payer-specific negotiated charge by MS–DRG for payers that are Medicare Advantage (MA) organizations, as applicable, and changes thereto as they are put into effect.
(ii) The contractor evaluates the charge schedules as specified in paragraph (d)(3)(i) of this section to determine the extent to which they may be used for determining program payment.
(h) * * *
(1) * * *
(iii)
(A) Leaves a program after the hospital or program closure is publicly announced, but before the actual hospital or program closure;
(B) Is assigned to and training at planned rotations at another hospital who will be unable to return to his/her rotation at the closing hospital or program;
(C) Is accepted into a GME program at the closing hospital or program but has not yet started training at the closing hospital or program;
(D) Is physically training in the hospital on the day prior to or day of program or hospital closure; or
(E) Is on approved leave at the time of the announcement of closure or actual closure, and therefore, cannot return to his/her rotation at the closing hospital or program.
(b)
(A) “Bad debts” are amounts considered to be uncollectible from accounts and notes receivable that were created or acquired in providing services.
(B) “Accounts receivable” and “notes receivable” are designations for claims arising from the furnishing of services, and are collectible in money in the relatively near future.
(ii) For cost reporting periods beginning on or after October 1, 2020, “bad debts” are amounts considered to be uncollectible from patient accounts that were created or acquired in providing services and are categorized as implicit price concessions for cost reporting purposes and are recorded in the provider's accounting records as a component of net patient revenue.
(c)
(i) Bad debts, charity, and courtesy allowances represent reductions in revenue. The failure to collect charges for services furnished does not add to the cost of providing the services as these costs have already been incurred in the production of the services.
(ii) Medicare bad debts must not be written off to a contractual allowance account but must be charged to an expense account for uncollectible accounts.
(2) For cost reporting periods beginning on or after October 1, 2020:
(i) Bad debts, also known as “implicit price concessions,” charity, and
(ii) Medicare bad debts must not be written off to a contractual allowance account but must be recorded as an implicit price concession that results in a reduction in revenue.
(e) * * *
(2) The provider must be able to establish that reasonable collection efforts were made.
(i)
(A) A provider's collection effort or the effort of a collection agency acting on the provider's behalf, or both, to collect Medicare deductible or coinsurance amounts must consist of all of the following:
(
(
(
(
(
(
(
(
(
(
(
(
(
(B) A provider that uses a collection agency to perform its collection effort must do all of the following:
(
(
(
(ii)
(A) To determine a beneficiary to be an indigent non-dual eligible beneficiary, the provider—
(
(
(
(
(
(B) Once indigence is determined the bad debt may be deemed uncollectible without applying a collection effort under paragraph (e)(2)(i)(A) or (B) of this section.
(iii)
(A) When a State permits a Medicare provider's Medicaid enrollment for the purposes of processing a beneficiary's claim, to determine the State's liability for the beneficiary's Medicare cost sharing, the provider—
(
(
(
(
(
(B) When, through no fault of the provider, a provider does not receive a Medicaid remittance advice because the State does not permit a Medicare provider's Medicaid enrollment for the purposes of processing a beneficiary's claim, or because the State does not generate a Medicaid remittance advice, the provider—
(
(
(
(
(
(
(f)
(1) Any payment on the account made by the beneficiary or a responsible party, after the write-off date but before the end of the cost reporting period, must be used to reduce the final bad debt for the account claimed in that cost report.
(2) In some cases an amount written off as a bad debt and reimbursed by the program in a prior cost reporting period may be recovered in a subsequent period.
(i) In situations described in this paragraph (f)(2), the recovered amount must be used to reduce the provider's reimbursable costs in the period in which the amount is recovered.
(ii) The amount of reduction in the period of recovery (as specified in paragraph (f)(2)(i) of this section) must not exceed the actual amount reimbursed by the program for the related bad debt in the applicable prior cost reporting period.
An additional payment is made to a skilled nursing facility in accordance with § 476.78 of this chapter for the costs of sending requested patient records to the QIO in electronic format, by facsimile, or by photocopying and mailing.
42 U.S.C. 300e, 300e-5, 300e-91302 and 1395hh), and 31 U.S.C. 9701.
(g)
42 U.S.C. 1302 and 1395hh.
The revisions and additions read as follows:
(b) * * *
(2) * * *
(ii) Except if granted a waiver as described in paragraph (d) of this section, send secure transmission of an electronic version of each requested patient record to the QIO.
(A) Providers and practitioners must deliver electronic versions of patient records within 14 calendar days of the request.
(B) A QIO is authorized to require the receipt of the patient records earlier than the 14-day timeframe if the QIO makes a preliminary determination that the review involves a potential gross and flagrant or substantial violation as specified in part 1004 of this title and circumstances warrant earlier receipt of the patient records.
(C) A practitioner's or provider's failure to comply with the request for patient records within the established timeframe may result in the QIO taking action in accordance with § 476.90.
(c)
(d)
(i) For providers that are required to execute a written agreement with the QIO, a request for a waiver must be made during execution of the written agreement with the QIO.
(ii) Providers that are required to execute a written agreement with the QIO must request a waiver by notifying the QIO that they lack the capability to submit patient records in electronic format, if their lack of capability arises after the written agreement is executed.
(iii) Upon approval of the waiver, the waiver becomes part of the written agreement with the QIO.
(iv) A provider with an approved waiver may submit patient records by facsimile or by photocopying and mailing to the QIO.
(v) A provider with an approved waiver may be reimbursed by the QIO for patient records submitted by facsimile or by photocopying and mailing in accordance with paragraph (e)(2) of this section.
(vi) A QIO may not reimburse for any patient record submitted to the QIO by
(2) Providers and practitioners that are not required to execute a written agreement with the QIO may request a waiver to be exempted from submitting patient records in an electronic format.
(i) Such providers and practitioners may request a waiver by notifying the QIO that they lack the capability to submit patient records in electronic format.
(ii) Upon approval of the waiver, a provider or practitioner may submit patient records by facsimile or by photocopying and mailing to the QIO.
(iii) Providers and practitioners with approved waivers may be reimbursed by the QIO for patient records submitted by facsimile or by photocopying and mailing in accordance with paragraph (e)(2) of this section.
(iv) A QIO may not reimburse for any patient records submitted to the QIO by facsimile or by photocopying and mailing, if the provider or practitioner does not have an approved waiver.
(e)
(2) A QIO may reimburse a provider or practitioner for requested patient records submitted in an electronic format, at the rate of $3.00 per patient record.
(3) For a provider or practitioner that has an approved waiver under paragraph (d) of this section, a QIO may reimburse the provider or practitioner for requested records submitted by—
(i) Facsimile at the rate of $0.15 per page; or
(ii) Photocopying and mailing at the rate of $0.15 per page, plus the cost of first class postage.
(4) A QIO may only reimburse a provider or practitioner once for each patient record submitted, per request, even if a patient record is submitted using multiple formats, in fragments, or more than once in response to a single request by the QIO.
(f)
42 U.S.C. 1302 and 1395hh.
(d)(1) When submitting patient records to the QIO under this section, the institution or practitioner must do so consistent with the requirements in § 476.78(c) and (d) of this chapter.
(2) Reimbursement to an institution or practitioner for the cost of providing patient records is paid in accordance with § 476.78(e) of this chapter.
42 U.S.C. 1302 and 1395hh.
An additional payment is made to a home health agency in accordance with § 476.78 of this chapter for the costs of sending requested patient records to the QIO in electronic format, by facsimile, or by photocopying and mailing.
42 U.S.C. 1302 and 1395hh.
(2) * * *
(vi) The following are applicable for 2022:
(A) If an eligible hospital has not successfully demonstrated it is a meaningful EHR user in a prior year, the EHR reporting period is any continuous 90-day period within CY 2022 and applies for the FY 2023 and 2024 payment adjustment years. For the FY 2023 payment adjustment year, the EHR reporting period must end before and the eligible hospital must successfully register for and attest to meaningful use no later than October 1, 2022.
(B) If in a prior year an eligible hospital has successfully demonstrated it is a meaningful EHR user, the EHR reporting period is any continuous 90-day period within CY 2022 and applies for the FY 2024 payment adjustment year.
(3) * * *
(vi) The following are applicable for 2022:
(A) If a CAH has not successfully demonstrated it is a meaningful EHR user in a prior year, the EHR reporting period is any continuous 90-day period within CY 2022 and applies for the FY 2022 payment adjustment year.
(B) If in a prior year a CAH has successfully demonstrated it is a meaningful EHR user, the EHR reporting period is any continuous 90-day period within CY 2022 and applies for the FY 2022 payment adjustment year.
(e) * * *
(5) * * *
(iii) * * *
(B)
(6) * * *
(ii) * * *
(B)
(c) * * *
(5) * * *
(viii) * * *
(B)
(C)
(D)
The following Addendum and Appendixes will not appear in the Code of Federal Regulations.
In this Addendum, we are setting forth a description of the methods and data we used to determine the prospective payment rates for Medicare hospital inpatient operating costs and Medicare hospital inpatient capital-related costs for FY 2021 for acute care hospitals. We also are setting forth the rate-of-increase percentage for updating the target amounts for certain hospitals excluded from the IPPS for FY 2021. We note that, because certain hospitals excluded from the IPPS are paid on a reasonable cost basis subject to a rate-of-increase ceiling (and not by the IPPS), these hospitals are not affected by the figures for the standardized amounts, offsets, and budget neutrality factors. Therefore, in this final rule, we are setting forth the rate-of-increase percentage for updating the target amounts for certain hospitals excluded from the IPPS that will be effective for cost reporting periods beginning on or after October 1, 2020.
In addition, we are setting forth a description of the methods and data we used to determine the LTCH PPS standard Federal payment rate that will be applicable to Medicare LTCHs for FY 2021.
In general, except for SCHs and MDHs, for FY 2021, each hospital's payment per discharge under the IPPS is based on 100 percent of the Federal national rate, also known as the national adjusted standardized amount. This amount reflects the national average hospital cost per case from a base year, updated for inflation.
SCHs are paid based on whichever of the following rates yields the greatest aggregate payment: the Federal national rate (including, as discussed in section IV.G. of the preamble of this final rule, uncompensated care payments under section 1886(r)(2) of the Act); the updated hospital-specific rate based on FY 1982 costs per discharge; the updated hospital-specific rate based on FY 1987 costs per discharge; the updated hospital-specific rate based on FY 1996 costs per discharge; or the updated hospital-specific rate based on FY 2006 costs per discharge.
Under section 1886(d)(5)(G) of the Act, MDHs historically were paid based on the Federal national rate or, if higher, the Federal national rate plus 50 percent of the difference between the Federal national rate and the updated hospital-specific rate based on FY 1982 or FY 1987 costs per discharge, whichever was higher. However, section 5003(a)(1) of Public Law 109–171 extended and modified the MDH special payment provision that was previously set to expire on October 1, 2006, to include discharges occurring on or after October 1, 2006, but before October 1, 2011. Under section 5003(b) of Public Law 109–171, if the change results in an increase to an MDH's target amount, we must rebase an MDH's hospital specific rates based on its FY 2002 cost report. Section 5003(c) of Public Law 109–171 further required that MDHs be paid based on the Federal national rate or, if higher, the Federal national rate plus 75 percent of the difference between the Federal national rate and the updated hospital specific rate. Further, based on the provisions of section 5003(d) of Public Law 109–171, MDHs are no longer subject to the 12-percent cap on their DSH payment adjustment factor. Section 50205 of the Bipartisan Budget Act of 2018 extended the MDH program for discharges on or after October 1, 2017 through September 30, 2022.
As discussed in section IV.B. of the preamble of this final rule, in accordance with section 1886(d)(9)(E) of the Act as amended by section 601 of the Consolidated Appropriations Act, 2016 (Pub. L. 114–113), for FY 2021, subsection (d) Puerto Rico hospitals will continue to be paid based on 100 percent of the national standardized amount. Because Puerto Rico hospitals are paid 100 percent of the national standardized amount and are subject to the same national standardized amount as subsection (d) hospitals that receive the full update, our discussion later in this section does not include references to the Puerto Rico standardized amount or the Puerto Rico-specific wage index.
As discussed in section II. of this Addendum, as we proposed, we are making we changes in the determination of the prospective payment rates for Medicare inpatient operating costs for acute care hospitals for FY 2021. In section III. of this Addendum, we discuss our policy changes for determining the prospective payment rates for Medicare inpatient capital-related costs for FY 2021. In section IV. of this Addendum, we are setting forth the rate-of-increase percentage for determining the rate-of-increase limits for certain hospitals excluded from the IPPS for FY 2021. In section V. of this Addendum, we discuss policy changes for determining the LTCH PPS standard Federal rate for LTCHs paid under the LTCH PPS for FY 2021. The tables to which we refer in the preamble of this final rule are listed in section VI. of this Addendum and are available via the internet on the CMS website.
The basic methodology for determining prospective payment rates for hospital inpatient operating costs for acute care hospitals for FY 2005 and subsequent fiscal years is set forth under § 412.64. The basic methodology for determining the prospective payment rates for hospital inpatient operating costs for hospitals located in Puerto Rico for FY 2005 and subsequent fiscal years is set forth under §§ 412.211 and 412.212. Below we discuss the factors we used to use for determining the prospective payment rates for FY 2021.
In summary, the standardized amounts set forth in Tables 1A, 1B, and 1C that are listed and published in section VI. of this Addendum (and available via the internet on the CMS website) reflect—
• Equalization of the standardized amounts for urban and other areas at the level computed for large urban hospitals during FY 2004 and onward, as provided for under section 1886(d)(3)(A)(iv)(II) of the Act.
• The labor-related share that is applied to the standardized amounts to give the hospital the highest payment, as provided for under sections 1886(d)(3)(E) and 1886(d)(9)(C)(iv) of the Act. For FY 2021, depending on whether a hospital submits quality data under the rules established in accordance with section 1886(b)(3)(B)(viii) of the Act (hereafter referred to as a hospital that submits quality data) and is a meaningful EHR user under section 1886(b)(3)(B)(ix) of the Act (hereafter referred to as a hospital that is a meaningful EHR user), there are four possible applicable percentage increases that can be applied to the national standardized amount. We refer readers to section IV.B. of the preamble of this final rule for a complete discussion on the FY 2021 inpatient hospital update. The table that follows shows these four scenarios:
We note that section 1886(b)(3)(B)(viii) of the Act, which specifies the adjustment to the applicable percentage increase for “subsection (d)” hospitals that do not submit quality data under the rules established by the Secretary, is not applicable to hospitals located in Puerto Rico.
In addition, section 602 of Public Law 114–113 amended section 1886(n)(6)(B) of the Act to specify that Puerto Rico hospitals are eligible for incentive payments for the meaningful use of certified EHR technology, effective beginning FY 2016, and also to apply the adjustments to the applicable percentage increase under section 1886(b)(3)(B)(ix) of the Act to Puerto Rico hospitals that are not meaningful EHR users, effective FY 2022. Accordingly, because the provisions of section 1886(b)(3)(B)(ix) of the Act are not applicable to hospitals located in Puerto Rico until FY 2022, the adjustments under this provision are not applicable for FY 2021.
• An adjustment to the standardized amount to ensure budget neutrality for DRG recalibration and reclassification, as provided for under section 1886(d)(4)(C)(iii) of the Act.
• An adjustment to ensure the wage index and labor-related share changes (depending on the fiscal year) are budget neutral, as provided for under section 1886(d)(3)(E)(i) of the Act (as discussed in the FY 2006 IPPS final rule (70 FR 47395) and the FY 2010 IPPS final rule (74 FR 44005). We note that section 1886(d)(3)(E)(i) of the Act requires that when we compute such budget neutrality, we assume that the provisions of section 1886(d)(3)(E)(ii) of the Act (requiring a 62-percent labor-related share in certain circumstances) had not been enacted.
• An adjustment to ensure the effects of geographic reclassification are budget neutral, as provided for under section 1886(d)(8)(D) of the Act, by removing the FY 2020 budget neutrality factor and applying a revised factor.
• A positive adjustment of 0.5 percent in FYs 2019 through 2023 as required under section 414 of the MACRA.
• An adjustment to ensure the effects of the Rural Community Hospital Demonstration program required under section 410A of Public Law 108–173 (as amended by sections 3123 and 10313 of Public Law 111–148, which extended the demonstration program for an additional 5 years and section 15003 of Public Law 114–255), are budget neutral as required under section 410A(c)(2) of Public Law 108–173.
• Beginning with FY 2021, as we proposed, we applied an adjustment to ensure the effects of the reasonable cost based payment for allogeneic hematopoietic stem cell acquisition costs under section 108 of the Further Consolidated Appropriations Act, 2020 (Pub. L. 116–94), are budget neutral as required under section 108 of Public Law 116–94.
• An adjustment to the standardized amount to implement in a budget neutral manner the increase in the wage index values for hospitals with a wage index value below the 25th percentile wage index value across all hospitals (as described in section III.N. of the preamble of this final rule).
• As discussed in this section and in section III.2.d of the preamble of this final rule, an adjustment to the standardized amount (using our exceptions and adjustments authority under section 1886(d)(5)(I)(i) of the Act) to implement in a budget neutral manner our transition for hospitals negatively impacted due to changes to the wage index (including the implementation of the revised OMB market labor delineations). We refer reader to section III.2.d. of the preamble of this final rule, for a detailed discussion.
• An adjustment to remove the FY 2020 outlier offset and apply an offset for FY 2021, as provided for in section 1886(d)(3)(B) of the Act.
For FY 2021, consistent with current law, as we proposed, we applied the rural floor budget neutrality adjustment to hospital wage indexes. Also, consistent with section 3141 of the Affordable Care Act, instead of applying a State-level rural floor budget neutrality adjustment to the wage index, we applied a uniform, national budget neutrality adjustment to the FY 2021 wage index for the rural floor, as we proposed.
In general, the national standardized amount is based on per discharge averages of adjusted hospital costs from a base period (section 1886(d)(2)(A) of the Act), updated and otherwise adjusted in accordance with the provisions of section 1886(d) of the Act. The September 1, 1983 interim final rule (48 FR 39763) contained a detailed explanation of how base-year cost data (from cost reporting periods ending during FY 1981) were established for urban and rural hospitals in the initial development of standardized amounts for the IPPS.
Sections 1886(d)(2)(B) and 1886(d)(2)(C) of the Act require us to update base-year per discharge costs for FY 1984 and then standardize the cost data in order to remove the effects of certain sources of cost variations among hospitals. These effects include case-mix, differences in area wage levels, cost-of-living adjustments for Alaska and Hawaii, IME costs, and costs to hospitals serving a disproportionate share of low-income patients.
For FY 2021, as we proposed, we are continuing to use the national labor-related and nonlabor-related shares (which are based on the 2014-based hospital market basket) that were used in FY 2020. Specifically, under section 1886(d)(3)(E) of the Act, the Secretary estimates, from time to time, the proportion of payments that are labor-related and adjusts the proportion (as estimated by the Secretary from time to time) of hospitals' costs which are attributable to wages and wage-related costs of the DRG prospective payment rates. We refer to the proportion of hospitals' costs that are attributable to wages and wage-related costs as the “labor-related share.” For FY 2021, as discussed in section III. of the preamble of this final rule, as we proposed, we are continuing to use a labor-related share of 68.3 percent for the national standardized amounts for all IPPS hospitals (including hospitals in Puerto Rico) that have a wage index value that is greater than 1.0000. Consistent with section 1886(d)(3)(E) of the Act, as we proposed, we applied the wage index to a labor-related share of 62
The standardized amounts for operating costs appear in Tables 1A, 1B, and 1C that are listed and published in section VI. of the Addendum to this final rule and are available via the internet on the CMS website.
Section 1886(d)(3)(A)(iv)(II) of the Act requires that, beginning with FY 2004 and thereafter, an equal standardized amount be computed for all hospitals at the level computed for large urban hospitals during FY 2003, updated by the applicable percentage update. Accordingly, as we proposed, we calculated the FY 2021 national average standardized amount irrespective of whether a hospital is located in an urban or rural location.
Section 1886(b)(3)(B) of the Act specifies the applicable percentage increase used to update the standardized amount for payment for inpatient hospital operating costs. We note that, in compliance with section 404 of the MMA, as we proposed, we used the 2014-based IPPS operating and capital market baskets for FY 2021. As discussed in section IV.B. of the preamble of this final rule, in accordance with section 1886(b)(3)(B) of the Act, as amended by section 3401(a) of the Affordable Care Act, as we proposed, we reduced the FY 2021 applicable percentage increase (which for this final rule is based on IGI's second quarter 2020 forecast of the 2014-based IPPS market basket) by the MFP adjustment, as discussed elsewhere in this final rule.
Based on IGI's second quarter 2020 forecast of the hospital market basket increase (as discussed in Appendix B of this final rule), the forecast of the hospital market basket increase for FY 2021 for this final rule is 2.4 percent. As discussed earlier, for FY 2021, depending on whether a hospital submits quality data under the rules established in accordance with section 1886(b)(3)(B)(viii) of the Act and is a meaningful EHR user under section 1886(b)(3)(B)(ix) of the Act, there are four possible applicable percentage increases that can be applied to the standardized amount. We refer readers to section IV.B. of the preamble of this final rule for a complete discussion on the FY 2021 inpatient hospital update to the standardized amount. We also refer readers to the previous table for the four possible applicable percentage increases that would be applied to update the national standardized amount. The standardized amounts shown in Tables 1A through 1C that are published in section VI. of this Addendum and that are available via the internet on the CMS website reflect these differential amounts.
Although the update factors for FY 2021 are set by law, we are required by section 1886(e)(4) of the Act to recommend, taking into account MedPAC's recommendations, appropriate update factors for FY 2021 for both IPPS hospitals and hospitals and hospital units excluded from the IPPS. Section 1886(e)(5)(A) of the Act requires that we publish our recommendations in the
The methodology we used to calculate the FY 2021 standardized amount is as follows:
• To ensure we are only including hospitals paid under the IPPS in the calculation of the standardized amount, we applied the following inclusion and exclusion criteria: Include hospitals whose last four digits fall between 0001 and 0879 (section 2779A1 of Chapter 2 of the State Operations Manual on the CMS website at:
• As in the past, we adjusted the FY 2021 standardized amount to remove the effects of the FY 2020 geographic reclassifications and outlier payments before applying the FY 2021 updates. We then applied budget neutrality offsets for outliers and geographic reclassifications to the standardized amount based on FY 2021 payment policies.
• We do not remove the prior year's budget neutrality adjustments for reclassification and recalibration of the DRG relative weights and for updated wage data because, in accordance with sections 1886(d)(4)(C)(iii) and 1886(d)(3)(E) of the Act, estimated aggregate payments after updates in the DRG relative weights and wage index should equal estimated aggregate payments prior to the changes. If we removed the prior year's adjustment, we would not satisfy these conditions.
Budget neutrality is determined by comparing aggregate IPPS payments before and after making changes that are required to be budget neutral (for example, changes to MS–DRG classifications, recalibration of the MS–DRG relative weights, updates to the wage index, and different geographic reclassifications). We include outlier payments in the simulations because they may be affected by changes in these parameters.
• Consistent with our methodology established in the FY 2011 IPPS/LTCH PPS final rule (75 FR 50422 through 50433), because IME Medicare Advantage payments are made to IPPS hospitals under section 1886(d) of the Act, we believe these payments must be part of these budget neutrality calculations. However, we note that it is not necessary to include Medicare Advantage IME payments in the outlier threshold calculation or the outlier offset to the standardized amount because the statute requires that outlier payments be not less than 5 percent nor more than 6 percent of total “operating DRG payments,” which does not include IME and DSH payments. We refer readers to the FY 2011 IPPS/LTCH PPS final rule for a complete discussion on our methodology of identifying and adding the total Medicare Advantage IME payment amount to the budget neutrality adjustments.
• Consistent with the methodology in the FY 2012 IPPS/LTCH PPS final rule, in order to ensure that we capture only fee-for-service claims, we are only including claims with a “Claim Type” of 60 (which is a field on the MedPAR file that indicates a claim is an FFS claim).
• Consistent with our methodology established in the FY 2017 IPPS/LTCH PPS final rule (81 FR 57277), in order to further ensure that we capture only FFS claims, we are excluding claims with a “GHOPAID” indicator of 1 (which is a field on the MedPAR file that indicates a claim is not an FFS claim and is paid by a Group Health Organization).
• Consistent with our methodology established in the FY 2011 IPPS/LTCH PPS final rule (75 FR 50422 through 50423), we examine the MedPAR file and remove pharmacy charges for anti-hemophilic blood factor (which are paid separately under the IPPS) with an indicator of “3” for blood clotting with a revenue code of “0636” from the covered charge field for the budget neutrality adjustments. We also remove organ acquisition charges from the covered charge field for the budget neutrality adjustments because organ acquisition is a pass-through payment not paid under the IPPS.
• The participation of hospitals under the BPCI (Bundled Payments for Care Improvement) Advanced model started on October 1, 2018. The BPCI Advanced model, tested under the authority of section 3021 of the Affordable Care Act (codified at section 1115A of the Act), is comprised of a single
For FY 2021, consistent with how we treated hospitals that participated in the BPCI Advanced Model in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42620), as we proposed, we are including all applicable data from subsection (d) hospitals participating in the BPCI Advanced model in our IPPS payment modeling and ratesetting calculations. We believe it is appropriate to include all applicable data from the subsection (d) hospitals participating in the BPCI Advanced model in our IPPS payment modeling and ratesetting calculations because these hospitals are still receiving IPPS payments under section 1886(d) of the Act. For the same reasons, as we also proposed, we included all applicable data from subsection (d) hospitals participating in the Comprehensive Care for Joint Replacement (CJR) Model in our IPPS payment modeling and ratesetting calculations.
• Consistent with our methodology established in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53687 through 53688), we believe that it is appropriate to include adjustments for the Hospital Readmissions Reduction Program and the Hospital VBP Program (established under the Affordable Care Act) within our budget neutrality calculations.
Both the hospital readmissions payment adjustment (reduction) and the hospital VBP payment adjustment (redistribution) are applied on a claim-by-claim basis by adjusting, as applicable, the base-operating DRG payment amount for individual subsection (d) hospitals, which affects the overall sum of aggregate payments on each side of the comparison within the budget neutrality calculations.
In order to properly determine aggregate payments on each side of the comparison, consistent with the approach we have taken in prior years, for FY 2021, as we proposed, we are continuing to apply a proxy based on the prior fiscal year hospital readmissions payment adjustment (for FY 2021 this would be FY 2020 final adjustment factors from Table 15 of the FY 2020 IPPS/LTCH final rule) and a proxy based on the prior fiscal year hospital VBP payment adjustment (for FY 2021 this would be FY 2020 final adjustment factors from Table 16B of the FY 2020 IPPS/LTCH final rule) on each side of the comparison, consistent with the methodology that we adopted in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53687 through 53688). That is, as we proposed, we applied a proxy readmissions payment adjustment factor and a proxy hospital VBP payment adjustment factor from the prior final rule on both sides of our comparison of aggregate payments when determining all budget neutrality factors described in section II.A.4. of this Addendum.
• The Affordable Care Act also established section 1886(r) of the Act, which modifies the methodology for computing the Medicare DSH payment adjustment beginning in FY 2014. Beginning in FY 2014, IPPS hospitals receiving Medicare DSH payment adjustments receive an empirically justified Medicare DSH payment equal to 25 percent of the amount that would previously have been received under the statutory formula set forth under section 1886(d)(5)(F) of the Act governing the Medicare DSH payment adjustment. In accordance with section 1886(r)(2) of the Act, the remaining amount, equal to an estimate of 75 percent of what otherwise would have been paid as Medicare DSH payments, reduced to reflect changes in the percentage of individuals who are uninsured and any additional statutory adjustment, will be available to make additional payments to Medicare DSH hospitals based on their share of the total amount of uncompensated care reported by Medicare DSH hospitals for a given time period. In order to properly determine aggregate payments on each side of the comparison for budget neutrality, prior to FY 2014, we included estimated Medicare DSH payments on both sides of our comparison of aggregate payments when determining all budget neutrality factors described in section II.A.4. of this Addendum.
To do this for FY 2021 (as we did for the last 7 fiscal years), as we proposed, we included estimated empirically justified Medicare DSH payments that will be paid in accordance with section 1886(r)(1) of the Act and estimates of the additional uncompensated care payments made to hospitals receiving Medicare DSH payment adjustments as described by section 1886(r)(2) of the Act. That is, we considered estimated empirically justified Medicare DSH payments at 25 percent of what would otherwise have been paid, and also the estimated additional uncompensated care payments for hospitals receiving Medicare DSH payment adjustments on both sides of our comparison of aggregate payments when determining all budget neutrality factors described in section II.A.4. of this Addendum.
• When calculating total payments for budget neutrality, to determine total payments for SCHs, we model total hospital-specific rate payments and total Federal rate payments and then include whichever one of the total payments is greater. As discussed in section IV.G. of the preamble to this final rule and later in this section, we are continuing to use the FY 2014 finalized methodology under which we take into consideration uncompensated care payments in the comparison of payments under the Federal rate and the hospital-specific rate for SCHs. Therefore, we included estimated uncompensated care payments in this comparison.
Similarly, for MDHs, as discussed in section IV.G. of the preamble of this final rule, when computing payments under the Federal national rate plus 75 percent of the difference between the payments under the Federal national rate and the payments under the updated hospital-specific rate, as we proposed, we continued to take into consideration uncompensated care payments in the computation of payments under the Federal rate and the hospital-specific rate for MDHs.
• As we proposed, we included an adjustment to the standardized amount for those hospitals that are not meaningful EHR users in our modeling of aggregate payments for budget neutrality for FY 2021. Similar to FY 2020, we are including this adjustment based on data on the prior year's performance. Payments for hospitals will be estimated based on the applicable standardized amount in Tables 1A and 1B for discharges occurring in FY 2021.
• In our determination of all budget neutrality factors described in section II.A.4. of this Addendum, we used transfer-adjusted discharges. Specifically, we calculated the transfer-adjusted discharges using the statutory expansion of the postacute care transfer policy to include discharges to hospice care by a hospice program as discussed in section IV.A.2.b. of the preamble of this final rule.
We finally note that the wage index value is calculated and assigned to a hospital based on the hospital's labor market area. Under section 1886(d)(3)(E) of the Act, beginning with FY 2005, we delineate hospital labor market areas based on the Core-Based Statistical Areas (CBSAs) established by the Office of Management and Budget (OMB). The current statistical areas used in FY 2020 are based on OMB standards published on February 28, 2013 (79 FR 49951) and Census 2010 data and Census Bureau population estimates for 2014 and 2015 (OMB Bulletin No. 17–01). As stated in section II.D.2. of the preamble to this final rule, 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. 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
In section III.A.2. of the preamble to this final rule, as we proposed, we are implementing the revised OMB delineations as described in the September 14, 2018 OMB Bulletin No. 18–04, effective October 1, 2020
Section 1886(d)(4)(C)(iii) of the Act specifies that, beginning in FY 1991, the annual DRG reclassification and recalibration of the relative weights must be made in a manner that ensures that aggregate payments to hospitals are not affected. As discussed in section II.G. of the preamble of this rule, we normalized the recalibrated MS–DRG relative weights by an adjustment factor so that the average case relative weight after recalibration is equal to the average case relative weight prior to recalibration. However, equating the average case relative weight after recalibration to the average case relative weight before recalibration does not necessarily achieve budget neutrality with respect to aggregate payments to hospitals because payments to hospitals are affected by factors other than average case relative weight. Therefore, as we have done in past years, as we proposed, we are making a budget neutrality adjustment to ensure that the requirement of section 1886(d)(4)(C)(iii) of the Act is met.
For FY 2021, to comply with the requirement that MS–DRG reclassification and recalibration of the relative weights be budget neutral for the standardized amount and the hospital-specific rates, we used FY 2019 discharge data to simulate payments and compared the following:
• Aggregate payments using the FY 2020 labor-related share percentages, the revised OMB labor market area delineations for FY 2021, the FY 2020 relative weights, and the FY 2020 pre-reclassified wage data, and applied the FY 2021 hospital readmissions payment adjustments and estimated FY 2021 hospital VBP payment adjustments; and
• Aggregate payments using the FY 2020 labor-related share percentages, the revised OMB labor market area delineations for FY 2021, the FY 2021 relative weights, and the FY 2020 pre-reclassified wage data, and applied the FY 2021 hospital readmissions payment adjustments and estimated FY 2021 hospital VBP payment adjustments applied previously. (We note that these FY 2021 relative weights reflect our temporary measure for FY 2021, as discussed in section II.G. of the preamble of this final rule, to set the FY 2021 relative weight for MS–DRG 215 equal to the average of the FY 2020 relative weight and the otherwise applicable FY 2021 relative weight). Because this payment simulation uses the FY 2021 relative weights, consistent with our policy in section IV.I. of the preamble to this final rule, we applied the adjustor for certain CAR T-cell therapy cases in our simulation of these payments. (As discussed in section II.E.2.b. of the preamble of this final rule, we also calculated an adjustment to account for certain CAR T-cell therapy cases in calculating the FY 2021 relative weights and for purposes of budget neutrality and outlier simulations.) We note that because the simulations of payments for all of the budget neutrality factors discussed in this section also use the FY 2021 relative weights, as we proposed, we applied the adjustor for certain CAR T-cell therapy cases in all simulations of payments for the budget neutrality factors discussed later in this section. We refer the reader to section IV.I. of the preamble of this final rule for a complete discussion on the adjustor for certain CAR T-cell therapy cases and to section II.E.2.b. of the preamble of this final rule, for a complete discussion of the adjustment to the FY 2021 relative weights to account for certain CAR T-cell therapy cases.
Based on this comparison, we computed a budget neutrality adjustment factor and applied this factor to the standardized amount. As discussed in section IV. of this Addendum, as we proposed, we applied the MS–DRG reclassification and recalibration budget neutrality factor to the hospital-specific rates that are effective for cost reporting periods beginning on or after October 1, 2020. Please see the table later in this section setting forth each of the FY 2021 budget neutrality factors.
Section 1886(d)(3)(E)(i) of the Act requires us to update the hospital wage index on an annual basis beginning October 1, 1993. This provision also requires us to make any updates or adjustments to the wage index in a manner that ensures that aggregate payments to hospitals are not affected by the change in the wage index. Section 1886(d)(3)(E)(i) of the Act requires that we implement the wage index adjustment in a budget neutral manner. However, section 1886(d)(3)(E)(ii) of the Act sets the labor-related share at 62 percent for hospitals with a wage index less than or equal to 1.0000, and section 1886(d)(3)(E)(i) of the Act provides that the Secretary shall calculate the budget neutrality adjustment for the adjustments or updates made under that provision as if section 1886(d)(3)(E)(ii) of the Act had not been enacted. In other words, this section of the statute requires that we implement the updates to the wage index in a budget neutral manner, but that our budget neutrality adjustment should not take into account the requirement that we set the labor-related share for hospitals with wage indexes less than or equal to 1.0000 at the more advantageous level of 62 percent. Therefore, for purposes of this budget neutrality adjustment, section 1886(d)(3)(E)(i) of the Act prohibits us from taking into account the fact that hospitals with a wage index less than or equal to 1.0000 are paid using a labor-related share of 62 percent. Consistent with current policy, for FY 2021, as we proposed, we are adjusting 100 percent of the wage index factor for occupational mix. We describe the occupational mix adjustment in section III.E. of the preamble of this final rule.
To compute a budget neutrality adjustment factor for wage index and labor-related share percentage changes, we used FY 2019 discharge data to simulate payments and compared the following:
• Aggregate payments using the revised OMB labor market area delineations for FY 2021, the FY 2021 relative weights and the FY 2020 pre-reclassified wage indexes, applied the FY 2020 labor-related share of 68.3 percent to all hospitals (regardless of whether the hospital's wage index was above or below 1.0000), and applied the FY 2021 hospital readmissions payment adjustment and the estimated FY 2021 hospital VBP payment adjustment; and
• Aggregate payments using the revised OMB labor market area delineations for FY 2021, the FY 2021 relative weights and the FY 2021 pre-reclassified wage indexes, applied the labor-related share for FY 2021 of 68.3 percent to all hospitals (regardless of whether the hospital's wage index was above or below 1.0000), and applied the same FY 2021 hospital readmissions payment adjustments and estimated FY 2021 hospital VBP payment adjustments applied previously.
In addition, we applied the MS–DRG reclassification and recalibration budget neutrality adjustment factor (derived in the first step) to the payment rates that were used to simulate payments for this comparison of aggregate payments from FY 2020 to FY 2021. Based on this comparison, we computed a budget neutrality adjustment factor and applied this factor to the standardized amount for changes to the wage index. Please see the table later in this section for a summary of the FY 2021 budget neutrality factors.
Section 1886(d)(8)(B) of the Act provides that certain rural hospitals are deemed urban. In addition, section 1886(d)(10) of the Act provides for the reclassification of hospitals based on determinations by the MGCRB. Under section 1886(d)(10) of the Act, a hospital may be reclassified for purposes of the wage index.
Under section 1886(d)(8)(D) of the Act, the Secretary is required to adjust the standardized amount to ensure that aggregate payments under the IPPS after implementation of the provisions of sections 1886(d)(8)(B) and (C) and 1886(d)(10) of the Act are equal to the aggregate prospective payments that would have been made absent these provisions. We note, with regard to the requirement under section 1886(d)(8)(C)(iii) of the Act, as finalized in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42333 through 42336), we excluded the wage data of urban hospitals that have reclassified as rural under section 1886(d)(8)(E) of the Act (as implemented in § 412.103) from the calculation of “the wage index for rural areas in the State in which the county is located.” We refer the reader to the FY 2015 IPPS final rule (79 FR 50371 and 50372) for a complete discussion regarding the requirement of section 1886(d)(8)(C)(iii) of the Act. We further note that the wage index adjustments provided for under section 1886(d)(13) of the Act are not budget neutral. Section 1886(d)(13)(H) of the Act provides that any increase in a wage index under section 1886(d)(13) of the Act shall not be taken into account in applying any budget neutrality adjustment with respect to such index under section 1886(d)(8)(D) of the Act. To calculate the budget neutrality adjustment factor for FY 2021, we used FY 2019 discharge data to simulate payments and compared the following:
• Aggregate payments using the FY 2021 labor-related share percentages, the revised OMB labor market area delineations for FY 2021, the FY 2021 relative weights, and the FY 2021 wage data prior to any reclassifications under sections 1886(d)(8)(B) and (C) and 1886(d)(10) of the Act, and applied the FY 2021 hospital readmissions payment adjustments and the estimated FY 2021 hospital VBP payment adjustments; and
• Aggregate payments using the FY 2021 labor-related share percentages, the revised OMB labor market area delineations for FY 2021, the FY 2021 relative weights, and the FY 2021 wage data after such reclassifications, and applied the same FY 2021 hospital readmissions payment adjustments and the estimated FY 2021 hospital VBP payment adjustments applied previously.
We note that the reclassifications applied under the second simulation and comparison are those listed in Table 2 associated with this final rule, which is available via the internet on the CMS website. This table reflects reclassification crosswalks for FY 2021, and applies the policies explained in section III. of the preamble of this final rule. Based on this comparison, we computed a budget neutrality adjustment factor and applied this factor to the standardized amount to ensure that the effects of these provisions are budget neutral, consistent with the statute. Please see the table later in this section for a summary of the FY 2021 budget neutrality factors.
The FY 2021 budget neutrality adjustment factor was applied to the standardized amount after removing the effects of the FY 2020 budget neutrality adjustment factor. We note that the FY 2021 budget neutrality adjustment reflects FY 2021 wage index reclassifications approved by the MGCRB or the Administrator at the time of development of this final rule.
Under § 412.64(e)(4), we make an adjustment to the wage index to ensure that aggregate payments after implementation of the rural floor under section 4410 of the BBA (Pub. L. 105–33) is equal to the aggregate prospective payments that would have been made in the absence of this provision. Consistent with section 3141 of the Affordable Care Act and as discussed in section III.G. of the preamble of this final rule and codified at § 412.64(e)(4)(ii), the budget neutrality adjustment for the rural floor is a national adjustment to the wage index. We note, as finalized in the FY 2020 IPPS/LTCH final rule (84 FR 42332 through 42336), for FY 2021 we are calculating the rural floor without including the wage data of urban hospitals that have reclassified as rural under section 1886(d)(8)(E) of the Act (as implemented in § 412.103).
Similar to our calculation in the FY 2015 IPPS/LTCH PPS final rule (79 FR 50369 through 50370), for FY 2021, as we proposed, we calculated a national rural Puerto Rico wage index. Because there are no rural Puerto Rico hospitals with established wage data, our calculation of the FY 2021 rural Puerto Rico wage index is based on the policy adopted in the FY 2008 IPPS final rule with comment period (72 FR 47323). That is, we use the unweighted average of the wage indexes from all CBSAs (urban areas) that are contiguous (share a border with) to the rural counties to compute the rural floor (72 FR 47323; 76 FR 51594). Under the OMB labor market area delineations, except for Arecibo, Puerto Rico (CBSA 11640), all other Puerto Rico urban areas are contiguous to a rural area. Therefore, based on our existing policy, the FY 2021 rural Puerto Rico wage index is calculated based on the average of the FY 2021 wage indexes for the following urban areas: Aguadilla-Isabela, PR (CBSA 10380); Guayama, PR (CBSA 25020); Mayaguez, PR (CBSA 32420); Ponce, PR (CBSA 38660); San German, PR (CBSA 41900); and San Juan-Carolina-Caguas, PR (CBSA 41980).
To calculate the national rural floor budget neutrality adjustment factor, we used FY 2019 discharge data to simulate payments, the revised OMB labor market area delineations for FY 2021 and the post-reclassified national wage indexes and compared the following:
• National simulated payments without the rural floor; and
• National simulated payments with the rural floor.
Based on this comparison, we determined a national rural floor budget neutrality adjustment factor. The national adjustment was applied to the national wage indexes to produce rural floor budget neutral wage indexes. Please see the table later in this section for a summary of the FY 2021 budget neutrality factors.
In section IV.O. of the preamble of this final rule, we discuss the Rural Community Hospital Demonstration program, which was originally authorized for a 5-year period by section 410A of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108–173), and extended for another 5-year period by sections 3123 and 10313 of the Affordable Care Act (Pub. L. 111–148). Subsequently, section 15003 of the 21st Century Cures Act (Pub. L. 114–255), enacted December 13, 2016, amended section 410A of Public Law 108–173 to require a 10-year extension period (in place of the 5-year extension required by the Affordable Care Act, as further discussed later in this section). We make an adjustment to the standardized amount to ensure the effects of the Rural Community Hospital Demonstration program are budget neutral as required under section 410A(c)(2) of Public Law 108–173. We refer readers to section IV.O. of the preamble of this final rule for complete details regarding the Rural Community Hospital Demonstration.
With regard to budget neutrality, as mentioned earlier, we make an adjustment to the standardized amount to ensure the effects of the Rural Community Hospital Demonstration are budget neutral, as required under section 410A(c)(2) of Public Law 108–173. For FY 2021, based on the latest data for this final rule, the total amount that we are applying to make an adjustment to the standardized amounts to ensure the effects of the Rural Community Hospital Demonstration program are budget neutral is $39,825,670.Accordingly, using the most recent data available to account for the estimated costs of the demonstration program, for FY 2021, we computed a factor for the Rural Community Hospital Demonstration budget neutrality adjustment that will be applied to the standardized amount. Please see the table later in this section for a summary of the FY 2021 budget neutrality factors. We refer readers to section IV.O. of the preamble of this final rule on complete details regarding the calculation of the amount we are applying to make an adjustment to the standardized amounts.
In section IV.H. of the preamble of this final rule, we discuss the reasonable cost based payment for allogeneic hematopoietic stem cell acquisition costs beginning in FY 2021. Section 108 of the Further Consolidated Appropriations Act, 2020 requires that, for cost reporting periods beginning on or after October 1, 2020, in the case of a subsection (d) hospital that furnishes an allogeneic hematopoietic stem cell transplant, payment to such hospital for
As discussed in section III.G.3. of the preamble of this final rule, we are continuing the wage index policy finalized in the FY 2020 IPPS/LTCH PPS final rule to address wage index disparities by increasing the wage index values for hospitals with a wage index value below the 25th percentile wage index value across all hospitals (the low wage index hospital policy). As discussed in the FY 2020 IPPS/LTCH final rule (84 FR 42332), consistent with our current methodology for implementing wage index budget neutrality under section 1886(d)(3)(E) of the Act, we are making a budget neutrality adjustment to the national standardized amount for all hospitals so that the increase in the wage index for hospitals with a wage index below the 25th percentile wage index, is implemented in a budget neutral manner.
To calculate this budget neutrality adjustment factor for FY 2021, we used FY 2019 discharge data to simulate payments and compared the following:
• Aggregate payments using the FY 2021 labor-related share percentages, the revised OMB labor market area delineations for FY 2021, the FY 2021 relative weights, and the FY 2021 wage index for each hospital before adjusting the wage indexes under the low wage index hospital policy but without the 5 percent cap, and applied the FY 2021 hospital readmissions payment adjustments and the estimated FY 2021 hospital VBP payment adjustments, and the operating outlier reconciliation adjusted outlier percentage discussed later in this section; and
• Aggregate payments using the FY 2021 labor-related share percentages, the revised OMB labor market area delineations for FY 2021, the FY 2021 relative weights, and the FY 2021 wage index for each hospital after adjusting the wage indexes under the low wage index hospital policy but without the 5 percent cap, and applied the same FY 2021 hospital readmissions payment adjustments and the estimated FY 2021 hospital VBP payment adjustments applied previously, and the operating outlier reconciliation adjusted outlier percentage discussed later in this section.
This FY 2021 budget neutrality adjustment factor was applied to the standardized amount. Please see the table later in this section setting forth each of the FY 2021 budget neutrality factors.
For a discussion of public comments on this policy, we refer the reader to section III.G.3. of the preamble of this final rule.
In section III.A.2. of the preamble to this final rule, as we proposed, we are implementing 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. As we further stated in section III.A.2. of the preamble of this final rule, while the revised OMB delineations in the OMB bulletin (OMB Bulletin 18–04) are not based on new census data, there were some material changes in the OMB delineations. In accordance with our past practice of implementing transition policies to help mitigate negative impacts on hospitals of certain wage index policies, we stated that, in adopting the revised OMB delineations, it would be appropriate to implement a transition policy since, as mentioned previously, some of these revisions are material, and may negatively impact payments to hospitals. As we stated in section III.A.2. of the preamble of this final rule, we believe applying a 5-percent cap on any decrease in a hospital's wage index from the hospital's final wage index from the prior fiscal year, as we did for FY 2020, is an appropriate transition for FY 2021 for the revised OMB delineations. We refer the reader to section III.A.2. of the preamble to this final rule for a complete discussion on the rationale of this transition.
For FY 2021, as we proposed, we are using our exceptions and adjustments authority under section 1886(d)(5)(I)(i) of the Act to apply a budget neutrality adjustment to the standardized amount so that our transition for hospitals negatively impacted is implemented in a budget neutral manner. We refer readers to section III.A.2. of the preamble of this final rule for a complete discussion regarding this policy. To calculate a transition budget neutrality adjustment factor for FY 2021, we used FY 2019 discharge data to simulate payments and compared the following:
• Aggregate payments without the 5-percent cap using the FY 2021 labor-related share percentages, the revised OMB labor market area delineations for FY 2021, the FY 2021 relative weights, the FY 2021 wage index for each hospital after adjusting the wage indexes under the low wage index hospital policy with the associated budget neutrality adjustment to the standardized amount, and applied the FY 2021 hospital readmissions payment adjustments and the estimated FY 2021 hospital VBP payment adjustments, and the operating outlier reconciliation adjusted outlier percentage; and
• Aggregate payments with the 5-percent cap using the FY 2021 labor-related share percentages, the revised OMB labor market area delineations for FY 2021, the FY 2021 relative weights, the FY 2021 wage index for each hospital after adjusting the wage indexes under the low wage index hospital policy with the associated budget neutrality adjustment to the standardized amount, and applied the same FY 2021 hospital readmissions payment adjustments and the estimated FY 2021 hospital VBP payment adjustments applied previously, and the operating outlier reconciliation adjusted outlier percentage.
This FY 2021 budget neutrality adjustment factor was applied to the standardized amount. Please see the table later in this section setting forth each of the FY 2021 budget neutrality factors.
For a discussion of the public comments on this policy, we refer the reader to section III.A.2.C. and d. of the preamble of this final rule.
We note, Table 2 associated with this final rule, which is available via the internet on the CMS website contains the wage index by provider before and after applying the low wage index hospital policy and the transition.
As stated in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56785), once the recoupment required under section 631 of the ATRA was complete, we had anticipated making a single positive adjustment in FY 2018 to offset the reductions required to recoup the $11 billion under section 631 of the ATRA. However, section 414 of the MACRA (which was enacted on April 16, 2015) replaced the single positive adjustment we intended to make in FY 2018 with a 0.5 percent positive adjustment for each of FYs 2018 through 2023. (As noted in the FY 2018 IPPS/LTCH PPS proposed and final rules, section 15005 of the 21st Century Cures Act (Pub. L. 114–255), which was enacted December 13, 2016, reduced the adjustment for FY 2018 from 0.5 percentage points to 0.4588 percentage points.) Therefore, for FY 2021, as we proposed, we are implementing the required +0.5 percent adjustment to the standardized amount. This is a permanent adjustment to the payment rates.
Section 1886(d)(5)(A) of the Act provides for payments in addition to the basic prospective payments for “outlier” cases involving extraordinarily high costs. To qualify for outlier payments, a case must have costs greater than the sum of the prospective payment rate for the MS–DRG, any IME and DSH payments, uncompensated care payments, any new technology add-on payments, and the “outlier threshold” or “fixed-loss” amount (a dollar amount by which the costs of a case must exceed payments in order to qualify for an outlier payment). We refer to the sum of the prospective payment rate for the MS–DRG, any IME and DSH payments, uncompensated care payments, any new technology add-on payments, and the outlier threshold as the outlier “fixed-loss cost threshold.” To determine whether the costs of a case exceed the fixed-loss cost threshold, a hospital's CCR is applied to the total covered charges for the case to convert the charges to estimated costs. Payments for eligible cases are then made based on a marginal cost factor, which is a percentage of the estimated costs above the fixed-loss cost threshold. The marginal cost factor for FY 2021 is 80 percent, or 90 percent for burn MS–DRGs 927, 928, 929, 933, 934 and 935. We have used a marginal cost factor of 90 percent since FY 1989 (54 FR 36479 through 36480) for designated burn DRGs as well as a marginal cost factor of 80 percent for all other DRGs since FY 1995 (59 FR 45367).
In accordance with section 1886(d)(5)(A)(iv) of the Act, outlier payments for any year are projected to be not less than 5 percent nor more than 6 percent of total operating DRG payments (which does not include IME and DSH payments) plus outlier payments. When setting the outlier threshold, we compute the percent target by dividing the total operating outlier payments by the total operating DRG payments plus outlier payments. As discussed in the next section, for FY 2021, as we proposed, we incorporated an estimate of outlier reconciliation when setting the outlier threshold. We do not include any other payments such as IME and DSH within the outlier target amount. Therefore, it is not necessary to include Medicare Advantage IME payments in the outlier threshold calculation. Section 1886(d)(3)(B) of the Act requires the Secretary to reduce the average standardized amount by a factor to account for the estimated proportion of total DRG payments made to outlier cases. More information on outlier payments may be found on the CMS website at:
The regulations in 42 CFR 412.84(i)(4) state that any outlier reconciliation at cost report settlement will be based on operating and capital cost-to-charge ratios (CCRs) calculated based on a ratio of costs to charges computed from the relevant cost report and charge data determined at the time the cost report coinciding with the discharge is settled. We have instructed MACs to identify for CMS any instances where: (1) A hospital's actual CCR for the cost reporting period fluctuates plus or minus 10 percentage points compared to the interim CCR used to calculate outlier payments when a bill is processed; and (2) the total outlier payments for the hospital exceeded $500,000.00 for that cost reporting period. If we determine that a hospital's outlier payments should be reconciled, we reconcile both operating and capital outlier payments. We refer readers to section 20.1.2.5 of Chapter 3 of the Medicare Claims Processing Manual (available on the CMS website at:
If the operating CCR of a hospital subject to outlier reconciliation is lower at cost report settlement compared to the operating CCR used for payment, the hospital will owe CMS money because it received an outlier overpayment at the time of claim payment. Conversely, if the operating CCR increases at cost report settlement compared to the operating CCR used for payment, CMS will owe the hospital money because the hospital outlier payments were underpaid.
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42623 through 42625), for FY 2021, we finalized a methodology to incorporate outlier reconciliation in the FY 2021 outlier fixed loss cost threshold. As discussed in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19592), we stated that rather than trying to predict which claims and/or hospitals may be subject to outlier reconciliation, we believe a methodology that incorporates an estimate of outlier reconciliation dollars based on actual outlier reconciliation amounts reported in historical cost reports would be a more feasible approach and provide a better estimate and predictor of outlier reconciliation for the upcoming fiscal year. We also stated that we believe the methodology addresses stakeholder's concerns on the impact of outlier reconciliation on the modeling of the outlier threshold. For a detailed discussion of additional background regarding outlier reconciliation, we refer the reader to the FY 2020 IPPS/LTCH PPS final rule.
Based on the methodology finalized in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42623 through 42625), for FY 2021, as we proposed, we are continuing to incorporate
As discussed in the FY 2020 IPPS/LTCH PPS final rule, for FY 2020, we used the historical outlier reconciliation amounts from the FY 2014 cost reports (cost reports with a begin date on or after October 1, 2013, and on or before September 30, 2014), which we believed would provide the most recent and complete available data to project the estimate of outlier reconciliation. We refer the reader to the FY 2020 IPPS/LTCH PPS final rule (84 FR 42623 through 42625) for a complete discussion on the use of the FY 2014 cost report data for purposes of projecting outlier payment reconciliations for the FY 2020 outlier threshold calculation.
In the FY 2020 IPPS/LTCH PPS final rule, we stated that the methodology for FY 2020 could advance by 1 year the cost reports used to determine the historical outlier reconciliation. In the proposed rule, to determine a projection of outlier payment reconciliations for the FY 2021 outlier threshold calculation, we proposed to advance the methodology by 1 year and use FY 2015 cost reports (cost reports with a begin date on or after October 1, 2014, and on or before September 30, 2015).
For FY 2021, we proposed to use the same methodology from FY 2020 to incorporate a projection of operating outlier payment reconciliations for the FY 2021 outlier threshold calculation. The following steps are the same as those finalized in the FY 2020 final rule but with updated data for FY 2021:
In the FY 2021 proposed rule, we used the December 2019 HCRIS extract of the cost report data to calculate the proposed percentage adjustment for outlier reconciliation. For the FY 2021 final rule, we proposed to use the latest quarterly HCRIS extract that is publically available at the time of the development of that rule which, for FY 2021, would be the March 2020 extract. Similar to the FY 2020 final rule, we stated that we might also consider the use of more recent data that may become available for purposes of projecting the estimate of operating outlier reconciliation used in the calculation of the final FY 2021 outlier threshold.
In the FY 2021 proposed rule, based on the December 2019 HCRIS, 16 hospitals had an outlier reconciliation amount recorded on Worksheet E, Part A, Line 2.01 for total operating outlier reconciliation dollars of negative $2,516,904 (Step 2). The total Federal operating payments based on the December 2019 HCRIS was $90,313,815,275 (Step 3). The ratio (Step 4) is a negative 0.002787 percent, which, when rounded to the second digit, is 0.00 percent. Therefore, for FY 2021, we proposed to incorporate a projection of outlier reconciliation dollars by targeting an outlier threshold at 5.10 percent [5.1 percent − (−.00 percent)].
When the percentage of operating outlier reconciliation dollars to total Federal operating payments rounds to a negative value (that is, when the aggregate amount of outlier reconciliation as a percent of total operating payments rounds to a negative percent), the effect is a decrease to the outlier threshold compared to an outlier threshold that is calculated without including this estimate of operating outlier reconciliation dollars. In section II.A.4.i.(2). of the Addendum to the proposed rule, we provided the FY 2021 outlier threshold as calculated for the proposed rule both with and without including this proposed percentage estimate of operating outlier reconciliation. However, we noted that for the proposed rule, the outlier threshold was the same with and without the percentage estimate, since the projection of outlier reconciliation rounded to zero.
As explained in the FY 2020 IPPS/LTCH PPS final rule, we proposed to continue to use a 5.1 percent target (or an outlier offset factor of 0.949) in calculating the outlier offset to the standardized amount. In the past, the outlier offset was six decimals because we targeted and set the threshold at 5.1 percent by adjusting the standardized amount by the outlier offset until operating outlier payments divided by total operating Federal payments plus operating outlier payments equaled approximately 5.1 percent (this approximation resulted in an offset beyond three decimals). However, under our methodology, we believe a three decimal offset of 0.949 reflecting 5.1 percent is appropriate rather than the unrounded six decimal offset that we have calculated for prior fiscal years. Specifically, as discussed in section II.A.5. of this Addendum, we proposed to determine an outlier adjustment by applying a factor to the standardized amount that accounts for the projected proportion of total estimated FY 2021 operating Federal payments paid as outliers. Our proposed modification to the outlier threshold methodology is designed to adjust the total estimated outlier payments for FY 2021 by incorporating the projection of negative outlier reconciliation. That is, under this proposal, total estimated outlier payments for FY 2021 would be the sum of the estimated FY 2021 outlier payments based on the claims data from the outlier model and the estimated FY 2021 total operating outlier reconciliation dollars. We stated that we believe the proposed methodology would more accurately estimate the outlier adjustment to the standardized amount by increasing the accuracy of the calculation of the total estimated FY 2021 operating Federal payments paid as outliers. In other words, the net effect of our outlier proposal to incorporate a projection for outlier reconciliation dollars into the threshold methodology would be that FY 2021 outlier payments (which included the proposed estimated recoupment percentage for FY 2021 of 0.00 percent) would be 5.1 percent of total operating Federal payments plus total outlier payments. Therefore, the proposed operating outlier offset to the standardized amount was 0.949 (1 − 0.051).
We invited public comment on our proposed methodology for projecting an estimate of outlier reconciliation and incorporating that estimate into the modeling for the fixed-loss cost outlier threshold for FY 2021.
After consideration of the comments received, and for the reasons discussed in the proposed rule and in this final rule, we are finalizing the methodology described previously for incorporating the outlier reconciliation in the outlier threshold calculation. Therefore, for this final rule we
We establish an outlier threshold that is applicable to both hospital inpatient operating costs and hospital inpatient capital related costs (58 FR 46348). Similar to the calculation of the adjustment to the standardized amount to account for the projected proportion of operating payments paid as outlier payments, as discussed in greater detail in section III.A.2. of this Addendum, we proposed to reduce the FY 2021 capital standard Federal rate by an adjustment factor to account for the projected proportion of capital IPPS payments paid as outliers. The regulations in 42 CFR 412.84(i)(4) state that any outlier reconciliation at cost report settlement will be based on operating and capital CCRs calculated based on a ratio of costs to charges computed from the relevant cost report and charge data determined at the time the cost report coinciding with the discharge is settled. As such, any reconciliation also applies to capital outlier payments.
For FY 2021, we proposed to use the same methodology from FY 2020 to adjust the FY 2021 capital standard Federal rate by an adjustment factor to account for the projected proportion of capital IPPS payments paid as outliers. Similar to FY 2020, as part of our proposal for FY 2021 to incorporate into the outlier model the total outlier reconciliation dollars from the most recent and most complete fiscal year cost report data, we also proposed to adjust our estimate of FY 2021 capital outlier payments to incorporate a projection of capital outlier reconciliation payments when determining the adjustment factor to be applied to the capital standard Federal rate to account for the projected proportion of capital IPPS payments paid as outliers. To do so, we proposed to use the following methodology, which generally parallels the methodology to incorporate a projection of operating outlier reconciliation payments for the FY 2021 outlier threshold calculation.
We have a unified outlier payment methodology that uses a shared threshold to identify outlier cases for both operating and capital payments. The difference stems from the fact that operating outlier payments are determined by first setting a “target” percentage of operating outlier payments relative to aggregate operating payments which produces the outlier threshold. Once the shared threshold is set, it is used to estimate the percentage of capital outlier payments to total capital payments based on that threshold. Because the threshold is already set based on the operating target, rather than adjusting the threshold (or operating target), we adjust the percentage of capital outlier to total capital payments to account for the estimated effect of capital outlier reconciliation payments. This percentage is adjusted by adding the capital outlier reconciliation percentage from Step 4 to the estimate of the percentage of capital outlier payments to total capital payments based on the shared threshold.) Because the aggregate capital outlier reconciliation dollars from Step 2 are negative, we stated that the estimate of capital outlier payments
Similarly, for the FY 2021 proposed rule, we used the December 2019 HCRIS extract of the cost report data to calculate the proposed percentage adjustment for outlier reconciliation. For the FY 2021 final rule, we proposed to use the latest quarterly HCRIS extract that is publically available at the time of the development of that rule which, for FY 2021, would be the March 2020 extract. As previously noted, we stated that we may also consider the use of more recent data that may become available for purposes of projecting the estimate of capital outlier reconciliation used in the calculation of the final FY 2021 adjustment to the FY 2021 capital standard Federal rate.
For the FY 2021 proposed rule, the estimated percentage of FY 2021 capital outlier payments otherwise determined using the shared outlier threshold was 5.42 percent (estimated capital outlier payments of $432,102,494 divided by (estimated capital outlier payments of $432,102,494 plus the estimated total capital Federal payment of $7,569,294,589)). Based on the December 2019 HCRIS, 16 hospitals had an outlier reconciliation amount recorded on Worksheet E, Part A, Line 93 for total capital outlier reconciliation dollars of negative $956,065 (Step 2). The total Federal capital payments based on the December 2019 HCRIS was $8,114,838,772 (Step 3) which results in a ratio (Step 4) of −0.01 percent. Therefore, for FY 2021, taking into account projected capital outlier reconciliation payments under our proposed methodology would decrease the estimated percentage of FY 2021 aggregate capital outlier payments by 0.01 percent.
As discussed in section III.A.2. of this Addendum, we proposed to incorporate the capital outlier reconciliation dollars from Step 5 when applying the outlier adjustment factor in determining the capital Federal rate based on the estimated percentage of capital outlier payments to total capital Federal rate payments for FY 2021.
We are invited public comment on our proposed methodology for projecting an estimate of capital outlier reconciliation and incorporating that estimate into the modeling of the estimate of FY 2021 capital outlier payments for purposes of determining the capital outlier adjustment factor.
We did not receive comments about the proposed capital outlier reconciliation methodology.
For the reasons discussed, we are finalizing the methodology for projecting an estimate of capital outlier reconciliation. Therefore, for this final rule we used the same steps as described in the proposed rule and this final rule to reduce the FY 2021 capital standard Federal rate by an adjustment factor to account for the projected proportion of capital IPPS payments paid as outliers.
For projecting the estimate of capital outlier reconciliation, similar to our projection of the estimate of operating outlier reconciliation, we are using cost report data of 17 hospitals from the March 2020 HCRIS supplemented for two hospitals for a total of 19 hospitals, which we believe will lend additional accuracy to the projection of estimated capital outlier reconciliation for FY 2021. Without the two additional reports, the step 4 unrounded value for capital outlier reconciliation would have been 0.0152, which rounds to 0.02. We note that a difference in the number of cost reports for the operating and capital outlier reconciliation projections is possible and may be due to new hospitals defined in the regulations at 42 CFR 412.300(b) that may receive capital cost-based payments (in lieu of Federal rate payments), and therefore would not receive capital outlier payments. As a result, capital outlier reconciliation is not applicable to such hospitals since there is no capital outlier payment.
The estimated percentage of FY 2021 capital outlier payments otherwise determined using the shared outlier threshold is 5.36 percent (estimated capital outlier payments of $429,431,834 divided by (estimated capital outlier payments of $429,431,834 plus the estimated total capital Federal payment of $7,577,697,269)). Based on the March 2020 HCRIS supplemented by the data for two additional providers, 19 hospitals had an outlier reconciliation amount recorded on Worksheet E, Part A, Line 93 for total capital outlier reconciliation dollars of negative $1,901,335 (Step 2). The total Federal capital payments based on the March 2020 HCRIS and supplemental two reports is $8,114,957,508 (Step 3). The ratio (Step 4) is a negative 0.023430 percent, which, when rounded to the second digit, is negative 0.02 percent (Step 4). Therefore, for FY 2021, taking into account projected capital outlier reconciliation payments under our methodology would decrease the estimated percentage of FY 2021 aggregate capital outlier payments by 0.02 percent.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50977 through 50983), in response to public comments on the FY 2013 IPPS/LTCH PPS proposed rule, we made changes to our methodology for projecting the outlier fixed-loss cost threshold for FY 2014. We refer readers to the FY 2014 IPPS/LTCH PPS final rule for a detailed discussion of the changes.
As we have done in the past, to calculate the FY 2021 outlier threshold, we simulated payments by applying FY 2021 payment rates and policies using cases from the FY 2019 MedPAR file.
We note that because this payment simulation uses the FY 2021 relative weights, consistent with our finalized policy discussed in section IV.I. of the preamble to this final rule, we applied the adjustor for certain CAR–T cell therapy cases in our simulation of these payments. As discussed in section II.E.2.b. of the preamble of this final rule, we are finalizing an adjustment to account for certain CAR T-cell therapy cases in calculating the FY 2021 relative weights and for purposes of budget neutrality and outlier simulations. As noted in section II.C. of this Addendum, we specify the formula used for actual claim payment which is also used by CMS to project the outlier threshold for the upcoming fiscal year. The difference is the source of some of the variables in the formula. For example, operating and capital CCRs for actual claim payment are from the PSF while CMS uses an adjusted CCR (as described later in this section) to project the threshold for the upcoming fiscal year. In addition, charges for a claim payment are from the bill while charges to project the threshold are from the MedPAR data with an inflation factor applied to the charges (as described earlier).
In order to determine the FY 2021 outlier threshold, we inflated the charges on the MedPAR claims by 2 years, from FY 2019 to FY 2021. Consistent with the FY 2020 IPPS/LTCH PPS final rule (84 FR 42626 and 42627), we proposed to use the following methodology to calculate the charge inflation factor for FY 2021:
• Include hospitals whose last four digits fall between 0001 and 0899 (section 2779A1 of Chapter 2 of the State Operations Manual on the CMS website at
• Include providers that are in both periods of charge data that are used to calculate the 1-year average annual rate of-change in charges per case. We note this is consistent with the methodology used since FY 2014.
• We excluded Medicare Advantage IME claims for the reasons described in section I.A.4. of this Addendum. We refer readers to the FY 2011 IPPS/LTCH PPS final rule for a complete discussion on our methodology of identifying and adding the total Medicare Advantage IME payment amount to the budget neutrality adjustments.
• In order to ensure that we capture only FFS claims, we included claims with a “Claim Type” of 60 (which is a field on the MedPAR file that indicates a claim is an FFS claim).
• In order to further ensure that we capture only FFS claims, we excluded claims with a “GHOPAID” indicator of 1 (which is a field on the MedPAR file that indicates a claim is not an FFS claim and is paid by a Group Health Organization).
• We examined the MedPAR file and removed pharmacy charges for anti-hemophilic blood factor (which are paid separately under the IPPS) with an indicator of “3” for blood clotting with a revenue code of “0636” from the covered charge field. We also removed organ acquisition charges from the covered charge field because organ acquisition is a pass-through payment not paid under the IPPS.
Our general methodology to inflate the charges computes the 1-year average annual rate-of-change in charges per case which is then applied twice to inflate the charges on the MedPAR claims by 2 years (for example, FY 2019 to FY 2021).
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42627), we modified our charge inflation methodology. We stated that we
As we have done in the past, in the FY 2021 IPPS/LTCH PPS proposed rule, we proposed to establish the FY 2021 outlier threshold using hospital CCRs from the December 2019 update to the Provider-Specific File (PSF)—the most recent available data at the time of the development of the proposed rule. We proposed to apply the following edits to providers' CCRs in the PSF. We believe these edits are appropriate in order to accurately model the outlier threshold. We first search for Indian Health Service providers and those providers assigned the statewide average CCR from the current fiscal year. We then replace these CCRs with the statewide average CCR for the upcoming fiscal year. We also assign the statewide average CCR (for the upcoming fiscal year) to those providers that have no value in the CCR field in the PSF or whose CCRs exceed the ceilings described later in this section (3.0 standard deviations from the mean of the log distribution of CCRs for all hospitals). We do not apply the adjustment factors described later in this section to hospitals assigned the statewide average CCR. For FY 2021, we also proposed to continue to apply an adjustment factor to the CCRs to account for cost and charge inflation (as explained later in this section). We also proposed that, if more recent data become available, we would use that data to calculate the final FY 2021 outlier threshold.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50979), we adopted a new methodology to adjust the CCRs. Specifically, we finalized a policy to compare the national average case-weighted operating and capital CCR from the most recent update of the PSF to the national average case-weighted operating and capital CCR from the same period of the prior year.
Therefore, as we have done since FY 2014, we proposed to adjust the CCRs from the December 2019 update of the PSF by comparing the percentage change in the national average case-weighted operating CCR and capital CCR from the December 2018 update of the PSF to the national average case-weighted operating CCR and capital CCR from the December 2019 update of the PSF. We note that we used total transfer-adjusted cases from FY 2019 to determine the national average case-weighted CCRs for both sides of the comparison. As stated in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50979), we believe that it is appropriate to use the same case count on both sides of the comparison, because this will produce the true percentage change in the average case-weighted operating and capital CCR from 1 year to the next without any effect from a change in case count on different sides of the comparison.
Using the proposed methodology, for the proposed rule, we calculated a proposed December 2018 operating national average case-weighted CCR of 0.255979 and a proposed December 2019 operating national average case-weighted CCR of 0.249649. We then calculated the percentage change between the two national operating case-weighted CCRs by subtracting the December 2018 operating national average case-weighted CCR from the December 2019 operating national average case-weighted CCR and then dividing the result by the December 2018 national operating average case-weighted CCR. This resulted in a proposed national operating CCR adjustment factor of 0.975271.
We used this same proposed methodology to adjust the capital CCRs. Specifically, we calculated a December 2018 capital national average case-weighted CCR of 0.021043 and a December 2019 capital national average case-weighted CCR of 0.020255. We then calculated the percentage change between the two national capital case-weighted CCRs by subtracting the December 2018 capital national average case-weighted CCR from the December 2019 capital national average case-weighted CCR and then dividing the result by the December 2018 capital national average case-weighted CCR. This resulted in a proposed national capital CCR adjustment factor of 0.962553.
For purposes of estimating the proposed outlier threshold for FY 2021, we used a wage index that reflects the policies discussed in the proposed rule. This includes the proposed frontier State floor adjustments in accordance with section 10324(a) of the Affordable Care Act, the proposed out-migration adjustment as added by section 505 of Public Law 108–173, as well as incorporating the FY 2021 wage index adjustment for hospitals with a wage index value below the 25th percentile, where the increase in the wage index value for these hospitals would be equal to half the difference between the otherwise applicable final wage index value for a year for that hospital and the 25th percentile wage index value for that year across all hospitals. We also incorporated our proposal of the 5-percent cap on any decrease in a hospital's wage index from the hospital's final wage index in FY 2020. We stated in the proposed rule that if we did not take the aforementioned into account, our estimate of total FY 2021 payments would be too low, and, as a result, our proposed outlier threshold would be too high, such that estimated outlier payments would be less than our projected 5.1 percent of total payments (which includes outlier reconciliation).
As described in sections IV.K. and IV.L., respectively, of the preamble of this final rule, sections 1886(q) and 1886(o) of the Act establish the Hospital Readmissions Reduction Program and the Hospital VBP Program, respectively. We do not believe that it is appropriate to include the proposed hospital VBP payment adjustments and the hospital readmissions payment adjustments in the proposed outlier threshold calculation or the proposed outlier offset to the standardized amount. Specifically, consistent with our definition of the base operating DRG payment amount for the Hospital Readmissions Reduction Program under § 412.152 and the Hospital VBP Program under § 412.160, outlier payments under section 1886(d)(5)(A) of the Act are not affected by these payment adjustments. Therefore, outlier payments would continue to be calculated based on the unadjusted base DRG payment amount (as opposed to using the base-operating DRG payment amount adjusted by the hospital readmissions payment adjustment and the hospital VBP payment adjustment). Consequently, we proposed to exclude the proposed hospital VBP payment adjustments and the estimated hospital readmissions payment adjustments from the calculation of the proposed outlier fixed-loss cost threshold.
We noted in the proposed rule that, to the extent section 1886(r) of the Act modifies the DSH payment methodology under section 1886(d)(5)(F) of the Act, the uncompensated care payment under section 1886(r)(2) of the Act, like the empirically justified Medicare DSH payment under section 1886(r)(1) of the Act, may be considered an amount payable under section 1886(d)(5)(F) of the Act such that it would be reasonable to include the payment in the outlier determination under section 1886(d)(5)(A) of the Act. As we have done since the implementation of uncompensated care payments in FY 2014, for FY 2021, we also proposed to allocate an estimated per-discharge uncompensated care
Using this methodology, we used the formula described in section I.C.1. of this Addendum to simulate and calculate the Federal payment rate and outlier payments for all claims. In addition, as described in the earlier section to this Addendum, we proposed to incorporate an estimate of FY 2021 outlier reconciliation in the methodology for determining the outlier threshold. As noted previously, for the FY 2021 proposed rule, the ratio of outlier reconciliation dollars to total Federal Payments (Step 4) was a negative 0.002787 percent, which, when rounded to the second digit, is 0.00 percent. Therefore, for FY 2021, we proposed to incorporate a projection of outlier reconciliation dollars by targeting an outlier threshold at 5.10 percent [5.1 percent − (−.00 percent)]. Under the proposed approach, we determined a threshold of $30,006 and calculated total outlier payments of $4,935,261,570 and total operating Federal payments of $91,833,641,321. We then divided total outlier payments by total operating Federal payments plus total outlier payments and determined that this threshold matched with the 5.10 percent target, which reflected our proposal to incorporate an estimate of outlier reconciliation in the determination of the outlier threshold (as discussed in more detail in the previous section of this Addendum). Since the target remained at 5.10 percent, we noted that the threshold calculated without applying our proposed methodology for incorporating an estimate of outlier reconciliation in the determination of the outlier threshold is the same as identified previously at $30,006. We proposed an outlier fixed-loss cost threshold for FY 2021 equal to the prospective payment rate for the MS–DRG, plus any IME, empirically justified Medicare DSH payments, estimated uncompensated care payment, and any add-on payments for new technology, plus $30,006.
After consideration of the public comments we received, we are using the same methodology we proposed to calculate the final outlier threshold. As discussed previously, we are adopting for this final rule to calculate charge inflation using the publically available FY 2018 and FY 2019 claims data and to incorporate a projection of outlier payment reconciliations for the FY 2021 outlier threshold calculation.
For the FY 2021 final outlier threshold, we used the used the March 2019 MedPAR file of FY 2018 (October 1, 2017 through September 30, 2018) charge data (released in conjunction with the FY 2020 IPPS/LTCH PPS final rule) and the March 2020 MedPAR file of FY 2019 (October 1, 2018 through September 30, 2019) charge data (released in conjunction with this FY 2021 IPPS/LTCH PPS final rule) to determine the charge inflation factor. To compute the 1 year average annual rate of change in charges per case, we compared the average covered charge per case of $61,578.82 ($584,618,863,834/9,493,830 cases) from October 1, 2017 through September 31, 2018, to the average covered charge per case of $65,522.10 ($604,209,834,327/9,519,120 cases) from October 1, 2018 through September 31, 2019. This rate-of-change was 6.4 percent (1.06404) or 13.2 percent (1.13218) over 2 years. The billed charges are obtained from the claims from the MedPAR file and inflated by the inflation factor specified previously.
As we have done in the past, we are establishing the FY 2021 outlier threshold using hospital CCRs from the March 2020 update to the Provider-Specific File (PSF)—the most recent available data at the time of the development of the final rule. We applied the following edits to providers' CCRs in the PSF. We believe these edits are appropriate in order to accurately model the outlier threshold. We first search for Indian Health Service providers and those providers assigned the statewide average CCR from the current fiscal year. We then replaced these CCRs with the statewide average CCR for the upcoming fiscal year. We also assigned the statewide average CCR (for the upcoming fiscal year) to those providers that have no value in the CCR field in the PSF or whose CCRs exceed the ceilings described later in this section (3.0 standard deviations from the mean of the log distribution of CCRs for all hospitals). We did not apply the adjustment factors described below to hospitals assigned the statewide average CCR. For FY 2021, we also are continuing to apply an adjustment factor to the CCRs to account for cost and charge inflation (as explained below).
For this final rule, as we have done since FY 2014, we are adjusting the CCRs from the March 2020 update of the PSF by comparing the percentage change in the national average case-weighted operating CCR and capital CCR from the March 2019 update of the PSF to the national average case-weighted operating CCR and capital CCR from the March 2020 update of the PSF. We note that we used total transfer-adjusted cases from FY 2019 to determine the national average case weighted CCRs for both sides of the comparison. As stated in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50979), we believe that it is appropriate to use the same case count on both sides of the comparison because this will produce the true percentage change in the average case-weighted operating and capital CCR from one year to the next without any effect from a change in case count on different sides of the comparison.
Using the methodology described previously, for this final rule, we calculated a March 2019 operating national average case-weighted CCR of 0.254027 and a March 2020 operating national average case-weighted CCR of 0.247548. We then calculated the percentage change between the two national operating case-weighted CCRs by subtracting the March 2019 operating national average case-weighted CCR from the March 2020 operating national average case-weighted CCR and then dividing the result by the March 2019 national operating average case-weighted CCR. This resulted in a national operating CCR adjustment factor of 0.974495.
We used the same methodology to adjust the capital CCRs. Specifically, for this final rule, we calculated a March 2019 capital national average case-weighted CCR of 0.02073 and a March 2020 capital national average case-weighted CCR of 0.019935. We then calculated the percentage change between the two national capital case weighted CCRs by subtracting the March 2019 capital national average case-weighted CCR from the March 2020 capital national average case-weighted CCR and then dividing the result by the March 2019 capital national average case-weighted CCR. This resulted in a national capital CCR adjustment factor of 0.96165.
As discussed previously, similar to the proposed rule, for FY 2021, we applied the following policies (as discussed in more detail earlier):
• We used a wage index based on the FY 2021 wage index that hospitals will be paid. This included our policy to remove urban to rural reclassifications from the calculation of the rural floor, the frontier State floor adjustment in accordance with section 10324(a) of the Affordable Care Act, and the out migration adjustment as added by section 505 of Public Law 108–173, and incorporates our wage index policies to: (1) Increase the wage index values for hospitals with a wage index value below the 25th percentile wage index value across all hospitals, and (2) 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 in FY 2020. As stated previously, if we did not take the above into account, our estimate of total FY 2021 payments would be too low, and, as a result, our outlier threshold would be too high, such that estimated outlier payments would be less than our projected 5.11 percent of total payments (which reflects the estimate of outlier reconciliation calculated for this final rule).
• We excluded the hospital VBP payment adjustments and the hospital readmissions payment adjustments from the calculation of the outlier fixed-loss cost threshold.
• We used the estimated per-discharge uncompensated care payments to hospitals eligible for the uncompensated care payment for all cases in the calculation of the outlier fixed-loss cost threshold methodology.
Using this methodology, we used the formula described in section I.C.1 of this Addendum to simulate and calculate the Federal payment rate and outlier payments for all claims. In addition, as described in the earlier section to this Addendum, we are finalizing to incorporate an estimate of FY 2021 outlier reconciliation in the methodology for determining the outlier threshold. As noted previously, for this FY 2021 final rule, the ratio of outlier reconciliation dollars to total Federal Payments (Step 4) is a negative 0.009217 percent, which, when rounded to the second digit, is 0.01 percent. Therefore, for FY 2021, we incorporated a projection of outlier reconciliation dollars by targeting an outlier threshold at 5.11 percent [5.1 percent − (−.01 percent)]. Under this approach, we determined a threshold of $29,051 and calculated total outlier payments of $4,955,813,978 and total operating Federal payments of $92,027,177,037. We then divided total outlier payments by total operating Federal payments plus total outlier payments and determined that this threshold matched with the 5.11 percent target, which reflects our methodology to incorporate an estimate of outlier reconciliation in the determination of the outlier threshold (as discussed in more detail in the previous section of this Addendum). We note that, if calculated without applying our finalized methodology for incorporating an estimate of outlier reconciliation in the determination of the outlier threshold, the threshold would have been $29,108. We are finalizing an outlier fixed-loss cost threshold for FY 2021 equal to the prospective payment rate for the MS–DRG, plus any IME, empirically justified Medicare DSH payments, estimated uncompensated care payment, and any add-on payments for new technology, plus $29,051.
As stated in the FY 1994 IPPS final rule (58 FR 46348), we establish an outlier threshold that is applicable to both hospital inpatient operating costs and hospital inpatient capital-related costs. When we modeled the combined operating and capital outlier payments, we found that using a common threshold resulted in a higher percentage of outlier payments for capital-related costs than for operating costs. We project that the threshold for FY 2021 (which reflects our methodology to incorporate an estimate of operating outlier reconciliation) will result in outlier payments that will equal 5.1 percent of operating DRG payments and we estimate that capital outlier payments will equal 5.34 percent of capital payments based on the Federal rate (which reflects our methodology discussed previously to incorporate an estimate of capital outlier reconciliation).
In accordance with section 1886(d)(3)(B) of the Act and as discussed previously, we reduced the FY 2021 standardized amount by the percentage of 5.1 percent to account for the projected proportion of payments paid as outliers.
The outlier adjustment factors that would be applied to the operating standardized amount and capital Federal rate based on the FY 2021 outlier threshold are as follows:
We are applying the outlier adjustment factors to the FY 2021 payment rates after removing the effects of the FY 2020 outlier adjustment factors on the standardized amount.
To determine whether a case qualifies for outlier payments, we currently apply hospital-specific CCRs to the total covered charges for the case. Estimated operating and capital costs for the case are calculated separately by applying separate operating and capital CCRs. These costs are then combined and compared with the outlier fixed-loss cost threshold.
Under our current policy at § 412.84, we calculate operating and capital CCR ceilings and assign a statewide average CCR for hospitals whose CCRs exceed 3.0 standard deviations from the mean of the log distribution of CCRs for all hospitals. Based on this calculation, for hospitals for which the MAC computes operating CCRs greater than 1.142 or capital CCRs greater than 0.135, or hospitals for which the MAC is unable to calculate a CCR (as described under § 412.84(i)(3) of our regulations), statewide average CCRs are used to determine whether a hospital qualifies for outlier payments. Table 8A listed in section VI. of this Addendum (and available via the internet on the CMS website) contains the statewide average operating CCRs for urban hospitals and for rural hospitals for which the MAC is unable to compute a hospital-specific CCR within the range previously specified. These statewide average ratios would be effective for discharges occurring on or after October 1, 2020 and would replace the statewide average ratios from the prior fiscal year. Table 8B listed in section VI. of this Addendum (and available via the internet on the CMS website) contains the comparable statewide average capital CCRs. As previously stated, the CCRs in Tables 8A and 8B would be used during FY 2021 when hospital-specific CCRs based on the latest settled cost report either are not available or are outside the range noted previously. Table 8C listed in section VI. of this Addendum (and available via the internet on the CMS website) contains the statewide average total CCRs used under the LTCH PPS as discussed in section V. of this Addendum.
We finally note that section 20.1.2 of chapter three of the Medicare Claims Processing Manual (on the internet at
Our current estimate, using available FY 2019 claims data, is that actual outlier payments for FY 2019 were approximately 5.43 percent of actual total MS–DRG payments. Therefore, the data indicate that, for FY 2019, the percentage of actual outlier payments relative to actual total payments is higher than we projected for FY 2019. Consistent with the policy and statutory interpretation we have maintained since the inception of the IPPS, we do not make retroactive adjustments to outlier payments to ensure that total outlier payments for FY 2019 are equal to 5.1 percent of total MS–DRG payments. As explained in the FY 2003 Outlier Final Rule (68 FR 34502), if we were to make retroactive adjustments to all outlier payments to ensure total payments are 5.1 percent of MS–DRG payments (by retroactively adjusting outlier payments), we would be removing the important aspect of the prospective nature of the IPPS. Because such an across-the-board adjustment would either lead to more or less outlier payments for all hospitals, hospitals would no longer be able to reliably approximate their payment for a patient while the patient is still hospitalized. We believe it would be neither necessary nor appropriate to make such an aggregate retroactive adjustment. Furthermore, we believe it is consistent with the statutory language at section 1886(d)(5)(A)(iv) of the Act not to make retroactive adjustments to outlier payments. This section states that outlier payments be equal to or greater than 5 percent and less than or equal to 6 percent of projected or estimated (not actual) MS–DRG payments. We believe that an important goal of a PPS is predictability. Therefore, we believe that the fixed-loss outlier threshold should be projected based on the best available historical data and should not be adjusted retroactively. A retroactive change to the fixed-loss outlier threshold would affect all hospitals subject to the IPPS, thereby undercutting the predictability of the system as a whole.
We note that, because the MedPAR claims data for the entire FY 2020 period will not be available until after September 30, 2020, we are unable to provide an estimate of actual outlier payments for FY 2020 based on FY 2020 claims data in this final rule. We will provide an estimate of actual FY 2020 outlier payments in the FY 2022 IPPS/LTCH PPS proposed rule.
The adjusted standardized amount is divided into labor-related and nonlabor-related portions. Tables 1A and 1B listed and published in section VI. of this Addendum (and available via the internet on the CMS website) contain the national standardized amounts that we are applying to all hospitals, except hospitals located in Puerto Rico, for FY 2021. The standardized amount for hospitals in Puerto Rico is shown in Table 1C listed and published in section VI. of this Addendum (and available via the internet on the CMS website). The amounts shown in Tables 1A and 1B differ only in that the labor-related share applied to the standardized amounts in Table 1A is 68.3 percent, and the labor-related share applied to the standardized amounts in Table 1B is 62 percent. In accordance with sections 1886(d)(3)(E) and 1886(d)(9)(C)(iv) of the Act, we are applying a labor-related share of 62 percent, unless application of that percentage would result in lower payments to a hospital than would otherwise be made. In effect, the statutory provision means that we will apply a labor-related share of 62 percent for all hospitals whose wage indexes are less than or equal to 1.0000.
In addition, Tables 1A and 1B include the standardized amounts reflecting the applicable percentage increases for FY 2021.
The labor-related and nonlabor-related portions of the national average standardized amounts for Puerto Rico hospitals for FY 2021 are set forth in Table 1C listed and published in section VI. of this Addendum (and available via the internet on the CMS website). Similarly, section 1886(d)(9)(C)(iv) of the Act, as amended by section 403(b) of Public Law 108–173, provides that the labor-related share for hospitals located in Puerto Rico be 62 percent, unless the application of that percentage would result in lower payments to the hospital.
The following table illustrates the changes from the FY 2020 national standardized amounts to the FY 2021 national standardized amounts. The second through fifth columns display the changes from the FY 2019 standardized amounts for each applicable FY 2021 standardized amount. The first row of the table shows the updated (through FY 2020) average standardized amount after restoring the FY 2020 offsets for outlier payments and the geographic reclassification budget neutrality. The MS–DRG reclassification and recalibration and wage index budget neutrality adjustment factors are cumulative. Therefore, those FY 2020 adjustment factors are not removed from this table. Additionally, for FY 2021 we have applied the budget neutrality factors for the low wage index hospital policy and the transition policy, described previously.
Tables 1A through 1C, as published in section VI. of this Addendum (and available via the internet on the CMS website), contain the labor related and -nonlabor related- shares that we used to calculate the prospective payment rates for hospitals located in the 50 States, the District of Columbia, and Puerto Rico for FY 2021. This section addresses two types of adjustments to the standardized amounts that are made in determining the prospective payment rates as described in this Addendum.
Sections 1886(d)(3)(E) and 1886(d)(9)(C)(iv) of the Act require that we make an adjustment to the labor-related portion of the national prospective payment rate to account for area differences in hospital wage levels. This adjustment is made by multiplying the labor-related portion of the adjusted standardized amounts by the appropriate wage index for the area in which the hospital is located. For FY 2021, as discussed in section IV.B.3. of the preamble of this final rule, as we proposed, we are applying a labor-related share of 68.3 percent for the national standardized amounts for all IPPS hospitals (including hospitals in Puerto Rico) that have a wage index value that is greater than 1.0000. Consistent with section 1886(d)(3)(E) of the Act, as we proposed, we are applying the wage index to a labor-related share of 62 percent of the national standardized amount for all IPPS hospitals (including hospitals in Puerto Rico) whose wage index values are less than or equal to 1.0000. In section III. of the preamble of this final rule, we discuss the data and methodology for the FY 2021 wage index.
Section 1886(d)(5)(H) of the Act provides discretionary authority to the Secretary to make adjustments as the Secretary deems appropriate to take into account the unique circumstances of hospitals located in Alaska and Hawaii. Higher labor-related costs for these two States are taken into account in the adjustment for area wages described previously. To account for higher nonlabor-related costs for these two States, we multiply the nonlabor-related portion of the standardized amount for hospitals in Alaska and Hawaii by an adjustment factor.
In the FY 2013 IPPS/LTCH PPS final rule, we established a methodology to update the COLA factors for Alaska and Hawaii that were published by the U.S. Office of Personnel Management (OPM) every 4 years (at the same time as the update to the labor-related share of the IPPS market basket), beginning in FY 2014. We refer readers to the FY 2013 IPPS/LTCH PPS proposed and final rules for additional background and a detailed description of this methodology (77 FR 28145 through 28146 and 77 FR 53700 through 53701, respectively). For FY 2018, in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38530 through 38531), we updated the COLA factors published by OPM for 2009 (as these are the last COLA factors OPM published prior to transitioning from COLAs to locality pay) using the methodology that we finalized in the FY 2013 IPPS/LTCH PPS final rule.
Based on the policy finalized in the FY 2013 IPPS/LTCH PPS final rule, as we proposed, we are continuing to use the same COLA factors in FY 2021 that were used in FY 2019 to adjust the nonlabor-related portion of the standardized amount for hospitals located in Alaska and Hawaii. The following table lists the COLA factors for FY 2021.
Based on the policy finalized in the FY 2013 IPPS/LTCH PPS final rule, the next update to the COLA factors for Alaska and Hawaii would occur at the same time as the update to the labor-related share of the IPPS market basket (no later than FY 2022).
In general, the operating prospective payment rate for all hospitals (including hospitals in Puerto Rico) paid under the IPPS, except SCHs and MDHs, for FY 2021 equals the Federal rate (which includes uncompensated care payments).
Under current law, the MDH program has been extended for discharges occurring through September 30, 2022.
SCHs are paid based on whichever of the following rates yields the greatest aggregate payment: the Federal national rate (which, as discussed in section V.G. of the preamble of this final rule, includes uncompensated care payments); the updated hospital-specific rate based on FY 1982 costs per discharge; the updated hospital-specific rate based on FY 1987 costs per discharge; the updated hospital-specific rate based on FY 1996 costs per discharge; or the updated hospital-specific rate based on FY 2006 costs per discharge to determine the rate that yields the greatest aggregate payment.
The prospective payment rate for SCHs for FY 2021 equals the higher of the applicable Federal rate, or the hospital-specific rate as described later in this section. The prospective payment rate for MDHs for FY 2021 equals the higher of the Federal rate, or the Federal rate plus 75 percent of the difference between the Federal rate and the hospital-specific rate as described in this section. For MDHs, the updated hospital-specific rate is based on FY 1982, FY 1987, or FY 2002 costs per discharge, whichever yields the greatest aggregate payment.
The formula specified in this section is used for actual claim payment and is also used by CMS to project the outlier threshold for the upcoming fiscal year. The difference is the source of some of the variables in the formula. For example, operating and capital CCRs for actual claim payment are from the PSF while CMS uses an adjusted CCR (as described previously) to project the threshold for the upcoming fiscal year. In addition,
Step 1—Determine the MS–DRG and MS–DRG relative weight (from Table 5) for each claim based on the ICD–10–CM diagnosis and ICD–10–PCS procedure codes on the claim.
Step 2—Select the applicable average standardized amount depending on whether the hospital submitted qualifying quality data and is a meaningful EHR user, as described previously.
Step 3—Compute the operating and capital Federal payment rate:
Step 4—Determine operating and capital costs:
Step 5—Compute operating and capital outlier threshold (CMS applies a geographic adjustment to the operating and capital outlier threshold to account for local cost variation):
Step 6—Compute operating and capital outlier payments:
The payment rate may then be further adjusted for hospitals that qualify for a low-volume payment adjustment under section 1886(d)(12) of the Act and 42 CFR 412.101(b). The base-operating DRG payment amount may be further adjusted by the hospital readmissions payment adjustment and the hospital VBP payment adjustment as described under sections 1886(q) and 1886(o) of the Act, respectively. Payments also may be reduced by the 1-percent adjustment under the HAC Reduction Program as described in section 1886(p) of the Act. We also make new technology add-on payments in accordance with section 1886(d)(5)(K) and (L) of the Act. Finally, we add the uncompensated care payment to the total claim payment amount. As noted in the previous formula, we take uncompensated care payments and new technology add-on payments into consideration when calculating outlier payments.
Section 1886(b)(3)(C) of the Act provides that SCHs are paid based on whichever of the following rates yields the greatest aggregate payment: The Federal rate; the updated hospital-specific rate based on FY 1982 costs per discharge; the updated hospital-specific rate based on FY 1987 costs per discharge; the updated hospital-specific rate based on FY 1996 costs per discharge; or the updated hospital-specific rate based on FY 2006 costs per discharge to determine the rate that yields the greatest aggregate payment.
As noted previously, the MDH program has been extended under current law for discharges occurring through September 30, 2022. For MDHs, the updated hospital-specific rate is based on FY 1982, FY 1987, or FY 2002 costs per discharge, whichever yields the greatest aggregate payment.
For a more detailed discussion of the calculation of the hospital-specific rates, we refer readers to the FY 1984 IPPS interim final rule (48 FR 39772); the April 20, 1990 final rule with comment period (55 FR 15150); the FY 1991 IPPS final rule (55 FR 35994); and the FY 2001 IPPS final rule (65 FR 47082).
Section 1886(b)(3)(B)(iv) of the Act provides that the applicable percentage increase applicable to the hospital-specific rates for SCHs and MDHs equals the applicable percentage increase set forth in section 1886(b)(3)(B)(i) of the Act (that is, the same update factor as for all other hospitals subject to the IPPS). Because the Act sets the update factor for SCHs and MDHs equal to the update factor for all other IPPS hospitals, the update to the hospital-specific rates for SCHs and MDHs is subject to the amendments to section 1886(b)(3)(B) of the Act made by sections 3401(a) and 10319(a) of the Affordable Care Act. Accordingly, the applicable percentage increases to the hospital-specific rates applicable to SCHs and MDHs are the following:
For a complete discussion of the applicable percentage increase applied to the hospital-specific rates for SCHs and MDHs, we refer readers to section IV.B. of the preamble of this final rule. In addition, because SCHs and MDHs use the same MSDRGs as other hospitals when they are paid based in whole or in part on the hospital-specific rate, the -hospital specific-rate is adjusted by a budget
The PPS for acute care hospital inpatient capital-related costs was implemented for cost reporting periods beginning on or after October 1, 1991. The basic methodology for determining Federal capital prospective rates is set forth in the regulations at 42 CFR 412.308 through 412.352. In this section of this Addendum, we discuss the factors that we used to determine the capital Federal rate for FY 2021, which are effective for discharges occurring on or after October 1, 2020.
All hospitals (except “new” hospitals under § 412.304(c)(2)) are paid based on the capital Federal rate. We annually update the capital standard Federal rate, as provided in § 412.308(c)(1), to account for capital input price increases and other factors. The regulations at § 412.308(c)(2) also provide that the capital Federal rate be adjusted annually by a factor equal to the estimated proportion of outlier payments under the capital Federal rate to total capital payments under the capital Federal rate. In addition, § 412.308(c)(3) requires that the capital Federal rate be reduced by an adjustment factor equal to the estimated proportion of payments for exceptions under § 412.348. (We note that, as discussed in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53705), there is generally no longer a need for an exceptions payment adjustment factor.) However, in limited circumstances, an additional payment exception for extraordinary circumstances is provided for under § 412.348(f) for qualifying hospitals.
Therefore, in accordance with § 412.308(c)(3), an exceptions payment adjustment factor may need to be applied if such payments are made. Section 412.308(c)(4)(ii) requires that the capital standard Federal rate be adjusted so that the effects of the annual DRG reclassification and the recalibration of DRG weights and changes in the geographic adjustment factor (GAF) are budget neutral.
Section 412.374 provides for payments to hospitals located in Puerto Rico under the IPPS for acute care hospital inpatient capital-related costs, which currently specifies capital IPPS payments to hospitals located in Puerto Rico are based on 100 percent of the Federal rate.
In the discussion that follows, we explain the factors that we used to determine the capital Federal rate for FY 2021. In particular, we explain why the FY 2021 capital Federal rate would increase approximately 0.84 percent, compared to the FY 2020 capital Federal rate. As discussed in the impact analysis in Appendix A to this FY 2021 IPPS/LTCH final rule, we estimate that capital payments per discharge would increase approximately 0.3 percent during that same period. Because capital payments constitute approximately 10 percent of hospital payments, a 1-percent change in the capital Federal rate yields only approximately a 0.1 percent change in actual payments to hospitals.
Under § 412.308(c)(1), the capital standard Federal rate is updated on the basis of an analytical framework that takes into account changes in a capital input price index (CIPI) and several other policy adjustment factors. Specifically, we adjust the projected CIPI rate of change, as appropriate, each year for case-mix index-related changes, for intensity, and for errors in previous CIPI forecasts. The update factor for FY 2021 under that framework is 1.1 percent based on a projected 1.1 percent increase in the 2014-based CIPI, a 0.0 percentage point adjustment for intensity, a 0.0 percentage point adjustment for case-mix, a 0.0 percentage point adjustment for the DRG reclassification and recalibration, and a forecast error correction of 0.0 percentage point. As discussed in section III.C. of this Addendum, we continue to believe that the CIPI is the most appropriate input price index for capital costs to measure capital price changes in a given year. We also explain the basis for the FY 2021 CIPI projection in that same section of this Addendum. Below we describe the policy adjustments that we applied in the update framework for FY 2021.
The case-mix index is the measure of the average DRG weight for cases paid under the IPPS. Because the DRG weight determines the prospective payment for each case, any percentage increase in the case-mix index corresponds to an equal percentage increase in hospital payments.
The case-mix index can change for any of several reasons—
• The average resource use of Medicare patient changes (“real” case-mix change);
• Changes in hospital documentation and coding of patient records result in higher-weighted DRG assignments (“coding effects”); or
• The annual DRG reclassification and recalibration changes may not be budget neutral (“reclassification effect”).
We define real case-mix change as actual changes in the mix (and resource requirements) of Medicare patients, as opposed to changes in documentation and coding behavior that result in assignment of cases to higher-weighted DRGs, but do not reflect higher resource requirements. The capital update framework includes the same case-mix index adjustment used in the former operating IPPS update framework (as discussed in the May 18, 2004 IPPS proposed rule for FY 2005 (69 FR 28816)). (We no longer use an update framework to make a recommendation for updating the operating IPPS standardized amounts, as discussed in section II. of Appendix B to the FY 2006 IPPS final rule (70 FR 47707).)
For FY 2021, we are projecting a 0.5 percent total increase in the case-mix index. We estimated that the real case-mix increase would equal 0.5 percent for FY 2021. The net adjustment for change in case-mix is the difference between the projected real increase in case mix and the projected total increase in case mix. Therefore, as we proposed, the net adjustment for case-mix change in FY 2021 is 0.0 percentage point.
The capital update framework also contains an adjustment for the effects of DRG reclassification and recalibration. This adjustment is intended to remove the effect on total payments of prior year's changes to the DRG classifications and relative weights, in order to retain budget neutrality for all case-mix index-related changes other than those due to patient severity of illness. Due to the lag time in the availability of data, there is a 2-year lag in data used to determine the adjustment for the effects of DRG reclassification and recalibration. For example, we have data available to evaluate the effects of the FY 2019 DRG reclassification and recalibration as part of our update for FY 2021. We assume, for purposes of this adjustment, that the estimate of FY 2019 DRG reclassification and recalibration would result in no change in the case-mix when compared with the case-mix index that would have resulted if we had not made the reclassification and recalibration changes to the DRGs. Therefore, as we proposed, we are making a 0.0 percentage point adjustment for reclassification and recalibration in the update framework for FY 2021.
The capital update framework also contains an adjustment for forecast error. The input price index forecast is based on historical trends and relationships ascertainable at the time the update factor is established for the upcoming year. In any given year, there may be unanticipated price fluctuations that may result in differences between the actual increase in prices and the forecast used in calculating the update factors. In setting a prospective payment rate under the framework, we make an adjustment for forecast error only if our estimate of the change in the capital input price index for any year is off by 0.25 percentage point or more. There is a 2-year lag between the forecast and the availability of data to develop a measurement of the forecast error. Historically, when a forecast error of the CIPI is greater than 0.25 percentage point in absolute terms, it is reflected in the update recommended under this framework. A forecast error of 0.0
Under the capital IPPS update framework, we also make an adjustment for changes in intensity. Historically, we calculate this adjustment using the same methodology and data that were used in the past under the framework for operating IPPS. The intensity factor for the operating update framework reflects how hospital services are utilized to produce the final product, that is, the discharge. This component accounts for changes in the use of quality-enhancing services, for changes within DRG severity, and for expected modification of practice patterns to remove noncost-effective services. Our intensity measure is based on a 5-year average.
We calculate case-mix constant intensity as the change in total cost per discharge, adjusted for price level changes (the CPI for hospital and related services) and changes in real case-mix. Without reliable estimates of the proportions of the overall annual intensity changes that are due, respectively, to ineffective practice patterns and the combination of quality-enhancing new technologies and complexity within the DRG system, we assume that one-half of the annual change is due to each of these factors. Thus, the capital update framework provides an add-on to the input price index rate of increase of one-half of the estimated annual increase in intensity, to allow for increases within DRG severity and the adoption of quality-enhancing technology.
In this final rule, as we proposed, we are continuing to use a Medicare-specific intensity measure that is based on a 5-year adjusted average of cost per discharge for FY 2021 (we refer readers to the FY 2011 IPPS/LTCH PPS final rule (75 FR 0436) for a full description of our Medicare-specific intensity measure). Specifically, for FY 2021, we used an intensity measure that is based on an average of cost-per-discharge data from the 5-year period beginning with FY 2014 and extending through FY 2018. Based on these data, we estimated that case-mix constant intensity declined during FYs 2014 through 2018. In the past, when we found intensity to be declining, we believed a zero (rather than a negative) intensity adjustment was appropriate. Consistent with this approach, because we estimated that intensity would decline during that 5-year period, we believe it is appropriate to continue to apply a zero-intensity adjustment for FY 2021. Therefore, as we proposed, we made a 0.0 percentage point adjustment for intensity in the update for FY 2021.
Earlier, we described the basis of the components we used to develop the 1.1 percent capital update factor under the capital update framework for FY 2021, as shown in the following table.192
Section 412.312(c) establishes a unified outlier payment methodology for inpatient operating and inpatient capital-related costs. A shared threshold is used to identify outlier cases for both inpatient operating and inpatient capital-related payments. Section 412.308(c)(2) provides that the standard Federal rate for inpatient capital-related costs be reduced by an adjustment factor equal to the estimated proportion of capital-related outlier payments to total inpatient capital-related PPS payments. The outlier threshold is set so that operating outlier payments are projected to be 5.1 percent of total operating IPPS DRG payments. For FY 2021, as we proposed we are incorporating the estimated outlier reconciliation payment amounts into the outlier threshold model, as we did for FY 2020. (For more details on our policy to incorporate outlier reconciliation payment amounts into the outlier threshold model, please see section II.A. of this Addendum to this final rule.)
For FY 2020, we estimated that outlier payments for capital-related PPS payments would equal 5.37 percent of inpatient capital-related payments based on the capital Federal rate in FY 2020. Based on the threshold discussed in section II.A. of this Addendum, we estimate that prior to taking into account projected capital outlier reconciliation payments, outlier payments for capital-related costs would equal 5.36 percent for inpatient capital-related payments based on the capital Federal rate in FY 2021. However, using the methodology outlined in section II.A. of this Addendum, we estimate that taking into account projected capital outlier reconciliation payments would decrease FY 2021 aggregate estimated capital outlier payments by 0.02 percent. Therefore, accounting for estimated capital outlier reconciliation, the estimated outlier payments for capital-related PPS payments would equal 5.34 percent (5.36 percent − 0.02 percent) of inpatient capital-related payments based on the capital Federal rate in FY 2021. Accordingly, we applied an outlier adjustment factor of 0.9466 in determining the capital Federal rate for FY 2021. Thus, we estimate that the percentage of capital outlier payments to total capital Federal rate payments for FY 2021 would be lower than the percentage for FY 2020.
The outlier reduction factors are not built permanently into the capital rates; that is, they are not applied cumulatively in determining the capital Federal rate. The FY 2021 outlier adjustment of 0.9466 is a 0.03 percent change from the FY 2020 outlier adjustment of 0.9463. Therefore, the net change in the outlier adjustment to the capital Federal rate for FY 2021 is 1.0003 (0.9466/0.9463; calculation performed on unrounded numbers) so that the outlier adjustment will increase the FY 2021 capital Federal rate by approximately 0.03 percent compared to the FY 2020 outlier adjustment.
Section 412.308(c)(4)(ii) requires that the capital Federal rate be adjusted so that aggregate payments for the fiscal year based
As discussed in section III.G.3. of the preamble of this final rule, in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42325 through 42339), we finalized a policy to help reduce wage index disparities between high and low wage index hospitals by increasing the wage index values for certain hospitals with low wage index values. As also discussed in section III.G.3. of the preamble of this final rule, this policy will continue in FY 2021. In addition, in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42332 through 42336), we removed urban to rural reclassifications from the calculation of the rural floor to prevent inappropriate payment increases under the rural floor due to rural reclassifications, such that, beginning in FY 2020, the rural floor is calculated without including the wage data of hospitals that have reclassified as rural under section 1886(d)(8)(E) of the Act (as implemented in the regulations at § 412.103). Therefore, as mentioned in section III.G.1. of the preamble of this final rule, the rural floor for this FY 2021 final rule is calculated without the wage data of hospitals that have reclassified as rural under § 412.103. Lastly, for FY 2020, we placed a 5-percent cap on any decrease in a hospital's wage index from the hospital's final wage index in FY 2019 (84 FR 42336 through 42338). In light of the OMB updates described in section III.B.2. of the preamble of this final rule, for FY 2021, we are again capping any decreases in the wage index at 5 percent so that a hospital's final wage index for FY 2021 will not be less than 95 percent of its final wage index for FY 2020.
As we discussed in the in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42638 through 42639), we augmented our historical methodology for computing the budget neutrality factor for changes in the GAFs in light of the effect of those wage index changes on the GAFs. Specifically, we established a 2-step methodology, under which we first calculate a factor to ensure budget neutrality for changes to the GAFs due to the update to the wage data, wage index reclassifications and redesignations, including our policy to remove the wage data of urban hospitals that have reclassified as rural under § 412.103 from the calculation of “the wage index for rural areas in the State in which the county is located” in applying the provisions of section 1886(d)(8)(C)(iii) of the Act, and the rural floor, including our policy to calculate the rural floor without including the wage data of urban hospitals that have reclassified as rural under § 412.103, consistent with our historical GAF budget neutrality factor methodology. In the second step, we calculate a factor to ensure budget neutrality for changes to the GAFs due to our policy to increase the wage index for hospitals with a wage index value below the 25th percentile wage index and our policy to place a 5-percent cap on any decrease in a hospital's wage index from the hospital's final wage index in the prior fiscal year. In this section, we refer to these two policies as the lowest quartile hospital wage index adjustment and the 5-percent cap on wage index decreases.
In light of the changes to the wage index and other wage index policies for FY 2021 discussed previously, which directly affect the GAF, we continue to compute a budget neutrality factor for changes in the GAFs in two steps. We discuss our 2-step calculation of the GAF budget neutrality factors for FY 2021 as follows.
To determine the GAF budget neutrality factors for FY 2021, we first compared estimated aggregate capital Federal rate payments based on the FY 2020 MS–DRG classifications and relative weights and the FY 2020 GAFs to estimated aggregate capital Federal rate payments based on the FY 2020 MS–DRG classifications and relative weights and the FY 2021 GAFs without incorporating the effects on the GAFs of the lowest quartile hospital wage index adjustment and the 5-percent cap on wage index decreases. To achieve budget neutrality for these changes in the GAFs, we calculated an incremental GAF budget neutrality adjustment factor of 1.0021 for FY 2021. Next, we compared estimated aggregate capital Federal rate payments based on the FY 2021 GAFs with and without incorporating the effects on the GAFs of the lowest quartile hospital wage index adjustment and the 5-percent cap on wage index decreases. For this calculation, estimated aggregate capital Federal rate payments were calculated using the FY 2021 MS–DRG classifications and relative weights, and the FY 2021 GAFs (both with and without incorporating the effects on the GAF of the lowest quartile hospital wage index adjustment and the 5-percent cap on wage index decreases). (We note, for this calculation the GAFs included the out-migration and Frontier state adjustments.) To achieve budget neutrality for the effects of the lowest quartile hospital wage index adjustment and the 5-percent cap on wage index decreases on the FY 2021 GAFs, we calculated an incremental GAF budget neutrality adjustment factor of 0.9963. Therefore, to achieve budget neutrality for the changes in the GAFs, based on the calculations described previously, we are applying an incremental budget neutrality adjustment factor of 0.9984 (1.0021 x 0.9963) for FY 2021 to the previous cumulative FY 2020 adjustment factor.
We also compared estimated aggregate capital Federal rate payments based on the FY 2020 MS–DRG classifications and relative weights and the FY 2021 GAFs to estimated aggregate capital Federal rate payments based on the cumulative effects of the FY 2021 MS–DRG classifications and relative weights and the FY 2021 GAFs without the effects of the lowest quartile hospital wage index adjustment and the 5-percent cap on wage index decreases. The incremental adjustment factor for DRG classifications and changes in relative weights is 0.9988. The incremental adjustment factors for MS–DRG classifications and changes in relative weights (0.9988) and for changes in the GAFs through FY 2021 (0.9984) is 0.9971 (0.9988 x 0.9984). We note that all the values are calculated with unrounded numbers.
The GAF/DRG budget neutrality adjustment factors are built permanently into the capital rates; that is, they are applied cumulatively in determining the capital Federal rate. This follows the requirement under § 412.308(c)(4)(ii) that estimated aggregate payments each year be no more or less than they would have been in the absence of the annual DRG reclassification and recalibration and changes in the GAFs.
The methodology used to determine the recalibration and geographic adjustment factor (GAF/DRG) budget neutrality adjustment is similar to the methodology used in establishing budget neutrality adjustments under the IPPS for operating costs. One difference is that, under the operating IPPS, the budget neutrality adjustments for the effect of geographic reclassifications are determined separately from the effects of other changes in the hospital wage index and the MS–DRG relative weights. Under the capital IPPS, there is a single GAF/DRG budget neutrality adjustment factor for changes in the GAF (including geographic reclassification and the lowest quartile hospital wage index adjustment and the 5-percent cap on wage index decreases described previously) and the MS–DRG relative weights. In addition, there is no adjustment for the effects that geographic reclassification or the lowest quartile hospital wage index adjustment and the 5-percent cap on wage index decreases described previously have on the other payment parameters, such as the payments for DSH or IME.
The incremental GAF/DRG adjustment factor of 0.9971 (the product of the incremental GAF budget neutrality adjustment factor of 0.9984 and the incremental DRG budget neutrality adjustment factor of 0.9988) accounts for the MS–DRG reclassifications and recalibration and for changes in the GAFs. As noted previously, it also incorporates the effects on the GAFs of FY 2021 geographic reclassification decisions made by the MGCRB compared to FY 2020 decisions and the lowest quartile hospital wage index adjustment, and the 5-percent cap on wage index decreases described earlier. However, it does not account for changes in payments due to changes in the DSH and IME adjustment factors.
For FY 2020, we established a capital Federal rate of $462.33 (84 FR 42640, as corrected in 84 FR 53613). We are establishing an update of 1.1 percent in determining the FY 2021 capital Federal rate for all hospitals. As a result of this update and the budget neutrality factors discussed earlier, we are establishing a national capital Federal rate of $466.22 for FY 2021. The national capital Federal rate for FY 2021 was calculated as follows:
• The FY 2021 update factor is 1.011; that is, the update is 1.1 percent.
• The FY 2021 budget neutrality adjustment factor that is applied to the capital Federal rate for changes in the MS–DRG classifications and relative weights and changes in the GAFs is 0.9971.
• The FY 2021 outlier adjustment factor is 0.9466.
We are providing the following chart that shows how each of the factors and adjustments for FY 2021 affects the computation of the FY 2021 national capital Federal rate in comparison to the FY 2020 national capital Federal rate. The FY 2021 update factor has the effect of increasing the capital Federal rate by 1.1 percent compared to the FY 2020 capital Federal rate. The GAF/DRG budget neutrality adjustment factor has the effect of decreasing the capital Federal rate by 0.29 percent. The FY 2021 outlier adjustment factor has the effect of increasing the capital Federal rate by 0.03 percent compared to the FY 2020 capital Federal rate. The combined effect of all the changes would increase the national capital Federal rate by approximately 0.84 percent, compared to the FY 2020 national capital Federal rate.
For purposes of calculating payments for each discharge during FY 2021, the capital Federal rate is adjusted as follows: (Standard Federal Rate) × (DRG weight) × (GAF) × (COLA for hospitals located in Alaska and Hawaii) × (1 + DSH Adjustment Factor + IME Adjustment Factor, if applicable). The result is the adjusted capital Federal rate.
Hospitals also may receive outlier payments for those cases that qualify under the threshold established for each fiscal year. Section 412.312(c) provides for a shared threshold to identify outlier cases for both inpatient operating and inpatient capital-related payments. The outlier threshold for FY 2021 is in section II.A. of this Addendum. For FY 2021, a case will qualify as a cost outlier if the cost for the case plus the (operating) IME and DSH payments (including both the empirically justified Medicare DSH payment and the estimated uncompensated care payment, as discussed in section II.A.4.j. of this Addendum) is greater than the prospective payment rate for the MS–DRG plus the fixed-loss amount of $29,051.
Currently, as provided under § 412.304(c)(2), we pay a new hospital 85 percent of its reasonable costs during the first 2 years of operation, unless it elects to receive payment based on 100 percent of the capital Federal rate. Effective with the third year of operation, we pay the hospital based on 100 percent of the capital Federal rate (that is, the same methodology used to pay all other hospitals subject to the capital PPS).
Like the operating input price index, the capital input price index (CIPI) is a fixed-weight price index that measures the price changes associated with capital costs during a given year. The CIPI differs from the operating input price index in one important aspect—the CIPI reflects the vintage nature of capital, which is the acquisition and use of capital over time. Capital expenses in any given year are determined by the stock of capital in that year (that is, capital that remains on hand from all current and prior capital acquisitions). An index measuring capital price changes needs to reflect this vintage nature of capital. Therefore, the CIPI was developed to capture the vintage nature of capital by using a weighted-average of past capital purchase prices up to and including the current year.
We periodically update the base year for the operating and capital input price indexes to reflect the changing composition of inputs for operating and capital expenses. For this FY 2021 IPPS/LTCH PPS final rule, we use the IPPS operating and capital market baskets that reflect a 2014 base year. For a complete discussion of the development of these market baskets, we refer readers to section IV. of the preamble of the FY 2018 IPPS/LTCH PPS final rule (82 FR 38170).
Based on IHS Global Inc.'s second quarter 2020 forecast, for this FY 2021 IPPS/LTCH PPS final rule, we are forecasting the 2014-based CIPI to increase 1.1 percent in FY 2021. This reflects a projected 1.6 percent increase in vintage-weighted depreciation prices (building and fixed equipment, and movable equipment), and a projected 1.7 percent increase in other capital expense prices in FY 2021, partially offset by a projected 1.7 percent decline in vintage-weighted interest expense prices in FY 2021. The weighted average of these three factors produces the forecasted 1.1 percent increase for the 2014-based CIPI in FY 2021. As proposed, we are using the more recent data available for this final rule to determine the FY 2021 increase in the 2014-based CIPI for the final rule.
Payments for services furnished in children's hospitals, 11 cancer hospitals, and hospitals located outside the 50 States, the District of Columbia and Puerto Rico (that is, short-term acute care hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa) that are excluded from the IPPS are made on the basis of reasonable costs based on the hospital's own historical cost experience, subject to a rate-of-increase ceiling. A per discharge limit (the target amount, as defined in § 413.40(a) of the regulations) is set for each hospital, based on the hospital's own cost experience in its base year, and updated annually by a rate-of-increase percentage specified in § 413.40(c)(3). In addition, as specified in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38536), effective for cost reporting periods beginning during FY 2018, the annual update to the target amount for extended neoplastic disease care hospitals (hospitals described in § 412.22(i) of the regulations) also is the rate-of-increase percentage specified in § 413.40(c)(3). (We note that, in accordance with § 403.752(a), religious nonmedical health care institutions (RNHCIs) are also subject to the rate-of
For the FY 2021 IPPS/LTCH PPS proposed rule, based on IGI's fourth quarter 2019 forecast, we estimated that the 2014-based IPPS operating market basket update for FY 2021 would be 3.0 percent (that is, the estimate of the market basket rate-of-increase). Based on this estimate, we stated in the proposed rule that the FY 2021 rate-of-increase percentage that would be applied to the FY 2020 target amounts in order to calculate the FY 2021 target amounts for children's hospitals, the 11 cancer hospitals, RNCHIs, short-term acute care hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa, and extended neoplastic disease care hospitals would be 3.0 percent, in accordance with the applicable regulations at 42 CFR 413.40. However, we proposed that if more recent data became available for the final rule, we would use them, as appropriate, to calculate the IPPS operating market basket update for FY 2021. For this FY 2021 IPPS/LTCH PPS final rule, based on IGI's 2020 second quarter forecast, the 2014-based IPPS operating market basket update for FY 2021 is 2.4 percent (that is, the estimate of the market basket rate-of-increase). Therefore, the FY 2021 rate-of-increase percentage that will be applied to the FY 2020 target amounts in order to calculate the FY 2021 target amounts for children's hospitals, the 11 cancer hospitals, RNCHIs, extended neoplastic disease care hospitals, and short-term acute care hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa is 2.4 percent, in accordance with the applicable regulations at 42 CFR 413.40.
IRFs and rehabilitation distinct part units, IPFs and psychiatric distinct part units, and LTCHs are excluded from the IPPS and paid under their respective PPSs. The IRF PPS, the IPF PPS, and the LTCH PPS are updated annually. We refer readers to section VII. of the preamble of this final rule and section V. of the Addendum to this final rule for the updated changes to the Federal payment rates for LTCHs under the LTCH PPS for FY 2021. The annual updates for the IRF PPS and the IPF PPS are issued by the agency in separate
We did not receive public comments related to the rate-of-increase percentage used to determine the target amounts for excluded hospitals for FY 2021. Therefore, for the reasons set forth in this final rule and in the FY 2021 IPPS/LTCH PPS proposed rule, we are finalizing as proposed, without modification, our policy for updating the target amounts for the excluded hospitals discussed in this section.
In section VII. of the preamble of this final rule, we discuss our annual updates to the payment rates, factors, and specific policies under the LTCH PPS for FY 2021.
Under § 412.523(c)(3) of the regulations, for LTCH PPS FYs 2012 through 2020, we updated the standard Federal payment rate by the most recent estimate of the LTCH PPS market basket at that time, including additional statutory adjustments required by sections 1886(m)(3) (citing sections 1886(b)(3)(B)(xi)(II), and 1886(m)(4) of the Act as set forth in the regulations at § 412.523(c)(3)(viii) through (xv)). (For a summary of the payment rate development prior to FY 2012, we refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38310 through 38312) and references therein.)
Section 1886(m)(3)(A) of the Act specifies that, for rate year 2012 and each subsequent rate year, any annual update to the standard Federal payment rate shall be reduced by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act (which we refer to as “the multifactor productivity (MFP) adjustment”) as discussed in section VII.C.2 of the preamble of this final rule.
This section of the Act further provides that the application of section 1886(m)(3)(B) of the Act may result in the annual update being less than zero for a rate year, and may result in payment rates for a rate year being less than such payment rates for the preceding rate year. (As noted in section VII.C.2. of the preamble of this final rule, the annual update to the LTCH PPS occurs on October 1 and we have adopted the term “fiscal year” (FY) rather than “rate year” (RY) under the LTCH PPS beginning October 1, 2010. Therefore, for purposes of clarity, when discussing the annual update for the LTCH PPS, including the provisions of the Affordable Care Act, we use the term “fiscal year” rather than “rate year” for 2011 and subsequent years.)
For LTCHs that fail to submit the required quality reporting data in accordance with the LTCH QRP, the annual update is reduced by 2.0 percentage points as required by section 1886(m)(5) of the Act.
Consistent with our historical practice, for FY 2021, as we proposed, we are applying the annual update to the LTCH PPS standard Federal payment rate from the previous year. Furthermore, in determining the LTCH PPS standard Federal payment rate for FY 2021, we also are making certain regulatory adjustments, consistent with past practices. Specifically, in determining the FY 2021 LTCH PPS standard Federal payment rate, as we proposed, we are applying a budget neutrality adjustment factor for the changes related to the area wage level adjustment (that is, changes to the wage data, labor-related share, and geographic labor-market area designations, and the 5-percent cap on any decrease in a LTCH's wage index transition policy) as discussed in section V.B.6 of this Addendum to this final rule. In addition, as we proposed, we applied the permanent budget neutrality adjustment factor (applied to LTCH PPS standard Federal payment rate cases only) for the cost of the elimination of the 25-percent threshold policy for FY 2021 (discussed in section VII.D. of the preamble of this final rule).
In this final rule, we are establishing an annual update to the LTCH PPS standard Federal payment rate of 2.3 percent. Accordingly, as reflected in § 412.523(c)(3)(xvii), we are applying a factor of 1.023 to the FY 2020 LTCH PPS standard Federal payment rate of $42,677.64 to determine the FY 2021 LTCH PPS standard Federal payment rate. Also, as reflected in § 412.523(c)(3)(xvii), applied in conjunction with the provisions of § 412.523(c)(4), we are required to reduce the annual update to the LTCH PPS standard Federal payment rate by 2.0 percentage points for LTCHs that fail to submit the required quality reporting data for FY 2021 as required under the LTCH QRP. Therefore, we are establishing an annual update to the LTCH PPS standard Federal payment rate of 0.3 percent (that is, an update factor of 1.003) for FY 2021 for LTCHs that fail to submit the required quality reporting data for FY 2021 as required under the LTCH QRP. Additionally, as discussed in VII.C. of the preamble of this final rule, we are applying a permanent budget neutrality adjustment factor of 0.991249 to the LTCH PPS standard Federal payment rate for the cost of the elimination of the 25-percent threshold policy for FY 2021 and subsequent years after removing the temporary budget neutrality adjustment factor of 0.990737 that was applied to the LTCH PPS standard Federal payment rate for the cost of the elimination of the 25-percent threshold policy for FY 2020 (or a factor of 1.000517, calculated as 1/0.990737 × 0.991249). Consistent with § 412.523(d)(4), we also are applying an area wage level budget neutrality factor to the FY 2021 LTCH PPS standard Federal payment rate of 1.0016837, based on the best available data at this time, to ensure that any changes to the general updates to the area wage level adjustment (that is, the annual update of the wage index, including any changes to the geographic labor-market area designations and labor-related share) would not result in any change (increase or decrease) in estimated aggregate LTCH PPS standard Federal payment rate payments. Accordingly, we are establishing an LTCH PPS standard Federal payment rate of $43,755.34 (calculated as $42,677.64 × 1.000517 × 1.023 × 1.0016837 for FY 2021 (calculations performed on unrounded numbers). For LTCHs that fail to submit quality reporting data for FY 2021, in accordance with the requirements of the LTCH QRP under section 1866(m)(5) of the Act, we are establishing an LTCH PPS standard Federal payment rate of $42,899.90 (calculated as $42,677.64 × 1.000517 × 1.003 × 1.0016837) (calculations performed on unrounded numbers) for FY 2021.
Under the authority of section 123 of the BBRA, as amended by section 307(b) of the BIPA, we established an adjustment to the LTCH PPS standard Federal payment rate to account for differences in LTCH area wage levels under § 412.525(c). The labor-related share of the LTCH PPS standard Federal payment rate is adjusted to account for geographic differences in area wage levels by applying the applicable LTCH PPS wage index. The applicable LTCH PPS wage index is computed using wage data from inpatient acute care hospitals without regard to
The FY 2021 LTCH PPS standard Federal payment rate wage index values that would be applicable for LTCH PPS standard Federal payment rate discharges occurring on or after October 1, 2020, through September 30, 2021, are presented in Table 12A (for urban areas) and Table 12B (for rural areas), which are listed in section VI. of the Addendum to this final rule and available via the internet on the CMS website.
In adjusting for the differences in area wage levels under the LTCH PPS, the labor-related portion of an LTCH's Federal prospective payment is adjusted by using an appropriate area wage index based on the geographic classification (labor market area) in which the LTCH is located. Specifically, the application of the LTCH PPS area wage level adjustment under existing § 412.525(c) is made based on the location of the LTCH—either in an “urban area,” or a “rural area,” as defined in § 412.503. Under § 412.503, an “urban area” is defined as a Metropolitan Statistical Area (MSA) (which includes a Metropolitan division, where applicable), as defined by the Executive OMB and a “rural area” is defined as any area outside of an urban area (75 FR 37246).
The CBSA-based geographic classifications (labor market area definitions) currently used under the LTCH PPS, effective for discharges occurring on or after October 1, 2014, are based on the OMB labor market area delineations based on the 2010 Decennial Census data. In general, the current statistical areas (which were implemented beginning with FY 2015) are based on revised OMB delineations issued on February 28, 2013, in OMB Bulletin No. 13–01. (As noted elsewhere in this final rule, we have adopted minor revisions and updates in the years between the decennial censuses.) We adopted these labor market area delineations because they were at that time based on the best available data that reflect the local economies and area wage levels of the hospitals that are currently located in these geographic areas. We also believed that these OMB delineations would ensure that the LTCH PPS area wage level adjustment most appropriately accounted for and reflected the relative hospital wage levels in the geographic area of the hospital as compared to the national average hospital wage level. We noted that this policy was consistent with the IPPS policy adopted in FY 2015 under § 412.64(b)(1)(ii)(D) of the regulations (79 FR 49951 through 49963). (For additional information on the CBSA-based labor market area (geographic classification) delineations currently used under the LTCH PPS and the history of the labor market area definitions used under the LTCH PPS, we refer readers to the FY 2015 IPPS/LTCH PPS final rule (79 FR 50180 through 50185).)
In general, it is our historical practice to update the CBSA-based labor market area delineations annually based on the most recent updates issued by OMB. Generally, OMB issues major revisions to statistical areas every 10 years, based on the results of the decennial census.
However, OMB occasionally issues minor updates and revisions to statistical areas in the years between the decennial censuses. OMB Bulletin No. 17–01, issued August 15, 2017, established the delineations for the Nation's statistical areas, and the corresponding changes to the CBSA-based labor market areas were adopted in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41731). A copy of this bulletin may be obtained on the website at:
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42642), we adopted our current policy, that is, the continued use of the CBSA-based labor market area delineations as established in OMB Bulletin 17–01 and adopted in the FY 2019 IPPS/LTCH PPS final rule.
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. 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 based on the standards published on June 28, 2010 (75 FR 37246), and Census Bureau data. A copy of the September 14, 2018 OMB Bulletin No. 18–04, may be obtained at
In the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32920 through 32921), we proposed to adopt the revised delineations announced in OMB Bulletin No. 18–04 effective for FY 2021 under the LTCH PPS. We did not receive any public comments on this proposal. Therefore, in this final rule, under the authority of section 123 of the BBRA, as amended by section 307(b) of the BIPA, we are adopting the revised delineations announced in OMB Bulletin No. 18–04 effective for FY 2021 under the LTCH PPS, as we proposed, without modification. As noted previously, the March 6, 2020 OMB Bulletin 20–01 was not issued in time for development of the proposed rule. The minor updates included in OMB Bulletin 20–01 do not alter the urban or rural status of any county, and do not impact our updates to the CBSA-based labor market area delineations discussed in this section of the rule. Our adoption of the revised delineations announced in OMB Bulletin No. 18–04 is consistent with the changes under the IPPS for FY 2021 as discussed in section III.A.2. of the preamble of this final rule. A summary of these changes is presented in the discussion that follows in this section. For complete details on the changes we refer readers to section III.A.2. of the preamble of this final rule.
Under the revised OMB labor market area delineations, 34 counties (and county equivalents) currently considered part of an urban CBSA will be considered to be located in a rural area beginning in FY 2021 under our adoption of the revisions to the OMB delineations based on OMB Bulletin No. 18–04. The chart in section III.A.2.ii. of the preamble of this final rule lists the 34 urban counties that will be rural under these revisions to the OMB delineations.
Under the revised labor market area delineations shows that a total of 47 counties (and county equivalents) located in rural areas that will be located in urban areas beginning in FY 2021 under our adoption of the revisions to the OMB delineations based on OMB Bulletin No. 18–04. The chart in section III.A.2.iii. of the preamble of this final rule lists the 47 rural counties that will be urban under these revised OMB delineations.
In addition to rural counties becoming urban and urban counties becoming rural, some urban counties will shift from one urban CBSA to another urban CBSA under our adoption of the revised delineations announced in OMB Bulletin No. 18–04. In other cases, the adoption of the revised delineations announced in OMB Bulletin No. 18–04 will involve a change only in CBSA name and/or number, while the CBSA continues to encompass the same constituent counties. For example, CBSA 19380 (Dayton, OH) will experience both a change to its number and its name, and become CBSA 19430 (Dayton-Kettering, OH), while all of its three constituent counties will remain the same. In other cases, only the name of the CBSA will be modified, and none of the currently assigned counties will be reassigned to a different urban CBSA. The chart in section III.A.2.iii. of the preamble of this final rule lists the CBSAs where only the name and/or CBSA number changed.
There are also counties that will shift between existing and new CBSAs, changing the constituent makeup of the CBSAs, under our adoption of the revisions to the OMB delineations based on OMB Bulletin No. 18–04. For example, some CBSAs will be split into multiple new CBSAs, or a CBSA will lose one or more counties to other urban CBSAs. The chart in section III.A.2.iv. of the preamble of this final rule lists the urban counties that will move from one urban CBSA to a new or modified CBSA under our after adoption of these revisions to the OMB delineations.
We believe these revisions to the CBSA-based labor market area delineations as established in OMB Bulletin 18–04 will ensure that the LTCH PPS area wage level adjustment most appropriately accounts for and reflects the relative hospital wage levels in the geographic area of the hospital as compared to the national average hospital wage level based on the best available data that reflect the local economies and area wage levels of the hospitals that are currently located in these geographic areas (81 FR 57298). Therefore, as we proposed, we are adopting the revisions announced in OMB Bulletin No. 18–04 to the CBSA-based labor market area delineations under the LTCH PPS, effective October 1, 2020. Accordingly, the FY 2021 LTCH PPS wage index values in Tables 12A and 12B listed in section VI. of the Addendum to this final rule (which are available via the internet on the CMS website) reflect the revisions to the CBSA-based labor market area delineations previously described. We note that, as discussed in section III.A.2. of the preamble of this final rule, these revisions to the CBSA-based delineations also are being adopted under the IPPS.
As indicated previously, overall, we believe that our adoption of the revised delineations announced in OMB Bulletin No. 18–04 will result in LTCH PPS wage index values being more representative of the actual costs of labor in a given area. However, we also recognize that some LTCHs will experience decreases in their area wage index values as a result of adopting the revisions to the OMB delineations. We also realize that many LTCHs will have higher area wage index values under our adoption of these revisions to the OMB delineations. To mitigate the impact upon LTCHs, we have in the past provided for transition periods when adopting changes that have significant payment implications, particularly large negative impacts. While we believe that using the new OMB delineations will create a more accurate payment adjustment for differences in area wage levels, as we discussed in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32921), we also recognize that adopting such changes may cause some short-term instability in LTCH PPS payments. Therefore, we proposed a transition policy to help mitigate any significant negative impacts that LTCHs may experience due to our proposal to adopt the revised OMB delineations under the LTCH PPS. Consistent with past practice, we proposed that this transition would be implemented in a budget neutral manner. As discussed in section V.B.5. of the Addendum to this final rule, as we proposed, we are establishing a transition policy to help mitigate any significant negative impacts that LTCHs may experience due to our adoption of the revised OMB delineations under the LTCH PPS. Consistent with past practice, this transition will be implemented in a budget neutral manner, as discussed in section V.B.6. of the Addendum to this final rule.
Under the payment adjustment for the differences in area wage levels under § 412.525(c), the labor-related share of an LTCH's standard Federal payment rate payment is adjusted by the applicable wage index for the labor market area in which the LTCH is located. The LTCH PPS labor-related share currently represents the sum of the labor-related portion of operating costs and a labor-related portion of capital costs using the applicable LTCH market basket. Additional background information on the historical development of the labor-related share under the LTCH PPS can be found in the RY 2007 LTCH PPS final rule (71 FR 27810 through 27817 and 27829 through 27830) and the FY 2012 IPPS/LTCH PPS final rule (76 FR 51766 through 51769 and 51808).
For FY 2013, we rebased and revised the market basket used under the LTCH PPS by adopting a 2009-based LTCH market basket. In addition, beginning in FY 2013, we determined the labor-related share annually as the sum of the relative importance of each labor-related cost category of the 2009-based LTCH market basket for the respective fiscal year based on the best available data. (For more details, we refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53477 through 53479).) Then, effective for FY 2017, we rebased and revised the 2009-based LTCH market basket to reflect a 2013 base year and determined the labor-related share annually as the sum of the relative importance of each labor-related cost category in the 2013-based LTCH market basket using the most recent available data. (For more details, we refer readers to the FY 2017 IPPS/LTCH PPS final rule (81 FR 57085 through 57096).)
As noted previously in section V.A. in this Addendum to this final rule, effective for FY 2021, as we proposed, we are rebasing and revising the 2013-based LTCH market basket to reflect a 2017 base year. In addition, as discussed in section VII.D.6. of the preamble of this final rule, as we proposed, we are establishing that the LTCH PPS labor-related share for FY 2021 is the sum of the FY 2021 relative importance of each labor-related cost category in the 2017-based LTCH market basket using the most recent available data. For more information on comments related to our proposed labor-related share as well as our responses to those comments, we refer readers to section VII.D.6. of the preamble of this final rule. Also as we proposed, consistent with our historical practice, we are using the most recent data available to determine the final FY 2021 labor-related share in this final rule.
Table E9 in section VII.D.6. of the preamble of this final rule shows the FY 2021 labor-related share using the 2017-based LTCH market basket and the FY 2020 labor-related share using the 2013-based LTCH market basket. The labor-related share for FY 2021 is the sum of the relative importance of Wages and Salaries; Employee Benefits; Professional Fees: Labor-Related; Administrative and Facilities Support Services; Installation, Maintenance, and Repair Services; All Other: Labor-related Services; and a portion of the Capital-Related cost weight from the 2017-based LTCH market basket. The relative importance reflects the different rates of price change for these cost categories between the base year (2017) and FY 2021. Based on IHS Global Inc.'s second quarter 2020 forecast of the 2017-based LTCH market basket, the sum of the FY 2021 relative importance for Wages and Salaries, Employee Benefits, Professional Fees: Labor-related, Administrative and Facilities Support Services, Installation Maintenance & Repair Services, and All Other: Labor-related Services is 63.7 percent. The portion of Capital-Related costs that is influenced by the local labor market is estimated to be 46 percent, which is the same percentage applied to the 2013-based LTCH market basket. Since the FY 2021 relative importance for Capital-Related is 9.5 percent based on IHS Global Inc.'s second quarter 2020 forecast of the 2017-based LTCH market basket, we took 46 percent of 9.5 percent to determine the labor-related share of Capital-Related for FY 2021 of 4.4 percent. Therefore, consistent with our proposal, we are establishing a total labor-related share for FY 2021 of 68.1 percent (the sum of 63.7 percent for the operating cost and 4.4 percent for the labor-related share of Capital-Related). The total difference between the FY 2021 labor-related share using the 2017-based LTCH market basket and the FY 2020 labor-related share using the 2013-based LTCH market basket is 1.8 percentage points (68.1 percent and 66.3 percent, respectively). As discussed in greater detail in section VII.D.6. of the preamble of this final rule, this difference is attributable to the revision to the base year cost weights, the revision to the starting point of the calculation of relative importance (base year) from 2013 to 2017, and the use of an updated IHS Global Inc. forecast and reflecting an additional year of inflation.
Historically, we have established LTCH PPS area wage index values calculated from acute care IPPS hospital wage data without taking into account geographic reclassification under sections 1886(d)(8) and 1886(d)(10) of the Act (67 FR 56019). The area wage level adjustment established under the LTCH PPS is based on an LTCH's actual location without regard to the “urban” or “rural” designation of any related or affiliated provider.
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42643), we calculated the FY 2020 LTCH PPS area wage index values using the same data used for the FY 2020 acute care hospital IPPS (that is, data from cost reporting periods beginning during FY 2016), without taking into account geographic reclassification under sections 1886(d)(8) and 1886(d)(10) of the Act, as these were the most recent complete data available at that time. In that same final rule, we indicated that we computed the FY 2020 LTCH PPS area wage index values, consistent with the urban and rural geographic classifications (labor market areas) that were in place at that time and consistent with the pre-reclassified IPPS wage index policy (that is, our historical policy of not taking into account IPPS geographic reclassifications in determining payments under the LTCH PPS). As with the IPPS wage index, wage data for multicampus hospitals with campuses located in different labor market areas (CBSAs) are apportioned to each CBSA where the campus (or campuses) are located. We also continued to use our existing policy for determining area
Consistent with our historical methodology, to determine the applicable area wage index values for the FY 2021 LTCH PPS standard Federal payment rate, under the broad authority of section 123 of the BBRA, as amended by section 307(b) of the BIPA, as we proposed, we are continuing to employ our historical practice of using the same data we used to compute the FY 2021 acute care hospital inpatient wage index, as discussed in section III. of the preamble of this final rule, that is wage data collected from cost reports submitted by IPPS hospitals for cost reporting periods beginning during FY 2017, because these data are the most recent complete data available.
In addition, as we proposed, we computed the FY 2021 LTCH PPS standard Federal payment rate area wage index values consistent with the “urban” and “rural” geographic classifications (that is, the labor market area delineations, including the updates, as previously discussed in section V.B. of this Addendum) and our historical policy of not taking into account IPPS geographic reclassifications under sections 1886(d)(8) and 1886(d)(10) of the Act in determining payments under the LTCH PPS. As we proposed, we also continued to apportion the wage data for multicampus hospitals with campuses located in different labor market areas to each CBSA where the campus or campuses are located, consistent with the IPPS policy. Lastly, consistent with our existing methodology for determining the LTCH PPS wage index values and as we proposed, for FY 2021 we continued to use our existing policy for determining area wage index values for areas where there are no IPPS wage data. Under our existing methodology, the LTCH PPS wage index value for urban CBSAs with no IPPS wage data is determined by using an average of all of the urban areas within the State, and the LTCH PPS wage index value for rural areas with no IPPS wage data is determined by using the unweighted average of the wage indices from all of the CBSAs that are contiguous to the rural counties of the State.
Based on the FY 2017 IPPS wage data that we used to determine the FY 2021 LTCH PPS standard Federal payment rate area wage index values in this final rule, there are no IPPS wage data for the urban area of Hinesville, GA (CBSA 25980). Consistent with our existing methodology, we calculated the FY 2021 wage index value for CBSA 25980 as the average of the wage index values for all of the other urban areas within the State of Georgia (that is, CBSAs 10500, 12020, 12060, 12260, 15260, 16860, 17980, 19140, 23580, 31420, 40660, 42340, 46660 and 47580), as shown in Table 12A, which is listed in section VI. of the Addendum to this final rule and available via the internet on the CMS website.
Based on the FY 2017 IPPS wage data that we used to determine the FY 2021 LTCH PPS standard Federal payment rate area wage index values in this final rule, there are no rural areas without IPPS hospital wage data. Therefore, it is not necessary to use our established methodology to calculate a LTCH PPS standard Federal payment rate wage index value for rural areas with no IPPS wage data for FY 2021. We note that, as IPPS wage data are dynamic, it is possible that the number of rural areas without IPPS wage data will vary in the future.
As discussed in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32922), overall, we believe that our proposal to adopt the revised OMB delineations announced in Bulletin No. 18–04 for FY 2021 would result in LTCH PPS wage index values being more representative of the actual costs of labor in a given area. However, we also recognize that some LTCHs would experience decreases in their area wage index values as a result of our proposal. We also realize that some LTCHs would have higher area wage index values under our proposal.
To mitigate the potential impacts of policies on LTCHs, as we explained in the FY 2021 IPPS/LTCH PPS proposed final rule, we have in the past provided for transition periods when adopting changes that have significant payment implications, particularly large negative impacts. For example, we have proposed and finalized budget neutral transition policies to help mitigate negative impacts on LTCHs following the adoption of the new CBSA delineations based on the 2010 decennial census data in the FY 2015 IPPS/LTCH PPS final rule (79 FR 50185). Specifically, we implemented a 1-year 50/50 blended wage index for any LTCHs that experienced a decrease in wage index values due to our adoption of the revised delineations. This required calculating and comparing two wage indexes for each LTCH since that blended wage index was computed as the sum of 50 percent of the FY 2015 LTCH PPS wage index values under the FY 2014 CBSA delineations and 50 percent of the FY 2015 LTCH PPS wage index values under the FY 2015 new OMB delineations. While we believed that using the new OMB delineations would ultimately create a more accurate payment adjustment for differences in area wage levels, we also recognized that adopting such changes may cause some short-term instability in LTCH PPS payments. Similar instability may result from the wage policies herein, in particular for LTCHs that would be negatively impacted by the adoption of the updates to the OMB delineations. For example, LTCH's currently located in CBSA 35614 (New York–Jersey City–White Plains, NY–NJ) that would be located in new CBSA 35154 (New Brunswick–Lakewood, NJ) under the changes to the CBSA-based labor market area delineations would experience a nearly 17 percent decrease in the wage index as a result of the change. (85 FR 32922)
Consistent with our past practice of implementing transition policies to help mitigate negative impacts on hospitals following the adoption of the new CBSA delineations, we proposed that if we adopt the revised delineations announced in OMB Bulletin 18–04, it would be appropriate to implement a transition policy since, as mentioned previously, some of these revisions are material, and may negatively impact payments to LTCHs. Similar to the proposed policy under the IPPS for the adoption of the revised delineations announced in OMB Bulletin 18–04 discussed in section III.A.2. of the preamble to the proposed rule, we believe applying a 5-percent cap on any decrease in an LTCH's wage index from the LTCH's final wage index from the prior fiscal year would be an appropriate transition for FY 2021 for the revised OMB delineations as it provides transparency and predictability in payment levels from FY 2020 to the upcoming FY 2021. The FY 2021 5-percent cap on wage index decreases would be applied to all LTCHs that have any decrease in their wage indexes, regardless of the circumstance causing the decline. Given the significant portion of Medicare LTCH PPS payments that are adjusted by the wage index and how relatively few LTCHs generally see wage index declines in excess of 5 percent, LTCHs may have difficulty adapting to changes in the wage index of this magnitude all at once. For these reasons, in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32922), under the authority of section 123 of the BBRA, as amended by section 307(b) of the BIPA, we proposed to apply a 5-percent cap on any decrease in a LTCH's wage index from the LTCH's wage index from the prior fiscal year such that that an LTCH's final wage index for FY 2021 would not be less than 95 percent of its final wage index for FY 2020. This transition would allow the effects of our adoption of the revised CBSA delineations to be phased in over 2 years, where the estimated reduction in an LTCH's wage index would be capped at 5 percent in FY 2021 (that is, no cap would be applied to the reduction in the wage index for the second year (FY 2022)). Because we believe that using the new OMB delineations would ultimately create a more accurate payment adjustment for differences in area wage levels we did not propose to include a cap on the overall increase in an LTCH's wage index value.
Furthermore, consistent with the requirement at § 412.525(c)(2) that changes to area wage level adjustments are made in a budget neutral manner, we proposed that this 5 percent cap on the decrease on an LTCH's wage index would not result in any change in estimated aggregate LTCH PPS payments by including the application of this policy in the determination of the area wage level budget neutrality factor that is applied to the standard Federal payment rate, as is discussed in section V.B.6. of the Addendum to the proposed rule.
Another commenter noted that the FY 2021 LTCH PPS Impact File that accompanied the proposed rule did not include the proposed wage indexes for LTCHs after the 5-percent cap on wage index decreases was applied. The commenter recommended that in this final rule, we ensure that the wage index value for every LTCH with a final wage index value that would decreases by more than 5
After consideration of the public comments we received, for the reasons discussed above, we are finalizing without modification our proposal to apply a 5-percent cap on any decrease in a LTCH's wage index from the LTCH's wage index from the prior fiscal year such that that an LTCH's final wage index for FY 2021 will not be less than 95 percent of its final wage index for FY 2020. In addition we are finalizing without modification our proposal adopt the 5 percent cap on the decrease on an LTCH's wage index in a budget neutral manner by including the application of this policy in the determination of the area wage level budget neutrality factor that is applied to the standard Federal payment rate, which is discussed in section V.B.6. of the Addendum to this final rule.
In response to the comment that the FY 2021 LTCH PPS Impact File that accompanied the proposed rule did not include the LTCH wage indexes after the 5-percent cap on wage index decreases was applied, we have included in the FY 2021 LTCH PPS Impact File that accompanies this final rule the LTCH wage indexes without the 5-percent cap on wage index decreases applied, as well as the final LTCH wage indexes for FY 2021 (which do have the 5-percent cap on wage index decreases applied).
Historically, the LTCH PPS wage index and labor-related share are updated annually based on the latest available data. Under § 412.525(c)(2), any changes to the area wage index values or labor-related share are to be made in a budget neutral manner such that estimated aggregate LTCH PPS payments are unaffected; that is, will be neither greater than nor less than estimated aggregate LTCH PPS payments without such changes to the area wage level adjustment. Under this policy, we determine an area wage level adjustment budget neutrality factor that is applied to the standard Federal payment rate to ensure that any changes to the area wage level adjustments are budget neutral such that any changes to the area wage index values or labor-related share would not result in any change (increase or decrease) in estimated aggregate LTCH PPS payments. Accordingly, under § 412.523(d)(4), we have applied an area wage level adjustment budget neutrality factor in determining the standard Federal payment rate, and we also established a methodology for calculating an area wage level adjustment budget neutrality factor. (For additional information on the establishment of our budget neutrality policy for changes to the area wage level adjustment, we refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51771 through 51773 and 51809).)
For FY 2021, in accordance with § 412.523(d)(4), as we proposed, we applied an area wage level budget neutrality factor to adjust the LTCH PPS standard Federal payment rate to account for the estimated effect of the adjustments or updates to the area wage level adjustment under § 412.525(c)(1) on estimated aggregate LTCH PPS payments, consistent with the methodology we established in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51773). As discussed previously, the 5 percent cap on the decrease on an LTCH's wage index will be implemented in a budget neutral manner by including the application of that policy in the area wage level a budget neutrality factor that is applied to the standard Federal payment rate.
Specifically, as we proposed, we determined an area wage level adjustment budget neutrality factor that is applied to the LTCH PPS standard Federal payment rate under § 412.523(d)(4) for FY 2021 using the following methodology:
We note that, because the area wage level adjustment under § 412.525(c) is an adjustment to the LTCH PPS standard Federal payment rate, consistent with historical practice, we only used data from claims that qualified for payment at the LTCH PPS standard Federal payment rate under the dual rate LTCH PPS to calculate the FY 2021 LTCH PPS standard Federal payment rate area wage level adjustment budget neutrality factor. In addition, we note that the estimated LTCH PPS standard Federal payment rate used in the calculations in Steps 1 through 4 include the permanent one-time budget neutrality adjustment factor for the estimated cost of eliminating the 25-percent threshold policy in FY 2021 and subsequent years (discussed in section VII.D. of the preamble of this final rule).
For this final rule, using the steps in the methodology previously described, we determined a FY 2021 LTCH PPS standard Federal payment rate area wage level adjustment budget neutrality factor of 1.0016837. Accordingly, in section V.A. of the Addendum to this final rule, to determine the FY 2021 LTCH PPS standard Federal payment rate, we applied the area wage level adjustment budget neutrality factor of 1.0016837, in accordance with § 412.523(d)(4).
Under § 412.525(b), a cost-of-living adjustment (COLA) is provided for LTCHs located in Alaska and Hawaii to account for the higher costs incurred in those States. Specifically, we apply a COLA to payments to LTCHs located in Alaska and Hawaii by multiplying the nonlabor-related portion of the standard Federal payment rate by the applicable COLA factors established annually by CMS. Higher labor-related costs for LTCHs located in Alaska and Hawaii are taken into account in the adjustment for area wage levels previously described. The methodology used to determine the COLA factors for Alaska and Hawaii is based on a comparison of the growth in the Consumer Price Indexes (CPIs) for Anchorage, Alaska, and Honolulu, Hawaii, relative to the growth in the CPI for the average U.S. city as published by the Bureau of Labor Statistics (BLS). It also includes a 25-percent cap on the CPI-updated COLA factors. Under our current policy, we update the COLA factors using the methodology as previously described every 4 years (at the same time as the update to the labor-related share of the IPPS market basket), and we last updated the COLA factors for Alaska and Hawaii published by OPM for 2009 in FY 2018 (82 FR 38539 through 38540).
We continue to believe that determining updated COLA factors using this methodology would appropriately adjust the nonlabor-related portion of the LTCH PPS standard Federal payment rate for LTCHs located in Alaska and Hawaii. Therefore, in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32923 through 32924), for FY 2021, under the broad authority conferred upon the
We did not receive any public comments on our proposal. Therefore, we are adopting our proposal, without modification. Consistent with our historical practice, we are establishing that the COLA factors shown in the following table will be used to adjust the nonlabor-related portion of the LTCH PPS standard Federal payment rate for LTCHs located in Alaska and Hawaii under § 412.525(b).
From the beginning of the LTCH PPS, we have included an adjustment to account for cases in which there are extraordinarily high costs relative to the costs of most discharges. Under this policy, additional payments are made based on the degree to which the estimated cost of a case (which is calculated by multiplying the Medicare allowable covered charge by the hospital's overall hospital CCR) exceeds a fixed-loss amount. This policy results in greater payment accuracy under the LTCH PPS and the Medicare program, and the LTCH sharing the financial risk for the treatment of extraordinarily high-cost cases.
We retained the basic tenets of our HCO policy in FY 2016 when we implemented the dual rate LTCH PPS payment structure under section 1206 of Public Law 113–67. LTCH discharges that meet the criteria for exclusion from the site neutral payment rate (that is, LTCH PPS standard Federal payment rate cases) are paid at the LTCH PPS standard Federal payment rate, which includes, as applicable, HCO payments under § 412.523(e). LTCH discharges that do not meet the criteria for exclusion are paid at the site neutral payment rate, which includes, as applicable, HCO payments under § 412.522(c)(2)(i). In the FY 2016 IPPS/LTCH PPS final rule, we established separate fixed-loss amounts and targets for the two different LTCH PPS payment rates. Under this bifurcated policy, the historic 8-percent HCO target was retained for LTCH PPS standard Federal payment rate cases, with the fixed-loss amount calculated using only data from LTCH cases that would have been paid at the LTCH PPS standard Federal payment rate if that rate had been in effect at the time of those discharges. For site neutral payment rate cases, we adopted the operating IPPS HCO target (currently 5.1 percent) and set the fixed-loss amount for site neutral payment rate cases at the value of the IPPS fixed-loss amount. Under the HCO policy for both payment rates, an LTCH receives 80 percent of the difference between the estimated cost of the case and the applicable HCO threshold, which is the sum of the LTCH PPS payment for the case and the applicable fixed-loss amount for such case.
In order to maintain budget neutrality, consistent with the budget neutrality requirement at § 412.522(d)(1) for HCO payments to LTCH PPS standard Federal rate payment cases, we also adopted a budget neutrality requirement for HCO payments to site neutral payment rate cases by applying a budget neutrality factor to the LTCH PPS payment for those site neutral payment rate cases. (We refer readers to § 412.522(c)(2)(i) of the regulations for further details.) We note that, during the 4-year transitional period, the site neutral payment rate HCO budget neutrality factor did not apply to the LTCH PPS standard Federal payment rate portion of the blended payment rate at § 412.522(c)(3) payable to site neutral payment rate cases. (For additional details on the HCO policy adopted for site neutral payment rate cases under the dual rate LTCH PPS payment structure, including the budget neutrality adjustment for HCO payments to site neutral payment rate cases, we refer readers to the FY 2016 IPPS/LTCH PPS final rule (80 FR 49617 through 49623).)
As noted previously, CCRs are used to determine payments for HCO adjustments for both payment rates under the LTCH PPS and also are used to determine payments for site neutral payment rate cases. As noted earlier, in determining HCO and the site neutral payment rate payments (regardless of whether the case is also an HCO), we generally calculate the estimated cost of the case by multiplying the LTCH's overall CCR by the Medicare allowable charges for the case. An overall CCR is used because the LTCH PPS uses a single prospective payment per discharge that covers both inpatient operating and capital-related costs. The LTCH's overall CCR is generally computed based on the sum of LTCH operating and capital costs (as described in Section 150.24, Chapter 3, of the Medicare Claims Processing Manual (Pub. 100–4)) as compared to total Medicare charges (that is, the sum of its operating and capital inpatient routine and ancillary charges), with those values determined from either the most recently settled cost report or the most recent tentatively settled cost report, whichever is from the latest cost reporting period. However, in certain instances, we use an alternative CCR, such as the statewide average CCR, a CCR that is specified by CMS, or one that is requested by the hospital. (We refer readers to § 412.525(a)(4)(iv) of the regulations for further details regarding HCO adjustments for either LTCH PPS payment rate and § 412.522(c)(1)(ii) for the site neutral payment rate.)
The LTCH's calculated CCR is then compared to the LTCH total CCR ceiling. Under our established policy, an LTCH with a calculated CCR in excess of the applicable maximum CCR threshold (that is, the LTCH total CCR ceiling, which is calculated as 3 standard deviations from the national geometric average CCR) is generally assigned the applicable statewide CCR. This policy is premised on a belief that calculated CCRs above the LTCH total CCR ceiling are most likely due to faulty data reporting or entry, and CCRs based on erroneous data should not be used to identify and make payments for outlier cases.
Consistent with our historical practice, as we proposed, we used the most recent data available to determine the LTCH total CCR ceiling for FY 2021 in this final rule. Specifically, in this final rule, using our established methodology for determining the LTCH total CCR ceiling based on IPPS total CCR data from the March 2020 update of the Provider Specific File (PSF), which is the most recent data available, we are establishing an LTCH total CCR ceiling of 1.24 under the LTCH PPS for FY 2021 in accordance with § 412.525(a)(4)(iv)(C)(
We did not receive any public comments on our proposals. Therefore, we are finalizing our proposals as described above, without modification.
Our general methodology for determining the statewide average CCRs used under the LTCH PPS is similar to our established methodology for determining the LTCH total CCR ceiling because it is based on “total” IPPS CCR data. (For additional information on our methodology for determining statewide average CCRs under the LTCH PPS, we refer readers to the FY 2007 IPPS final rule (71 FR 48119 through 48120).) Under the LTCH PPS HCO policy at § 412.525(a)(4)(iv)(C), the SSO policy at § 412.529(f)(4)(iii), and the site neutral payment rate at § 412.522(c)(1)(ii), the MAC may use a statewide average CCR, which is established annually by CMS, if it is unable to determine an accurate CCR for an LTCH in one of the following circumstances: (1) New LTCHs that have not yet submitted their first Medicare cost report (a new LTCH is defined as an entity that has not accepted assignment of an existing hospital's provider agreement in accordance with § 489.18); (2) LTCHs whose calculated CCR is in excess of the LTCH total CCR ceiling; and (3) other LTCHs for whom data with which to calculate a CCR are not available (for example, missing or faulty data). (Other sources of data that the MAC may consider in determining an LTCH's CCR include data from a different cost reporting period for the LTCH, data from the cost reporting period preceding the period in which the hospital began to be paid as an LTCH (that is, the period of at least 6 months that it was paid as a short-term, acute care hospital), or data from other comparable LTCHs, such as LTCHs in the same chain or in the same region.)
Consistent with our historical practice of using the best available data, in this final rule, using our established methodology for determining the LTCH statewide average CCRs, based on the most recent complete IPPS “total CCR” data from the March 2020 update of the PSF, as we proposed, we are establishing LTCH PPS statewide average total CCRs for urban and rural hospitals that will be effective for discharges occurring on or after October 1, 2020, through September 30, 2021, in Table 8C listed in section VI. of the Addendum to this final rule (and available via the internet on the CMS website). Consistent with our historical practice, as we also proposed, we used more recent data to determine the LTCH PPS statewide average total CCRs for FY 2021 in this final rule.
Under the current LTCH PPS labor market areas, all areas in Delaware, the District of Columbia, New Jersey, and Rhode Island are classified as urban. Therefore, there are no rural statewide average total CCRs listed for those jurisdictions in Table 8C. This policy is consistent with the policy that we established when we revised our methodology for determining the applicable LTCH statewide average CCRs in the FY 2007 IPPS final rule (71 FR 48119 through 48121) and is the same as the policy applied under the IPPS. In addition, although Connecticut has areas that are designated as rural, in our calculation of the LTCH statewide average CCRs, there was no data available from short-term, acute care IPPS hospitals to compute a rural statewide average CCR or there were no short-term, acute care IPPS hospitals or LTCHs located in these areas as of March 2020. Therefore, consistent with our existing methodology, as we proposed, we used the national average total CCR for rural IPPS hospitals for rural Connecticut in Table 8C. While Massachusetts also has rural areas, the statewide average CCR for rural areas in Massachusetts is based on one IPPS provider whose CCR is an atypical 0.949. Because this is much higher than the statewide urban average (0.459) and furthermore implies costs are nearly equal to charges, as with Connecticut, we used the national average total CCR for rural hospitals for hospitals located in rural Massachusetts. Furthermore, consistent with our existing methodology, in determining the urban and rural statewide average total CCRs for Maryland LTCHs paid under the LTCH PPS, as we proposed, we are continuing to use, as a proxy, the national average total CCR for urban IPPS hospitals and the national average total CCR for rural IPPS hospitals, respectively. We are using this proxy because we believe that the CCR data in the PSF for Maryland hospitals may not be entirely accurate (as discussed in greater detail in the FY 2007 IPPS final rule (71 FR 48120)).
We did not receive any public comments on our proposals. Therefore, we are finalizing our proposals as described above, without modification.
Under the HCO policy for cases paid under either payment rate at § 412.525(a)(4)(iv)(D), the payments for HCO cases are subject to reconciliation. Specifically, any such payments are reconciled at settlement based on the CCR that was calculated based on the cost report coinciding with the discharge. For additional information on the reconciliation policy, we refer readers to Sections 150.26 through 150.28 of the Medicare Claims Processing Manual (Pub. 100–4), as added by Change Request 7192 (Transmittal 2111; December 3, 2010), and the RY 2009 LTCH PPS final rule (73 FR 26820 through 26821).
Under the regulations at § 412.525(a)(2)(ii) and as required by section 1886(m)(7) of the Act, the fixed-loss amount for HCO payments is set each year so that the estimated aggregate HCO payments for LTCH PPS standard Federal payment rate cases are 99.6875 percent of 8 percent (that is, 7.975 percent) of estimated aggregate LTCH PPS payments for LTCH PPS standard Federal payment rate cases. (For more details on the requirements for high-cost outlier payments in FY 2018 and subsequent years under section 1886(m)(7) of the Act and additional information regarding high-cost outlier payments prior to FY 2018, we refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38542 through 38544).)
When we implemented the LTCH PPS, we established a fixed-loss amount so that total estimated outlier payments are projected to equal 8 percent of total estimated payments under the LTCH PPS (67 FR 56022 through 56026). When we implemented the dual rate LTCH PPS payment structure beginning in FY 2016, we established that, in general, the historical LTCH PPS HCO policy would continue to apply to LTCH PPS standard Federal payment rate cases. That is, the fixed-loss amount and target for LTCH PPS standard Federal payment rate cases would be determined using the LTCH PPS HCO policy adopted when the LTCH PPS was first implemented, but we limited the data used under that policy to LTCH cases that would have been LTCH PPS standard Federal payment rate cases if the statutory changes had been in effect at the time of those discharges.
To determine the applicable fixed-loss amount for LTCH PPS standard Federal payment rate cases, we estimate outlier payments and total LTCH PPS payments for each LTCH PPS standard Federal payment rate case (or for each case that would have been a LTCH PPS standard Federal payment rate case if the statutory changes had been in effect at the time of the discharge) using claims data from the MedPAR files. In accordance with § 412.525(a)(2)(ii), the applicable fixed-loss amount for LTCH PPS standard Federal payment rate cases results
In the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32925), we proposed to continue to use our current methodology to calculate an applicable fixed-loss amount for LTCH PPS standard Federal payment rate cases for FY 2021 using the best available data that would maintain estimated HCO payments at the projected 7.975 percent of total estimated LTCH PPS payments for LTCH PPS standard Federal payment rate cases (based on the payment rates and policies for these cases presented in the proposed rule).
Specifically, based on the most recent complete LTCH data available at that time (that is, LTCH claims data from the December 2019 update of the FY 2019 MedPAR file and CCRs from the December 2019 update of the PSF), we determined a proposed fixed-loss amount for LTCH PPS standard Federal payment rate cases for FY 2021 of $30,515 that would result in estimated outlier payments projected to be equal to 7.975 percent of estimated FY 2021 payments for such cases. We also proposed to continue to make an additional HCO payment for the cost of an LTCH PPS standard Federal payment rate case that exceeds the HCO threshold amount that is equal to 80 percent of the difference between the estimated cost of the case and the outlier threshold (the sum of the proposed adjusted LTCH PPS standard Federal payment rate payment and the proposed fixed-loss amount for LTCH PPS standard Federal payment rate cases of $30,515).
Consistent with our historical practice of using the best data available, when determining the fixed-loss amount for LTCH PPS standard Federal payment rate cases for FY 2021 in the final rule, we proposed to use the most recent available LTCH claims data and CCR data.
Another commenter stated that CMS did not explain the proposed increase in the fixed-loss amount from FY 2020 of $26,778 to the FY 2021 proposed amount of $30,515. The commenter continued by indicating that, based on historical experience, the final fixed-loss amount would likely decrease from the proposed amount but expressed concern that the final fixed-loss amount may still reflect a significant increase. This commenter also stated that CMS did not explain how the charge inflation factor, which is integral to the determination of the fixed-loss amount, is calculated, and requested that CMS provide more information on how the fixed-loss amount for LTCH PPS standard Federal payment rate cases is calculated and the reasons for any significant changes.
As stated in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32963), consistent with past practice, in calculating estimated high cost outlier payments for that proposed rule, we increased estimated costs by an inflation factor of 5.4 percent (determined by the Office of the Actuary) to update the FY 2019 costs of each case to FY 2021. Based on the data available for this final rule, in calculating estimated high cost outlier payments for this final rule, we increased estimated costs by an inflation factor of 4.3 percent (determined by the Office of the Actuary) to update the FY 2019 costs of each case to FY 2021. The charge inflation factor is the average value resultant from eight quarterly market basket updates. To calculate a two-year charge inflation factor for FY 2021 for this final rule, consistent with historical practice, we divided the average of the four quarter market basket values for FY 2021 (1.093) by the average of the four quarter market basket values for FY 2019 (1.047), which results in a two-year charge inflation factor for FY 2021 of 1.043 (calculation performed using unrounded numbers). Therefore, consistent with past practice, in determining a FY 2021 fixed-loss amount that would result in estimated outlier payments for FY 2021 being projected to be equal to 7.975 percent of projected total FY 2021 LTCH PPS payments for LTCH PPS standard Federal payment rate cases, we inflated the charges on the MedPAR claims by 2 years, from FY 2019 to FY 2021, using the two-year charge inflation factor of 1.043.
After consideration of public comments we are finalizing our proposals without modification. In addition, consistent with our historical practice of using the best data available, as we proposed, when determining the fixed-loss amount for LTCH PPS standard Federal payment rate cases for FY 2021 in this final rule, we used the most recent available LTCH claims data and CCR data.
For this FY 2021 IPPS/LTCH PPS final rule, we are continuing to use our current methodology to calculate an applicable fixed-loss amount for LTCH PPS standard Federal payment rate cases for FY 2021 using the best available data that will maintain estimated HCO payments at the projected 7.975 percent of total estimated LTCH PPS payments for LTCH PPS standard Federal payment rate cases (based on the payment rates and policies for these cases presented in this final rule). Specifically, based on the most recent complete LTCH data available at this time (that is, LTCH claims data from the March 2020 update of the FY 2019 MedPAR file and CCRs from the March 2020 update of the PSF), we determined a fixed-loss amount for LTCH PPS standard Federal payment rate cases for FY 2021 of $27,195 that will result in estimated outlier payments projected to be equal to 7.975 percent of estimated FY 2021 payments for such cases. Under the broad authority of section 123(a)(1) of the BBRA and section 307(b)(1) of the BIPA, we are establishing a fixed-loss amount of $27,195 for LTCH PPS standard Federal payment rate cases for FY 2021. Under this policy, we would continue to make an additional HCO payment for the cost of an LTCH PPS standard Federal payment rate case that exceeds the HCO threshold amount that is equal to 80 percent of the difference between the estimated cost of the case and the outlier threshold (the sum of the adjusted LTCH PPS standard Federal payment rate and the fixed-loss amount for LTCH PPS standard Federal payment rate cases of $27,195).
We note, the fixed-loss amount for FY 2021 for LTCH PPS standard Federal payment rate cases we are establishing in this final rule based on the most recent LTCH claims data from the MedPAR file and the latest CCRs from the PSF, result in a fixed-loss amount for such cases that is lower than the proposed fixed-loss amount. This change is largely attributable to updates to CCRs from the December 2019 update of the PSF to the March 2020 update of the PSF. As previously discussed, the increase in the fixed-loss amount from FY 2020 of $26,778 to the FY 2021 amount of $27,195 is necessary to maintain estimated HCO payments at the projected 7.975 percent of total estimated LTCH PPS payments for LTCH PPS standard Federal payment rate cases.
When we implemented the application of the site neutral payment rate in FY 2016, in examining the appropriate fixed-loss amount for site neutral payment rate cases issue, we considered how LTCH discharges based on historical claims data would have been classified under the dual rate LTCH PPS payment structure and the CMS' Office of the Actuary projections regarding how LTCHs will likely respond to our implementation of policies resulting from the statutory payment changes. We again relied on these considerations and actuarial projections in FY 2017 and FY 2018 because the historical claims data available in each of these years were not all subject to the LTCH PPS dual rate payment system. Similarly, for FY 2019
For FYs 2016 through 2020, at that time our actuaries projected that the proportion of cases that would qualify as LTCH PPS standard Federal payment rate cases versus site neutral payment rate cases under the statutory provisions would remain consistent with what is reflected in the historical LTCH PPS claims data. Although our actuaries did not project an immediate change in the proportions found in the historical data, they did project cost and resource changes to account for the lower payment rates. Our actuaries also projected that the costs and resource use for cases paid at the site neutral payment rate would likely be lower, on average, than the costs and resource use for cases paid at the LTCH PPS standard Federal payment rate and would likely mirror the costs and resource use for IPPS cases assigned to the same MS–DRG, regardless of whether the proportion of site neutral payment rate cases in the future remains similar to what is found based on the historical data. As discussed in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49619), this actuarial assumption is based on our expectation that site neutral payment rate cases would generally be paid based on an IPPS comparable per diem amount under the statutory LTCH PPS payment changes that began in FY 2016, which, in the majority of cases, is much lower than the payment that would have been paid if these statutory changes were not enacted. In light of these projections and expectations, we discussed that we believed that the use of a single fixed-loss amount and HCO target for all LTCH PPS cases would be problematic. In addition, we discussed that we did not believe that it would be appropriate for comparable LTCH PPS site neutral payment rate cases to receive dramatically different HCO payments from those cases that would be paid under the IPPS (80 FR 49617 through 49619 and 81 FR 57305 through 57307). For those reasons, we stated that we believed that the most appropriate fixed-loss amount for site neutral payment rate cases for FYs 2016 through 2020 would be equal to the IPPS fixed-loss amount for that particular fiscal year. Therefore, we established the fixed-loss amount for site neutral payment rate cases as the corresponding IPPS fixed-loss amounts for FYs 2016 through 2020. In particular, in FY 2020, we established the fixed-loss amount for site neutral payment rate cases as the FY 2020 IPPS fixed-loss amount of $26,552 (as corrected at 84 FR 49845).
As noted earlier, because not all claims in the data used for this FY 2021 IPPS/LTCH PPS final rule were subject to the unblended site neutral payment rate, we continue to rely on the same considerations and actuarial projections used in FYs 2016 through 2020 when developing a fixed-loss amount for site neutral payment rate cases for FY 2021. Our actuaries continue to project that site neutral payment rate cases in FY 2021 will continue to mirror an IPPS case paid under the same MS–DRG. That is, our actuaries continue to project that the costs and resource use for FY 2021 cases paid at the site neutral payment rate would likely be lower, on average, than the costs and resource use for cases paid at the LTCH PPS standard Federal payment rate and will likely mirror the costs and resource use for IPPS cases assigned to the same MS–DRG, regardless of whether the proportion of site neutral payment rate cases in the future remains similar to what was found based on the historical data. (Based on the most recent FY 2019 LTCH claims data used in the development of this FY 2021 IPPS/LTCH PPS final rule, approximately 75 percent of LTCH cases were paid the LTCH PPS standard Federal payment rate and approximately 25 percent of LTCH cases were paid the site neutral payment rate for discharges occurring in FY 2019.)
For these reasons, we continue to believe that the most appropriate fixed-loss amount for site neutral payment rate cases for FY 2021 is the IPPS fixed-loss amount for FY 2021. Therefore, consistent with past practice, in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32926), we proposed that the applicable HCO threshold for site neutral payment rate cases is the sum of the site neutral payment rate for the case and the IPPS fixed-loss amount. That is, we proposed a fixed-loss amount for site neutral payment rate cases of $30,006. Accordingly, for FY 2021, we proposed to calculate a HCO payment for site neutral payment rate cases with costs that exceed the HCO threshold amount that is equal to 80 percent of the difference between the estimated cost of the case and the outlier threshold (the sum of the site neutral payment rate payment and the proposed fixed-loss amount for site neutral payment rate cases of $30,006).
We did not receive any public comments on our proposals. Therefore, we are finalizing our proposals as described above, without modification. Therefore, for FY 2021, as we proposed, we are establishing that the applicable HCO threshold for site neutral payment rate cases is the sum of the site neutral payment rate for the case and the IPPS fixed loss amount. That is, we are establishing a fixed-loss amount for site neutral payment rate cases of $29,051, which is the same FY 2021 IPPS fixed-loss amount discussed in section II.A.4.g.(1). of the Addendum to this final rule. Accordingly, under this policy, for FY 2021, we will calculate a HCO payment for site neutral payment rate cases with costs that exceed the HCO threshold amount, which is equal to 80 percent of the difference between the estimated cost of the case and the outlier threshold (the sum of site neutral payment rate payment and the fixed-loss amount for site neutral payment rate cases of $29,051).
In establishing a HCO policy for site neutral payment rate cases, we established a budget neutrality adjustment under § 412.522(c)(2)(i). We established this requirement because we believed, and continue to believe, that the HCO policy for site neutral payment rate cases should be budget neutral, just as the HCO policy for LTCH PPS standard Federal payment rate cases is budget neutral, meaning that estimated site neutral payment rate HCO payments should not result in any change in estimated aggregate LTCH PPS payments.
To ensure that estimated HCO payments payable to site neutral payment rate cases in FY 2021 would not result in any increase in estimated aggregate FY 2021 LTCH PPS payments, under the budget neutrality requirement at § 412.522(c)(2)(i), it is necessary to reduce site neutral payment rate payments by 5.1 percent to account for the estimated additional HCO payments payable to those cases in FY 2021, in general, we proposed to continue this policy.
As explained in the proposed rule, consistent with the IPPS HCO payment threshold, we estimate the proposed fixed-loss threshold would result in FY 2021 HCO payments for site neutral payment rate cases to equal 5.1 percent of the site neutral payment rate payments that are based on the IPPS comparable per diem amount. As such, to ensure estimated HCO payments payable for site neutral payment rate cases in FY 2021 would not result in any increase in estimated aggregate FY 2021 LTCH PPS payments, under the budget neutrality requirement at § 412.522(c)(2)(i), as we explained in the proposed rule, it is necessary to reduce the site neutral payment rate amount paid under § 412.522(c)(1)(i) by 5.1 percent to account for the estimated additional HCO payments payable for site neutral payment rate cases in FY 2021. In order to achieve this, for FY 2021, we proposed to apply a budget neutrality factor of 0.949 (that is, the decimal equivalent of a 5.1 percent reduction, determined as 1.0 − 5.1/100 = 0.949) to the site neutral payment rate for those site neutral payment rate cases paid under § 412.522(c)(1)(i). We note that, consistent with our current policy, this HCO budget neutrality adjustment would not be applied to the HCO portion of the site neutral payment rate amount (81 FR 57309).
After consideration of public comments, for the reasons discussed above, we are adopting our proposed site neutral payment rate HCO budget neutrality adjustment as final without modification. Specifically, for FY 2021, as we proposed, we are applying a budget neutrality factor of 0.949 (that is, the decimal equivalent of a 5.1 percent reduction, determined as 1.0 − 5.1/100 = 0.949) to the site neutral payment rate for those site neutral payment rate cases paid under § 412.522(c)(1)(i). We note that, consistent with our current policy, this HCO budget neutrality adjustment will not apply to the HCO portion of the site neutral payment rate amount.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50766), we established a policy to reflect the changes to the Medicare IPPS DSH payment adjustment methodology made by section 3133 of the Affordable Care Act in the calculation of the “IPPS comparable amount” under the SSO policy at § 412.529 and the “IPPS equivalent amount” under the site neutral payment rate at § 412.522. Historically, the determination of both the “IPPS comparable amount” and the “IPPS equivalent amount” includes an amount for inpatient operating costs “for the costs of serving a disproportionate share of low-income patients.” Under the statutory changes to the Medicare DSH payment adjustment methodology that began in FY 2014, in general, eligible IPPS hospitals receive an empirically justified Medicare DSH payment equal to 25 percent of the amount they otherwise would have received under the statutory formula for Medicare DSH payments prior to the amendments made by the Affordable Care Act. The remaining amount, equal to an estimate of 75 percent of the amount that otherwise would have been paid as Medicare DSH payments, reduced to reflect changes in the percentage of individuals who are uninsured and any additional statutory adjustment, is made available to make additional payments to each hospital that qualifies for Medicare DSH payments and that has uncompensated care. The additional uncompensated care payments are based on the hospital's amount of uncompensated care for a given time period relative to the total amount of uncompensated care for that same time period reported by all IPPS hospitals that receive Medicare DSH payments.
To reflect the statutory changes to the Medicare DSH payment adjustment methodology in the calculation of the “IPPS comparable amount” and the “IPPS equivalent amount” under the LTCH PPS, we stated that we will include a reduced Medicare DSH payment amount that reflects the projected percentage of the payment amount calculated based on the statutory Medicare DSH payment formula prior to the amendments made by the Affordable Care Act that will be paid to eligible IPPS hospitals as empirically justified Medicare DSH payments and uncompensated care payments in that year (that is, a percentage of the operating Medicare DSH payment amount that has historically been reflected in the LTCH PPS payments that are based on IPPS rates). We also stated that the projected percentage will be updated annually, consistent with the annual determination of the amount of uncompensated care payments that will be made to eligible IPPS hospitals. We believe that this approach results in appropriate payments under the LTCH PPS and is consistent with our intention that the “IPPS comparable amount” and the “IPPS equivalent amount” under the LTCH PPS closely resemble what an IPPS payment would have been for the same episode of care, while recognizing that some features of the IPPS cannot be translated directly into the LTCH PPS (79 FR 50766 through 50767).
As discussed in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32927), based on the data available at that time, we proposed to establish that the calculation of the “IPPS comparable amount” under § 412.529 would include an applicable operating Medicare DSH payment amount that is equal to 75.90 percent of the operating Medicare DSH payment amount that would have been paid based on the statutory Medicare DSH payment formula absent the amendments made by the Affordable Care Act. Furthermore, consistent with our historical practice, we proposed that, if more recent data became available, we would use that data to determine this factor in this final rule.
We did not receive any public comments in response to our proposal, and we are adopting it as final. However, as we proposed we are determine the factor in this final rule using more recent data. For FY 2021, as discussed in greater detail in section IV.G.3. of the preamble of this final rule, based on the most recent data available, our estimate of 75 percent of the amount that would otherwise have been paid as Medicare DSH payments (under the methodology outlined in section 1886(r)(2) of the Act) is adjusted to 72.86 percent of that amount to reflect the change in the percentage of individuals who are uninsured. The resulting amount is then used to determine the amount available to make uncompensated care payments to eligible IPPS hospitals in FY 2021. In other words, the amount of the Medicare DSH payments that would have been made prior to the amendments made by the Affordable Care Act is adjusted to 54.65 percent (the product of 75 percent and 72.86 percent) and the resulting amount is used to calculate the uncompensated care payments to eligible hospitals. As a result, for FY 2021, we project that the reduction in the amount of Medicare DSH payments pursuant to section 1886(r)(1) of the Act, along with the payments for uncompensated care under section 1886(r)(2) of the Act, will result in overall Medicare DSH payments of 79.65 percent of the amount of Medicare DSH payments that would otherwise have been made in the absence of the amendments made by the Affordable Care Act (that is, 25 percent + 54.65 percent = 79.65 percent).
Therefore, for FY 2021, consistent with our proposal, we are establishing that the calculation of the “IPPS comparable amount” under § 412.529 will include an applicable operating Medicare DSH payment amount that is equal to 79.65 percent of the operating Medicare DSH payment amount that would have been paid based on the statutory Medicare DSH payment formula absent the amendments made by the Affordable Care Act.
Section 412.525 sets forth the adjustments to the LTCH PPS standard Federal payment rate. Under the dual rate LTCH PPS payment structure, only LTCH PPS cases that meet the statutory criteria to be excluded from the site neutral payment rate are paid based on the LTCH PPS standard Federal payment rate. Under § 412.525(c), the LTCH PPS standard Federal payment rate is adjusted to account for differences in area wages by multiplying the labor-related share of the LTCH PPS standard Federal payment rate for a case by the applicable LTCH PPS wage index (the FY 2021 values are shown in Tables 12A through 12B listed in section VI. of the Addendum to this final rule and are available via the internet on the CMS website). The LTCH PPS standard Federal payment rate is also adjusted to account for the higher costs of LTCHs located in Alaska and Hawaii by the applicable COLA factors (the final FY 2021 factors are shown in the chart in section V.C. of this Addendum) in accordance with § 412.525(b). In this final rule, we are establishing an LTCH PPS standard Federal payment rate for FY 2021 of $43,755.34, as discussed in section V.A. of the Addendum to this final rule. We illustrate the methodology to adjust the LTCH PPS standard Federal payment rate for FY 2021 in the following example:
To calculate the LTCH's total adjusted Federal prospective payment for this Medicare patient case in FY 2021, we computed the wage-adjusted Federal prospective payment amount by multiplying the unadjusted FY 2021 LTCH PPS standard Federal payment rate ($43,755.34) by the labor-related share (0.681 percent) and the
This section lists the tables referred to throughout the preamble of this final rule and in the Addendum. In the past, a majority of these tables were published in the
In addition, under the HAC Reduction Program, established by section 3008 of the Affordable Care Act, a hospital's total payment may be reduced by 1 percent if it is in the lowest HAC performance quartile. The hospital-level data for the FY 2021 HAC Reduction Program will be made publicly available once it has undergone the review and corrections process.
As was the cases for the FY 2020 IPPS/LTCH PPS proposed and final rules, we are no longer including Table 15, which had typically included the fiscal year readmissions payment adjustment factors because hospitals have not yet had the opportunity to review and correct the data before the data are made public under our policy regarding the reporting of hospital-specific data. After hospitals have been given an opportunity to review and correct their calculations for FY 2021, we will post Table 15 (which will be available via the internet on the CMS website) to display the final FY 2021 readmissions payment adjustment factors that will be applicable to discharges occurring on or after October 1, 2020. We expect Table 15 will be posted on the CMS website in the fall of 2020.
Readers who experience any problems accessing any of the tables that are posted on the CMS websites identified below should contact Michael Treitel at (410) 786–4552.
The following IPPS tables for this final rule are generally available through the internet on the CMS website at:
The following LTCH PPS tables for this FY 2021 final rule are available through the internet on the CMS website at:
This final rule is necessary in order to make payment and policy changes under the Medicare IPPS for Medicare acute care hospital inpatient services for operating and capital-related costs as well as for certain hospitals and hospital units excluded from the IPPS. This final rule also is necessary to make payment and policy changes for Medicare hospitals under the LTCH PPS.
We believe that the changes in this final rule, such as the updates to the IPPS and LTCH PPS rates, and the policies and discussions relating to applications for new technology add-on payments, are needed to further each of these goals while maintaining the financial viability of the hospital industry and ensuring access to high quality health care for Medicare beneficiaries.
For example, without additional payments for new medical technologies that meet the criteria for approval for new technology add-on payments, Medicare beneficiaries may not have appropriate access to these new technologies. We discuss the technologies for which we received applications for add-on payments for new medical technologies for FY 2021 in sections II.G.5. and 6. of the preamble to this final rule. As discussed in section II.G.6. of the preamble of this final rule, under the alternative pathway for new technology add-on payments, new technologies that are medical products with a Qualified Infectious Disease Product (QIDP) designation or are part of the Breakthrough Device program will be considered new and not substantially similar to an existing technology and will not need to demonstrate that the technology represents a substantial clinical improvement. These technologies must still meet the cost criterion.
We expect that the policies in this final rule would ensure that the outcomes of the prospective payment systems are reasonable and equitable, while avoiding or minimizing unintended adverse consequences.
We have examined the impacts of this final rule as required by Executive Order 12866 on Regulatory Planning and Review (September 30, 1993), Executive Order 13563 on Improving Regulation and Regulatory Review (January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96–354), section 1102(b) of the Social Security Act, section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104–4), Executive Order 13132 on Federalism (August 4, 1999), the Congressional Review Act (5 U.S.C. 804(2), and Executive Order 13771 on Reducing Regulation and Controlling Regulatory Costs (January 30, 2017).
Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as an action that is likely to result in a rule: (1) Having an annual effect on the economy of $100 million or more in any 1 year, or adversely and materially affecting a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local or tribal governments or communities (also referred to as “economically significant”); (2) creating a serious inconsistency or otherwise interfering with an action taken or planned by another agency; (3) materially altering the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raising novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.
We have determined that this final rule is a major rule as defined in 5 U.S.C. 804(2). We estimate that the changes for FY 2021 acute care hospital operating and capital payments would redistribute amounts in excess of $100 million to acute care hospitals. The applicable percentage increase to the IPPS rates required by the statute, in conjunction with other payment changes in this final rule, would result in an estimated $3.5 billion increase in FY 2021 payments, primarily driven by a combined $3.0 billion increase in FY 2021 operating payments and uncompensated care payments, and a net increase of $506 million resulting from estimated changes in FY 2021 capital payments and new technology add-on payments. These changes are relative to payments made in FY 2020. The impact analysis of the capital payments can be found in section I.I. of this Appendix. In addition, as described in section I.J. of this Appendix, LTCHs are expected to experience a decrease in payments by approximately 40 million in FY 2021 relative to FY 2020, primarily due to the end of the statutory transition period for site neutral payment rate cases.
Our operating impact estimate includes the 0.5 percentage point adjustment required under section 414 of the MACRA applied to the IPPS standardized amount, as discussed in section II.D. of the preamble of this final rule. In addition, our operating payment impact estimate includes the 2.4 percent hospital update to the standardized amount (which includes the estimated 2.4 percent market basket update and the 0.0 percentage point for the multifactor productivity (MFP) adjustment). The estimates of IPPS operating payments to acute care hospitals do not reflect any changes in hospital admissions or real case-mix intensity, which will also affect overall payment changes.
The analysis in this Appendix, in conjunction with the remainder of this document, demonstrates that this final rule is consistent with the regulatory philosophy and principles identified in Executive Orders 12866 and 13563, the RFA, and section 1102(b) of the Act. This final rule would affect payments to a substantial number of small rural hospitals, as well as other classes of hospitals, and the effects on some hospitals may be significant. Finally, in accordance with the provisions of Executive Order 12866, the Executive Office of Management and Budget has reviewed this final rule.
The primary objective of the IPPS and the LTCH PPS is to create incentives for hospitals to operate efficiently and minimize unnecessary costs, while at the same time ensuring that payments are sufficient to adequately compensate hospitals for their legitimate costs in delivering necessary care to Medicare beneficiaries. In addition, we share national goals of preserving the Medicare Hospital Insurance Trust Fund.
We believe that the changes in this final rule would further each of these goals while maintaining the financial viability of the hospital industry and ensuring access to high quality health care for Medicare beneficiaries. We expect that these changes would ensure that the outcomes of the prospective payment systems are reasonable and equitable, while avoiding or minimizing unintended adverse consequences.
Because this final rule contains a range of policies, we refer readers to the section of the final rule where each policy is discussed. These sections include the rationale for our decisions, including the need for the policy.
The following quantitative analysis presents the projected effects of our policy changes, as well as statutory changes effective for FY 2021, on various hospital groups. We estimate the effects of individual policy changes by estimating payments per case, while holding all other payment policies constant. We use the best data available, but, generally unless specifically indicated, we do not attempt to make adjustments for future changes in such variables as admissions, lengths of stay, case-mix, changes to the Medicare population, or incentives. In addition, we discuss limitations of our analysis for specific policies in the discussion of those policies as needed.
The prospective payment systems for hospital inpatient operating and capital-related costs of acute care hospitals encompass most general short-term, acute care hospitals that participate in the Medicare program. There were 27 Indian Health Service hospitals in our database, which we excluded from the analysis due to the special characteristics of the prospective payment methodology for these hospitals. Among other short-term, acute care hospitals, hospitals in Maryland are paid in accordance with the Maryland Total Cost of Care Model, and hospitals located outside the 50 States, the District of Columbia, and Puerto Rico (that is, 6 short-term acute care hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa) receive payment for inpatient hospital services they furnish on the basis of reasonable costs, subject to a rate-of-increase ceiling.
As of July 2020, there were 3,201 IPPS acute care hospitals included in our analysis. This represents approximately 54 percent of all Medicare-participating hospitals. The majority of this impact analysis focuses on this set of hospitals. There also are
As of July 2020, there were 95 children's hospitals, 11 cancer hospitals, 6 short-term acute care hospitals located in the Virgin Islands, Guam, the Northern Mariana Islands and American Samoa, 1 extended neoplastic disease care hospital, and 15 RNHCIs being paid on a reasonable cost basis subject to the rate-of-increase ceiling under § 413.40. (In accordance with § 403.752(a) of the regulation, RNHCIs are paid under § 413.40.) Among the remaining providers, 302 rehabilitation hospitals and 816 rehabilitation units, and approximately 363 LTCHs, are paid the Federal prospective per discharge rate under the IRF PPS and the LTCH PPS, respectively, and 547 psychiatric hospitals and 1,003 psychiatric units are paid the Federal per diem amount under the IPF PPS. As stated previously, IRFs and IPFs are not affected by the rate updates discussed in this final rule. The impacts of the changes on LTCHs are discussed in section I.J. of this Appendix.
For children's hospitals, the 11 cancer hospitals, the 6 short-term acute care hospitals located in the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa, the 1 extended neoplastic disease care hospital, and RNHCIs, the update of the rate-of-increase limit (or target amount) is the estimated FY 2021 percentage increase in the 2014-based IPPS operating market basket, consistent with section 1886(b)(3)(B)(ii) of the Act, and §§ 403.752(a) and 413.40 of the regulations. Consistent with current law, based on IGI's second quarter 2020 forecast of the 2014-based IPPS market basket increase, we are estimating the FY 2021 update to be 2.4 percent (that is, the estimate of the market basket rate-of-increase), as discussed in section IV.B. of the preamble of this final rule. We used the most recent data available for this final rule to calculate the IPPS operating market basket update for FY 2021. Children's hospitals, the 11 cancer hospitals, the 6 short-term acute care hospitals located in the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa, the 1 extended neoplastic disease care hospital, and RNHCIs that continue to be paid based on reasonable costs subject to rate-of-increase limits under § 413.40 of the regulations are not subject to the reductions in the applicable percentage increase required under the Affordable Care Act. The impact of the update in the rate-of-increase limit on those excluded hospitals depends on the cumulative cost increases experienced by each excluded hospital since its applicable base period. For excluded hospitals that have maintained their cost increases at a level below the rate-of-increase limits since their base period, the major effect is on the level of incentive payments these excluded hospitals receive. Conversely, for excluded hospitals with cost increases above the cumulative update in their rate-of-increase limits, the major effect is the amount of excess costs that would not be paid.
We note that, under § 413.40(d)(3), an excluded hospital that continues to be paid under the TEFRA system and whose costs exceed 110 percent of its rate-of-increase limit receives its rate-of-increase limit plus the lesser of: (1) 50 percent of its reasonable costs in excess of 110 percent of the limit; or (2) 10 percent of its limit. In addition, under the various provisions set forth in § 413.40, hospitals can obtain payment adjustments for justifiable increases in operating costs that exceed the limit.
In this final rule, we are announcing policy changes and payment rate updates for the IPPS for FY 2021 for operating costs of acute care hospitals. The FY 2021 updates to the capital payments to acute care hospitals are discussed in section I.I. of this Appendix.
Based on the overall percentage change in payments per case estimated using our payment simulation model, we estimate that total FY 2021 operating payments would increase by 2.5 percent, compared to FY 2020. In addition to the applicable percentage increase, this amount reflects the +0.5 percentage point permanent adjustment to the standardized amount required under section 414 of MACRA. The impacts do not reflect changes in the number of hospital admissions or real case-mix intensity, which would also affect overall payment changes.
We have prepared separate impact analyses of the changes to each system. This section deals with the changes to the operating inpatient prospective payment system for acute care hospitals. Our payment simulation model relies on the most recent available claims data to enable us to estimate the impacts on payments per case of certain changes in this final rule. However, there are other changes for which we do not have data available that would allow us to estimate the payment impacts using this model. For those changes, we have attempted to predict the payment impacts based upon our experience and other more limited data.
The data used in developing the quantitative analyses of changes in payments per case presented in this section are taken from the FY 2019 MedPAR file and the most current Provider-Specific File (PSF) that are used for payment purposes. Although the analyses of the changes to the operating PPS do not incorporate cost data, data from the most recently available hospital cost reports were used to categorize hospitals. Our analysis has several qualifications. First, in this analysis, we do not make adjustments for future changes in such variables as admissions, lengths of stay, or underlying growth in real case-mix. Second, due to the interdependent nature of the IPPS payment components, it is very difficult to precisely quantify the impact associated with each change. Third, we use various data sources to categorize hospitals in the tables. In some cases, particularly the number of beds, there is a fair degree of variation in the data from the different sources. We have attempted to construct these variables with the best available source overall. However, for individual hospitals, some miscategorizations are possible.
Using cases from the FY 2019 MedPAR file, we simulate payments under the operating IPPS given various combinations of payment parameters. As described previously, Indian Health Service hospitals and hospitals in Maryland were excluded from the simulations. The impact of payments under the capital IPPS, and the impact of payments for costs other than inpatient operating costs, are not analyzed in this section. Estimated payment impacts of the capital IPPS for FY 2021 are discussed in section I.I. of this Appendix.
We discuss the following changes:
• The effects of the application of the applicable percentage increase of 2.4 percent (that is, a 2.4 percent market basket update with a 0.0 percentage point adjustment for the multifactor productivity adjustment), and a 0.5 percentage point adjustment required under section 414 of the MACRA to the IPPS standardized amount, and the applicable percentage increase (including the market basket update and the multifactor productivity adjustment) to the hospital-specific rates.
• The effects of the changes to the relative weights and MS–DRG GROUPER.
• The effects of the changes in hospitals' wage index values reflecting updated wage data from hospitals' cost reporting periods beginning during FY 2017, compared to the FY 2016 wage data, to calculate the FY 2021 wage index.
• The effects of the geographic reclassifications by the MGCRB (as of publication of this final rule) that will be effective for FY 2021.
• The effects of the rural floor with the application of the national budget neutrality factor to the wage index.
• The effects of the frontier State wage index adjustment under the statutory provision that requires hospitals located in States that qualify as frontier States to not have a wage index less than 1.0. This provision is not budget neutral.
• The effects of the implementation of section 1886(d)(13) of the Act, as added by section 505 of Public Law 108–173, which provides for an increase in a hospital's wage index if a threshold percentage of residents of the county where the hospital is located commute to work at hospitals in counties with higher wage indexes for FY 2021. This provision is not budget neutral.
• The total estimated change in payments based on the FY 2021 policies relative to payments based on FY 2020 policies,
To illustrate the impact of the FY 2021 changes, our analysis begins with a FY 2020 baseline simulation model using: The FY 2020 applicable percentage increase of 2.6 percent; the 0.5 percentage point adjustment required under section 414 of the MACRA applied to the IPPS standardized amount; the FY 2020 MS–DRG GROUPER (Version 37); the FY 2020 CBSA designations for hospitals based on the OMB definitions from the 2010 Census; the FY 2020 wage index; and no MGCRB reclassifications. Outlier payments are set at 5.1 percent of total operating MS–DRG and outlier payments for modeling purposes.
Section 1886(b)(3)(B)(viii) of the Act, as added by section 5001(a) of Public Law 109–171, as amended by section 4102(b)(1)(A) of the ARRA (Pub. L. 111–5) and by section 3401(a)(2) of the Affordable Care Act (Pub. L. 111–148), provides that, for FY 2007 and each subsequent year through FY 2014, the update factor will include a reduction of 2.0 percentage points for any subsection (d) hospital that does not submit data on measures in a form and manner, and at a time specified by the Secretary. Beginning in FY 2015, the reduction is one-quarter of such applicable percentage increase determined without regard to section 1886(b)(3)(B)(ix), (xi), or (xii) of the Act, or one-quarter of the market basket update. Therefore, as discussed in section IV.B.1. of the preamble of this final rule, for FY 2021, hospitals that do not submit quality information under rules established by the Secretary and that are meaningful EHR users under section 1886(b)(3)(B)(ix) of the Act would receive an applicable percentage increase of 1.8 percent. At the time this impact was prepared, 37 hospitals are estimated to not receive the full market basket rate-of-increase for FY 2021 because they failed the quality data submission process or did not choose to participate, but are meaningful EHR users. For purposes of the simulations shown later in this section, we modeled the payment changes for FY 2021 using a reduced update for these hospitals.
For FY 2021, in accordance with section 1886(b)(3)(B)(ix) of the Act, a hospital that has been identified as not a meaningful EHR user will be subject to a reduction of three-quarters of such applicable percentage increase determined without regard to section 1886(b)(3)(B)(ix), (xi), or (xii) of the Act. Therefore, as discussed in section IV.B.1. of the preamble of this final rule, for FY 2021, hospitals that are identified as not meaningful EHR users and do submit quality information under section 1886(b)(3)(B)(viii) of the Act would receive an applicable percentage increase of 0.6 percent. At the time this impact analysis was prepared, 153 hospitals are estimated to not receive the full market basket rate-of-increase for FY 2021 because they are identified as not meaningful EHR users that do submit quality information under section 1886(b)(3)(B)(viii) of the Act. For purposes of the simulations shown in this section, we modeled the payment changes for FY 2021 using a reduced update for these hospitals.
Hospitals that are identified as not meaningful EHR users under section 1886(b)(3)(B)(ix) of the Act and also do not submit quality data under section 1886(b)(3)(B)(viii) of the Act would receive a applicable percentage increase of 0 percent, which reflects a one-quarter reduction of the market basket update for failure to submit quality data and a three-quarter reduction of the market basket update for being identified as not a meaningful EHR user. At the time this impact was prepared, 30 hospitals are estimated to not receive the full market basket rate-of-increase for FY 2021 because they are identified as not meaningful EHR users that do not submit quality data under section 1886(b)(3)(B)(viii) of the Act.
Each policy change, statutory or otherwise, is then added incrementally to this baseline, finally arriving at an FY 2021 model incorporating all of the changes. This simulation allows us to isolate the effects of each change.
Our comparison illustrates the percent change in payments per case from FY 2020 to FY 2021. Two factors not discussed separately have significant impacts here. The first factor is the update to the standardized amount. In accordance with section 1886(b)(3)(B)(i) of the Act, we are updating the standardized amounts for FY 2021 using an applicable percentage increase of 2.4 percent. This includes our forecasted IPPS operating hospital market basket increase of 2.4 percent with a 0.0 percentage point reduction for the multifactor productivity adjustment. Hospitals that fail to comply with the quality data submission requirements and are meaningful EHR users would receive an update of 1.8 percent. This update includes a reduction of one-quarter of the market basket update for failure to submit these data. Hospitals that do comply with the quality data submission requirements but are not meaningful EHR users would receive an update of 0.6 percent, which includes a reduction of three-quarters of the market basket update. Furthermore, hospitals that do not comply with the quality data submission requirements and also are not meaningful EHR users would receive a update of 0.0 percent. Under section 1886(b)(3)(B)(iv) of the Act, the update to the hospital-specific amounts for SCHs and MDHs is also equal to the applicable percentage increase, or 2.4 percent, if the hospital submits quality data and is a meaningful EHR user.
A second significant factor that affects the changes in hospitals' payments per case from FY 2020 to FY 2021 is the change in hospitals' geographic reclassification status from one year to the next. That is, payments may be reduced for hospitals reclassified in FY 2020 that are no longer reclassified in FY 2021. Conversely, payments may increase for hospitals not reclassified in FY 2020 that are reclassified in FY 2021.
Table I displays the results of our analysis of the changes for FY 2021. The table categorizes hospitals by various geographic and special payment consideration groups to illustrate the varying impacts on different types of hospitals. The top row of the table shows the overall impact on the 3,201 acute care hospitals included in the analysis.
The next two rows of Table I contain hospitals categorized according to their geographic location: Urban and rural. There are 2,462 hospitals located in urban areas and 739 hospitals in rural areas included in our analysis. The next two groupings are by bed-size categories, shown separately for urban and rural hospitals. The last groupings by geographic location are by census divisions, also shown separately for urban and rural hospitals.
The second part of Table I shows hospital groups based on hospitals' FY 2021 payment classifications, including any reclassifications under section 1886(d)(10) of the Act. For example, the rows labeled urban and rural show that the numbers of hospitals paid based on these categorizations after consideration of geographic reclassifications (including reclassifications under sections 1886(d)(8)(B) and 1886(d)(8)(E) of the Act that have implications for capital payments) are 2,049, and 1,152, respectively.
The next three groupings examine the impacts of the changes on hospitals grouped by whether or not they have GME residency programs (teaching hospitals that receive an IME adjustment) or receive Medicare DSH payments, or some combination of these two adjustments. There are 2,037 nonteaching hospitals in our analysis, 907 teaching hospitals with fewer than 100 residents, and 257 teaching hospitals with 100 or more residents.
In the DSH categories, hospitals are grouped according to their DSH payment status, and whether they are considered urban or rural for DSH purposes. The next category groups together hospitals considered urban or rural, in terms of whether they receive the IME adjustment, the DSH adjustment, both, or neither.
The next three rows examine the impacts of the changes on rural hospitals by special payment groups (SCHs, MDHs and RRCs). There were 483 RRCs, 304 SCHs, 145 MDHs, 149 hospitals that are both SCHs and RRCs, and 25 hospitals that are both MDHs and RRCs.
The next series of groupings are based on the type of ownership and the hospital's Medicare utilization expressed as a percent of total inpatient days. These data were taken from the FY 2018 or FY 2017 Medicare cost reports.
The next grouping concerns the geographic reclassification status of hospitals. The first subgrouping is based on whether a hospital is reclassified or not. The second and third subgroupings are based on whether urban and rural hospitals were reclassified by the MGCRB for FY 2021 or not, respectively. The fourth subgrouping displays hospitals that reclassified from urban to rural in accordance with section 1886(d)(8)(E) of the Act. The fifth subgrouping displays hospitals deemed urban in accordance with section 1886(d)(8)(B) of the Act.
As discussed in section IV.B. of the preamble of this final rule, this column includes the hospital update, including the 2.4 percent market basket update and the 0.0 percentage point for the multifactor productivity adjustment. In addition, as discussed in section II.D. of the preamble of this final rule, this column includes the FY 2021 +0.5 percentage point adjustment required under section 414 of the MACRA. As a result, we are making a 2.9 percent update to the national standardized amount.
Overall, hospitals would experience a 2.8 percent increase in payments primarily due to the combined effects of the hospital update to the national standardized amount and the hospital update to the hospital-specific rate. Hospitals that are paid under the hospital-specific rate would experience a 2.4 percent increase in payments; therefore, hospital categories containing hospitals paid under the hospital-specific rate would experience a lower than average increase in payments.
Column 2 shows the effects of the changes to the MS–DRGs and relative weights with the application of the recalibration budget neutrality factor to the standardized amounts. Section 1886(d)(4)(C)(i) of the Act requires us annually to make appropriate classification changes in order to reflect changes in treatment patterns, technology, and any other factors that may change the relative use of hospital resources. Consistent with section 1886(d)(4)(C)(iii) of the Act, we calculated a recalibration budget neutrality factor to account for the changes in MS–DRGs and relative weights to ensure that the overall payment impact is budget neutral.
As discussed in section II.E. of the preamble of this final rule, the FY 2021 MS–DRG relative weights will be 100 percent cost-based and 100 percent MS–DRGs. For FY 2021, the MS–DRGs are calculated using the FY 2019 MedPAR data grouped to the Version 38 (FY 2021) MS–DRGs. The methodology to calculate the relative weights and the reclassification changes to the GROUPER are described in more detail in section II.G. of the preamble of this final rule.
The “All Hospitals” line in Column 2 indicates that changes due to the MS–DRGs and relative weights would result in a 0.0 percent change in payments with the application of the recalibration budget neutrality factor of 0.99798 to the standardized amount. Hospital categories that generally treat relatively less complex cases, such as rural hospitals and smaller urban hospitals, would experience a decrease in their payments, while hospitals that generally treat relatively more complex cases, such as larger urban hospitals, would experience an increase in their payments under the relative weights. For example, rural hospitals with 50–99 beds and urban hospitals of 99 beds or less would experience a −0.3 and −0.5 percent decrease in payments, respectively. Conversely, urban hospitals of 500 beds or more would experience a +0.2 percent increase in payments.
Column 3 shows the impact of the updated wage data using FY 2017 cost report data, with the application of the wage budget neutrality factor. The wage index is calculated and assigned to hospitals on the basis of the labor market area in which the hospital is located. Under section 1886(d)(3)(E) of the Act, beginning with FY 2005, we delineate hospital labor market areas based on the Core Based Statistical Areas (CBSAs) established by OMB. The current statistical standards used in FY 2021 are based on OMB standards published on February 28, 2013 (75 FR 37246 and 37252), and 2010 Decennial Census data (OMB Bulletin No. 13–01), as updated in OMB Bulletin Nos. 15–01 and 17–01. (We refer readers to the FY 2015 IPPS/LTCH PPS final rule (79 FR 49951 through 49963) for a full discussion on our adoption of the OMB labor market area delineations, based on the 2010 Decennial Census data, effective beginning with the FY 2015 IPPS wage index, to the FY 2017 IPPS/LTCH PPS final rule (81 FR 56913) for a discussion of our adoption of the CBSA updates in OMB Bulletin No. 15–01, which were effective beginning with the FY 2017 wage index, and to the FY 2020 IPPS/LTCH PPS final rule (83 FR 41362) for a discussion of our adoption of the CBSA update in OMB Bulletin No. 17–01 for the FY 2020 wage index.)
As discussed in section III.A.2.a. of the preamble of this final rule, OMB Bulletin No. 18–04 established revised delineations for statistical areas, and in order to implement these changes for the IPPS, it is necessary to identify the new labor market area delineation for each county and hospital in the country that are affected by the revised OMB delineations. We believe that adopting the revised OMB delineations described in OMB Bulletin No. 18–04 will allow us to maintain a more accurate payment system that reflects the reality of population shifts and labor market conditions. We further believe that using these delineations will increase the integrity of the IPPS wage index system by creating a more accurate representation of geographic variations in wage levels. As discussed in section III.A.2, in this final rule, we are finalizing our proposal to implement the revised OMB delineations as described in the September 14, 2018 OMB Bulletin No. 18–04, effective beginning with the FY 2021 IPPS wage index.
Section 1886(d)(3)(E) of the Act requires that, beginning October 1, 1993, we annually update the wage data used to calculate the wage index. In accordance with this requirement, the wage index for acute care hospitals for FY 2021 is based on data submitted for hospital cost reporting periods, beginning on or after October 1, 2016 and before October 1, 2017. The estimated impact of the updated wage data using the FY 2017 cost report data and the revised OMB labor market area delineations on hospital payments is isolated in Column 3 by holding the other payment parameters constant in this simulation. That is, Column 3 shows the percentage change in payments when going from a model using the FY 2020 wage index, based on FY 2016 wage data, the labor-related share of 68.3 percent, under the revised OMB delineations and having a 100-percent occupational mix adjustment applied, to a model using the FY 2021 pre-reclassification wage index based on FY 2017 wage data with the labor-related share of 68.3 percent, under the revised OMB delineations, also having a 100-percent occupational mix adjustment applied, while holding other payment parameters, such as use of the Version 38 MS–DRG GROUPER constant. The FY 2021 occupational mix adjustment is based on the CY 2016 occupational mix survey.
In addition, the column shows the impact of the application of the wage budget neutrality to the national standardized amount. In FY 2010, we began calculating separate wage budget neutrality and recalibration budget neutrality factors, in accordance with section 1886(d)(3)(E) of the Act, which specifies that budget neutrality to account for wage index changes or updates made under that subparagraph must be made without regard to the 62 percent labor-related share guaranteed under section 1886(d)(3)(E)(ii) of the Act. Therefore, for FY 2021, we finalizing our proposal to calculate the wage budget neutrality factor to ensure that payments under updated wage data and the labor-related share of 68.3 percent are budget neutral, without regard to the lower labor-related share of 62 percent applied to hospitals with a wage index less than or equal to 1.0. In other words, the wage budget neutrality is calculated under the assumption that all hospitals receive the higher labor-related share of the standardized amount. The FY 2021 wage budget neutrality factor is 1.000426 and the overall payment change is 0 percent.
Column 3 shows the impacts of updating the wage data using FY 2017 cost reports. Overall, the new wage data and the labor-related share, combined with the wage budget neutrality adjustment, would lead to no change for all hospitals, as shown in Column 3.
In looking at the wage data itself, the national average hourly wage would increase 1.02 percent compared to FY 2020. Therefore, the only manner in which to maintain or exceed the previous year's wage index was to match or exceed the 1.02 percent increase in the national average hourly wage. Of the 3,181 hospitals with wage data for both FYs 2020 and 2021, 1,655 or 52 percent would experience an average hourly wage increase of 1.02 percent or more.
The following chart compares the shifts in wage index values for hospitals due to changes in the average hourly wage data for FY 2021 relative to FY 2020. These figures reflect changes in the “pre-reclassified, occupational mix-adjusted wage index,” that is, the wage index before the application of geographic reclassification, the rural floor, the out-migration adjustment, and other wage index exceptions and adjustments. We note that this analysis was performed by applying the revised OMB labor market area delineations to the FY 2021 wage data and also by recomputing the FY 2020 final wage data to reflect the revised OMB delineations. (We refer readers to sections III.G. through III.L. of the preamble of this final rule for a complete discussion of the exceptions and adjustments to the wage index.) We note that the “post-reclassified wage index” or “payment wage index,” which is the wage index that includes all such exceptions and
The following chart shows the projected impact of changes in the area wage index values for urban and rural hospitals.
Our impact analysis to this point has assumed acute care hospitals are paid on the basis of their actual geographic location (with the exception of ongoing policies that provide that certain hospitals receive payments on bases other than where they are geographically located). The changes in Column 4 reflect the per case payment impact of moving from this baseline to a simulation incorporating the MGCRB decisions for FY 2021.
By spring of each year, the MGCRB makes reclassification determinations that will be effective for the next fiscal year, which begins on October 1. The MGCRB may approve a hospital's reclassification request for the purpose of using another area's wage index value. Hospitals may appeal denials of MGCRB decisions to the CMS Administrator. Further, hospitals have 45 days from the date the IPPS proposed rule is issued in the
The overall effect of geographic reclassification is required by section 1886(d)(8)(D) of the Act to be budget neutral. Therefore, for purposes of this impact analysis, we finalizing our proposal to apply an adjustment of 0.986583 to ensure that the effects of the reclassifications under sections 1886(d)(8)(B) and (C) and 1886(d)(10) of the Act are budget neutral (section II.A. of the Addendum to this final rule). Geographic reclassification generally benefits hospitals in rural areas. We estimate that the geographic reclassification would increase payments to rural hospitals by an average of 1.1 percent. By region, most rural hospital categories would experience increases in payments due to MGCRB reclassifications. Hospitals in the rural West North Central region would experience a decrease in payments due to MGCRB reclassifications, while hospitals in the rural Mountain region would experience no change in payments due to MGCRB reclassifications.
Table 2 listed in section VI. of the Addendum to this final rule and available via the internet on the CMS website reflects the reclassifications for FY 2021.
As discussed in the FY 2009 IPPS final rule, the FY 2010 IPPS/RY 2010 LTCH PPS final rule, the FYs 2011 through 2020 IPPS/LTCH PPS final rules, and this FY 2021 IPPS/LTCH PPS final rule, section 4410 of Public Law 105–33 established the rural floor by requiring that the wage index for a hospital in any urban area cannot be less than the wage index applicable to hospitals located in rural areas in the same state. We apply a uniform budget neutrality adjustment to the wage index. Column 5 shows the effects of the final rural floor.
The Affordable Care Act requires that we apply one rural floor budget neutrality factor to the wage index nationally. We have calculated a FY 2021 rural floor budget neutrality factor of 0.993433 that we applied to the wage index, which will reduce wage indexes by approximately 0.7 percent.
Column 5 shows the projected impact of the rural floor with the national rural floor budget neutrality factor applied to the wage index based on the revised OMB labor market area delineations. The column compares the post-reclassification FY 2021 wage index of providers before the rural floor adjustment and the post-reclassification FY 2021 wage index of providers with the rural floor adjustment based on the revised OMB labor market area delineations. Only urban hospitals can benefit from the rural floor. Because the provision is budget neutral, all other hospitals that do not receive an increase to their wage index from the rural floor adjustment (that is, all rural hospitals and those urban hospitals to which the adjustment is not made) will experience a decrease in payments due to the budget neutrality adjustment that is applied to the wage index nationally. (As finalized in the FY 2020 IPPS/LTCH PPS final rule, we calculate the rural floor without including the wage data of hospitals that have reclassified as rural under § 412.103.)
We estimate that 285 hospitals will receive the rural floor in FY 2021. All IPPS hospitals in our model will have their wage indexes reduced by the rural floor budget neutrality adjustment of 0.993433. We project that, in aggregate, rural hospitals will experience a 0.2 percent decrease in payments as a result of the application of the rural floor budget neutrality because the rural hospitals do not benefit from the rural floor, but have their wage indexes downwardly adjusted to ensure that the application of the rural floor is budget neutral overall. We project that, in the aggregate, hospitals located in urban areas will experience no change in payments because increases in payments to hospitals benefitting from the rural floor offset decreases in payments to nonrural floor urban hospitals whose wage index is downwardly adjusted by the rural floor budget neutrality factor. Urban hospitals in the New England region will experience a 2.3 percent increase in payments primarily due to the application of the rural floor in Massachusetts. Fifty-two urban providers in Massachusetts are expected to receive the rural floor wage index value, including the rural floor budget neutrality adjustment, which will increase payments overall to hospitals in Massachusetts by an estimated $158 million. We estimate that Massachusetts hospitals will receive approximately a 4.1 percent increase in IPPS payments due to the application of the rural floor in FY 2021. Urban Puerto Rico hospitals are expected to experience a 0.2 percent increase in payments as a result of the application of the rural floor for FY 2021.
This column shows the combined effects of the application of section 10324(a) of the Affordable Care Act, which requires that we establish a minimum post-reclassified wage index of 1.00 for all hospitals located in “frontier States,” and the effects of section 1886(d)(13) of the Act, as added by section 505 of Public Law 108–173, which provides for an increase in the wage index for hospitals located in certain counties that have a relatively high percentage of hospital employees who reside in the county, but work in a different area with a higher wage index. These two wage index provisions are not budget neutral and will increase
The term “frontier States” is defined in the statute as States in which at least 50 percent of counties have a population density less than 6 persons per square mile. Based on these criteria, 5 States (Montana, Nevada, North Dakota, South Dakota, and Wyoming) are considered frontier States and 44 hospitals located in those States will receive a frontier wage index of 1.0000. Overall, this provision is not budget neutral and is estimated to increase IPPS operating payments by approximately $69 million. Urban hospitals located in the West North Central region will experience an increase in payments by 0.6 percent, because many of the hospitals located in this region are frontier State hospitals.
In addition, section 1886(d)(13) of the Act, as added by section 505 of Public Law 108–173, provides for an increase in the wage index for hospitals located in certain counties that have a relatively high percentage of hospital employees who reside in the county, but work in a different area with a higher wage index. Hospitals located in counties that qualify for the payment adjustment will receive an increase in the wage index that is equal to a weighted average of the difference between the wage index of the resident county, post-reclassification and the higher wage index work area(s), weighted by the overall percentage of workers who are employed in an area with a higher wage index. There are an estimated 212 providers that will receive the out-migration wage adjustment in FY 2021. Rural hospitals generally will qualify for the adjustment, resulting in a 0.1 percent increase in payments. This provision appears to benefit section 401 hospitals and RRCs in that they will each experience a 0.1 and 0.2 percent increase in payments, respectively. This out-migration wage adjustment also is not budget neutral, and we estimate the impact of these providers receiving the out-migration increase will be approximately $51 million.
Column 7 shows our estimate of the changes in payments per discharge from FY 2020 and FY 2021, resulting from all changes reflected in this final rule for FY 2021. It includes combined effects of the year-to-year change of the previous columns in the table.
The average increase in payments under the IPPS for all hospitals is approximately 2.5 percent for FY 2021 relative to FY 2020 and for this row is primarily driven by the changes reflected in Column 1. Column 7 includes the annual hospital update of 2.9 percent to the national standardized amount. This annual hospital update includes the 2.4 percent market basket update and the 0.0 percentage point multifactor productivity adjustment. As discussed in section II.D. of the preamble of this final rule, this column also includes the +0.5 percentage point adjustment required under section 414 of the MACRA. Hospitals paid under the hospital-specific rate would receive a 2.4 percent hospital update. As described in Column 1, the annual hospital update with the +0.5 percent adjustment for hospitals paid under the national standardized amount, combined with the annual hospital update for hospitals paid under the hospital-specific rates, would result in a 2.5 percent increase in payments in FY 2021 relative to FY 2020. This estimated increase also reflects the effects of the adoption of the revised labor market area delineations in OMB Bulletin 18–04 and the effects of the transition to apply a 5-percent cap on any decrease in a hospital's wage index from the hospital's final wage index from the prior fiscal year. Additionally, the estimated increase also reflects an estimated decrease in outlier payments of 0.2 percent (from our current estimate of FY 2020 outlier payments of approximately 5.3 percent to 5.1 percent projected for FY 2021 based on the FY 2019 MedPAR data used for this final rule calculated for purposes of this impact analysis). There are also interactive effects among the various factors comprising the payment system that we are not able to isolate, which contribute to our estimate of the changes in payments per discharge from FY 2020 and FY 2021 in Column 7.
Overall payments to hospitals paid under the IPPS due to the applicable percentage increase and changes to policies related to MS–DRGs, geographic adjustments, and outliers are estimated to increase by 2.5 percent for FY 2021. Hospitals in urban areas would experience a 2.5 percent increase in payments per discharge in FY 2021 compared to FY 2020. Hospital payments per discharge in rural areas are estimated to increase by 2.2 percent in FY 2021.
Table II presents the projected impact of the changes for FY 2021 for urban and rural hospitals and for the different categories of hospitals shown in Table I. It compares the estimated average payments per discharge for FY 2020 with the estimated average payments per discharge for FY 2021, as calculated under our models. Therefore, this table presents, in terms of the average dollar amounts paid per discharge, the combined effects of the changes presented in Table I. The estimated percentage changes shown in the last column of Table II equal the estimated percentage changes in average payments per discharge from Column 7 of Table I.
In addition to those policy changes discussed previously that we are able to model using our IPPS payment simulation model, we are implementing various other changes in this final rule. As noted in section I.G. of this regulatory impact analysis, our payment simulation model uses the most recent available claims data to estimate the impacts on payments per case of certain changes being implemented in this final rule. Generally, we have limited or no specific data available with which to estimate the impacts of these changes using that payment simulation model. For those changes, we have attempted to predict the payment impacts based upon our experience and other more limited data. Our estimates of the likely impacts associated with these other changes are discussed in this section.
In section II.G.9.b of the preamble of this final rule, we are revising § 412.87(d)(1) to add drugs approved under FDA's LPAD pathway to the current alternative new technology add-on payment pathway for QIDPs, beginning with discharges occurring on or after October 1, 2021.
Given the relatively recent introduction of the FDA's LPAD pathway there have not been any drugs that were approved under the FDA's LPAD pathway that applied for an NTAP under the IPPS and were not approved for that NTAP. If all of the future LPADs that would have applied for new technology add-on payments would have been approved under existing criteria, this policy has no impact relative to current policy. To the
In section II.G.9.c. of the preamble of this final rule, we are revising § 412.87(e) to add a new paragraph (3) which would provide for conditional new technology add-on payment approval for a technology for which an application is submitted under the alternative pathway for certain antimicrobial products at § 412.87(d) that does not receive FDA marketing authorization by the July 1 deadline specified in § 412.87(e)(2), provided that the technology receives FDA marketing authorization by July 1 of the particular fiscal year for which the applicant applied for new technology add-on payments.
If all of the future antimicrobial products eligible for the alternative pathway for certain antimicrobial products at § 412.87(d) receive marketing authorization by the July 1 deadline specified in § 412.87(e)(2), this policy has no impact. To the extent that there are future antimicrobial products that do not receive marketing authorization by that deadline, but do receive FDA marketing authorization by July 1 of the particular fiscal year for which the applicant applied for new technology add-on payments, this policy is a cost, but that cost is not estimable.
In section II.G.4. of the preamble of this final rule, as proposed, we are discontinuing new technology add-on payments for the AQUABEAM System (Aquablation), ERLEADA®, GIAPREZA
• Based on the applicant's estimate for FY 2019, we currently estimate that new technology add-on payments for AndexXa
• Based on the applicant's estimate for FY 2020, we currently estimate that new technology add-on payments for AZEDRA® would increase overall FY 2021 payments by $39,260,000 (maximum add-on payment of $98,150 * 400 patients).
• Based on the applicant's estimate for FY 2020, we currently estimate that new technology add-on payments for BALVERSA
• Based on the applicant's estimate for FY 2020, we currently estimate that new technology add-on payments for Cablivi® would increase overall FY 2021 payments by $4,351,165 (maximum add-on payment of $33,215 * 131 patients).
• Based on the applicant's estimate for FY 2020, we currently estimate that new technology add-on payments for ELZONRIS® would increase overall FY 2021 payments by $30,985,668 (maximum add-on payment of $125,448.05 * 247 patients).
• Based on the applicant's estimate for FY 2020, we currently estimate that new technology add-on payments for Esketamine would increase overall FY 2021 payments by $6,494,656 (maximum add-on payment of $1,014.79 * 6,400 patients).
• Based on the applicant's estimate for FY 2020, we currently estimate that new technology add-on payments for Jakafi® would increase overall FY 2021 payments by $573,469 (maximum add-on payment of $4,096.21 * 140 patients).
• Based on the applicant's estimate for FY 2020, we currently estimate that new technology add-on payments for T2 Bacteria Test Panel would increase overall FY 2021 payments by $3,669,803 (maximum add-on payment of $97.50 * 37,639 patients).
• Based on the applicant's estimate for FY 2020, we currently estimate that new technology add-on payments for XOSPATA® would increase overall FY 2021 payments by $13,710,938 (maximum add-on payment of $7,312.50 * 1,875 patients).
• Based on the applicant's estimate for FY 2019 we currently estimate that new technology add-on payments for ZEMDRI
In sections II.G.5. and 6. of the preamble to this final rule, we discuss 15 technologies for which we received applications for add-on payments for new medical services and technologies for FY 2021. We note that three applicants did not receive FDA approval for their technology by the July 1 deadline. As explained in the preamble to this final rule, add-on payments for new medical services and technologies under section 1886(d)(5)(K) of the Act are not required to be budget neutral. As discussed in section II.H.6. of the preamble of this final rule, under the alternative pathway for new technology add-on payments, new technologies that are medical products with a QIDP designation or are part of the Breakthrough Device program will be considered new and not substantially similar to an existing technology and will not need to demonstrate that the technology represents a substantial clinical improvement. These technologies must still meet the cost criterion.
The following are estimates for FY 2021 for the 6 technologies that we are approving for under the traditional pathway new technology add-on payments beginning in FY 2021.
• Based on the applicant's estimate for FY 2021 we currently estimate that new technology add-on payments for ContaCT would increase overall FY 2021 payments by $72,109,440 (maximum add-on payment of $1,040 * 69,336 patients).
• Based on the applicant's estimate for FY 2021, we currently estimate that new technology add-on payments for Eluvia
• Based on the applicant's estimate for FY 2021, we currently estimate that new technology add-on payments for Hemospray® would increase overall FY 2021 payments by $20,637,500 (maximum add-on payment of $1,625 * 12,700 patients).
• Based on the applicants' estimate for FY 2021, we currently estimate that new technology add-on payments for TECENTRIQ® and IMFINZI® would increase overall FY 2021 payments by $29,538,866 (maximum add-on payment of $6,875.90 * 4,296 patients).
• Based on the applicant's estimate for FY 2021, we currently estimate that new technology add-on payments for Soliris® would increase overall FY 2021 payments by $290,012,580 (maximum add-on payment of $21,199.75 * 13,680 patients).
• Based on the applicant's estimate for FY 2021, we currently estimate that new technology add-on payments for the SpineJack System would increase overall FY 2021 payments by $5,745,220 (maximum add-on payment of $3,654.72 * 1,572 patients).
As also discussed in section II.G.6. of the preamble of this final rule, for FY 2021 we are approving seven alternative pathway applicant technologies (2 Breakthrough devices and 5 QIDPs) and conditionally approving one alternative pathway applicant technology (1 QIDP) for FY 2021that one
The following are estimates for FY 2021 for the eight alternative pathway technologies that we are approving or conditionally approving for new technology add-on payments beginning in FY 2021.
• Based on the applicant's estimate for FY 2021, we currently estimate that new technology add-on payments for the BAROSTIM NEO
• Based on the applicant's estimate for FY 2021, we currently estimate that new technology add-on payments for FETROJA® could increase overall FY 2021 payments by $50,330,710 (maximum add-on payment of $7,919.86 * 6,355 patients).
• Based on the applicant's estimate for FY 2021, we currently estimate that new technology add-on payments for CONTEPO would increase overall FY 2021 payments by $20,369,531 (maximum add-on payment of $2,343.75 * 8,691 patients) under our conditional approval policy for certain antimicrobial products depending on the quarter in which it ultimately receives FDA marketing authorization.
• Based on the applicant's estimate for FY 2021, we currently estimate that new technology add-on payments for NUZYRA® would increase overall FY 2021 payments by $26,235,698 (maximum add-on payment of $1,522.50 * 16,899 patients).
• Based on the applicant's estimate for FY 2021, we currently estimate that new technology add-on payments for Optimizer System would increase overall FY 2021 payments by $22,425,000 (maximum add-on payment of $14,950 * 1,500 patients).
• Based on the applicant's estimate for FY 2021, we currently estimate that new technology add-on payments for RECARBRIO
• Based on the applicant's estimate for FY 2021, we currently estimate that new technology add-on payments for XENELTA
• Based on the applicant's estimate for FY 2021, we currently estimate that new technology add-on payments for ZERBAXA® would increase overall FY 2021 payments by $55,324,327 (maximum add-on payment of $1,836.98 * 30,117 patients).
In section IV.A. of the preamble of this final rule, we discuss our changes to the list of MS–DRGs subject to the postacute care transfer policy and the MS DRG special payment policy for FY 2021. As reflected in Table 5 listed in section VI. of the Addendum to this final rule (which is available via the internet on the CMS website), using criteria set forth in regulations at 42 CFR 412.4, we evaluated MS–DRG charge, discharge, and transfer data to determine which new or revised MS–DRGs would qualify for the postacute care transfer and MS–DRG special payment policies. As a result of our revisions to the MS–DRG classifications for FY 2021, which are discussed in section II.F. of the preamble of this final rule, we are adding two MS–DRGs to the list of MS–DRGs that will be subject to the postacute care transfer policy and the MS–DRG special payment policy. Column 2 of Table I in this Appendix A shows the effects of the changes to the MS–DRGs and the relative payment weights and the application of the recalibration budget neutrality factor to the standardized amounts.
Section 1886(d)(4)(C)(i) of the Act requires us annually to make appropriate DRG classification changes in order to reflect changes in treatment patterns, technology, and any other factors that may change the relative use of hospital resources. The analysis and methods for determining the changes due to the MS–DRGs and relative payment weights account for and include changes as a result of the changes to the MS–DRGs subject to the MS–DRG postacute care transfer and MS–DRG special payment policies. We refer readers to section I.G. of this Appendix A for a detailed discussion of payment impacts due to the MS–DRG reclassification policies for FY 2021.
As discussed in section IV.G. of the preamble of this final rule, under section 3133 of the Affordable Care Act, hospitals that are eligible to receive Medicare DSH payments will receive 25 percent of the amount they previously would have received under the statutory formula for Medicare DSH payments under section 1886(d)(5)(F) of the Act. The remainder, equal to an estimate of 75 percent of what formerly would have been paid as Medicare DSH payments (Factor 1), reduced to reflect changes in the percentage of uninsured individuals and any additional statutory adjustment (Factor 2), is available to make additional payments to each hospital that qualifies for Medicare DSH payments and that has uncompensated care. Each hospital eligible for Medicare DSH payments will receive an additional payment based on its estimated share of the total amount of uncompensated care for all hospitals eligible for Medicare DSH payments. The uncompensated care payment methodology has redistributive effects based on the proportion of a hospital's amount of uncompensated care relative to the aggregate amount of uncompensated care of all hospitals eligible for Medicare DSH payments (Factor 3). The change to Medicare DSH payments under section 3133 of the Affordable Care Act is not budget neutral.
In this final rule, we are establishing the amount to be distributed as uncompensated care payments to DSH eligible hospitals, which for FY 2021 is $8,290,014,520.96. This figure represents 75 percent of the amount that otherwise would have been paid for Medicare DSH payment adjustments adjusted by a Factor 2 of 72.86 percent. For FY 2020, the amount available to be distributed for uncompensated care was $8,350,599,096.04, or 75 percent of the amount that otherwise would have been paid for Medicare DSH payment adjustments adjusted by a Factor 2 of 67.14 percent. To calculate Factor 3 for FY 2021, we used information on uncompensated care costs from Worksheet S–10 of hospitals' FY 2017 cost reports for all eligible hospitals, with the exception of Puerto Rico hospitals and Indian Health Service and Tribal hospitals, for which we are finalizing our proposal to continue to use low-income insured days from FY 2013 cost reports and FY 2018 SSI days to determine Factor 3. For purposes of this final rule, we used uncompensated care data from the HCRIS database, as updated through June 30, 2020, Medicaid days from hospitals' FY 2013 cost reports from the same extract of HCRIS, and SSI days from the FY 2018 SSI ratios. For a complete discussion of the methodology for calculating Factor 3, we refer readers to section IV.G.4. of the preamble of this final rule.
To estimate the impact of the combined effect of the changes to Factors 1 and 2, as well as the changes to the data used in determining Factor 3, on the calculation of Medicare uncompensated care payments, we compared total uncompensated care payments estimated in the FY 2020 IPPS/LTCH PPS final rule to total uncompensated care payments estimated in this FY 2021 IPPS/LTCH PPS final rule. For FY 2020, we calculated 75 percent of the estimated amount that would be paid as Medicare DSH payments absent section 3133 of the Affordable Care Act, adjusted by a Factor 2 of 67.14 percent and multiplied by a Factor 3 calculated using the methodology described in the FY 2020 IPPS/LTCH PPS final rule. For FY 2021, we calculated 75 percent of the estimated amount that would be paid as Medicare DSH payments absent section 3133 of the Affordable Care Act, adjusted by a Factor 2 of 72.86 percent and multiplied by a Factor 3 calculated using the methodology described previously.
Our analysis included 2,401 hospitals that are projected to be eligible for DSH in FY 2021. It did not include hospitals that terminated their participation from the Medicare program as of July 10, 2020, Maryland hospitals, new hospitals, MDHs, and SCHs that are expected to be paid based on their hospital-specific rates. The 22 hospitals participating in the Rural Community Hospital Demonstration Program were also excluded from this analysis, as participating hospitals are not eligible to receive empirically justified Medicare DSH payments and uncompensated care payments. In addition, the data from merged or acquired hospitals were combined under the surviving hospital's CMS certification number (CCN), and the nonsurviving CCN was excluded from the analysis. The estimated impact of the changes in Factors 1, 2, and 3 on uncompensated care payments across all hospitals projected to be eligible for DSH payments in FY 2021, by hospital characteristic, is presented in the following table.
The changes in projected uncompensated care payments for FY 2021 in relation to the uncompensated care payments for FY 2020 are driven by a decrease in Factor 1 and an increase in Factor 2, as well as by a decrease in the number of hospitals projected to be eligible to receive DSH in FY 2021 relative to FY 2020. Factor 1 has decreased from $12.438 billion to $11.378 billion, while the percent change in the percent of individuals who are uninsured (Factor 2) has increased from 67.14 percent to 72.86 percent. Based on the changes in these two factors, the impact analysis found that, across all projected DSH eligible hospitals, FY 2021 uncompensated care payments are estimated at approximately $8.290 billion, or a decrease of approximately 0.73 percent from FY 2020 uncompensated care payments (approximately $8.351 billion). While these changes will result in a net decrease in the amount available to be distributed in uncompensated care payments, the projected payment decreases vary by hospital type. This redistribution of uncompensated care payments is caused by changes in Factor 3. As seen in the previous table, a percent change lower than negative 0.73 percent indicates that hospitals within the specified category are projected to experience a larger decrease in uncompensated care payments, on average, compared to the universe of projected FY 2021 DSH hospitals. Conversely, a percent change greater than negative 0.73 percent indicates that a hospital type is projected to have a smaller decrease than the overall average. Similarly, a positive percent change indicates an increase in uncompensated care payments. The variation in the distribution of payments by hospital characteristic is largely dependent on a given hospital's uncompensated care costs as reported in the Worksheet S–10, or number of Medicaid days and SSI days for Puerto Rico hospitals and Indian Health Service and Tribal hospitals, used in the Factor 3 computation.
Rural hospitals, in general, are projected to experience larger decreases in uncompensated care payments than their urban counterparts. Overall, rural hospitals are projected to receive a 5.7 percent decrease in uncompensated care payments,
By bed size, smaller rural hospitals are projected to receive the largest decreases in uncompensated care payments. Rural hospitals with 0–99 beds are projected to receive a 7.22 percent payment decrease, and rural hospitals with 100–249 beds are projected to receive a 6.73 percent decrease. These decreases for smaller rural hospitals are greater than the overall hospital average. However, larger rural hospitals with 250+ beds are projected to receive a 7.44 percent payment increase. In contrast, the smallest urban hospitals (0–99 beds) are projected to receive an increase in uncompensated care payments of 2.42 percent, while urban hospitals with 100–249 beds are projected to receive a decrease of 1.10 percent, and larger urban hospitals with 250+ beds projected to receive a 0.29 percent decrease in uncompensated care payments, which is less than the overall hospital average.
By region, rural hospitals are expected to receive larger than average decreases in uncompensated care payments in all Regions, except for rural hospitals in the South Atlantic and East North Central Regions, which are projected to receive smaller than average decreases, and hospitals in the Pacific Region, which are projected to receive an increase in uncompensated care payments of 8.95 percent. Urban hospitals are projected to receive a more varied range of payment changes. Urban hospitals in the New England, the Middle Atlantic, West South Central, and Mountain Regions, as well as urban hospitals in Puerto Rico, are projected to receive larger than average decreases in uncompensated care payments. While hospitals in the South Atlantic, East North Central, East South Central, West North Central and Pacific Regions are projected to receive increases in uncompensated care payments.
By payment classification, hospitals in urban areas overall are expected to receive a 0.11 percent increase in uncompensated care payments, with hospitals in large urban areas are expected to see an increase in uncompensated care payments of 1.13 percent, while hospitals in other urban areas are expected to receive a decrease of 1.78 percent. In contrast, hospitals in rural areas are projected to receive a decrease in uncompensated care payments of 2.99 percent.
Nonteaching hospitals are projected to receive a payment decrease of 0.84 percent, teaching hospitals with fewer than 100 residents are projected to receive a payment decrease of 0.77 percent, and teaching hospitals with 100+ residents have a projected payment decrease of 0.59 percent. All of these decreases are consistent with the overall hospital average. Proprietary and government hospitals are projected to receive larger than average decreases of 2.55 and 1.25 percent respectively, while voluntary hospitals are expected to receive a payment increase of 0.06 percent. Hospitals with less than 50 percent Medicare utilization are projected to receive decreases in uncompensated care payments consistent with the overall hospital average percent change, while hospitals with 50 to 65 percent Medicare utilization are projected to receive a larger than average decrease of 2.31 percent. Hospitals with greater than 65 percent Medicare utilization are projected to receive an increase of 0.62 percent.
In section IV.G. of the preamble of this final rule, we discuss our proposed policies for the FY 2021 Hospital Readmissions Reduction Program. This program requires a reduction to a hospital's base operating DRG payment to account for excess readmissions of selected applicable conditions and procedures. The table and analysis in this final rule illustrate the estimated financial impact of the Hospital Readmissions Reduction Program payment adjustment methodology by hospital characteristic. Hospitals are stratified into quintiles based on the proportion of dual-eligible stays among Medicare FFS and managed care stays between July 1, 2016 and June 30, 2019 (that is the FY 2021 Hospital Readmissions Reduction Program's performance period). Hospitals' excess readmission ratios (ERRs) are assessed relative to their peer group median and a neutrality modifier is applied in the payment adjustment factor calculation to maintain budget neutrality. To analyze the results by hospital characteristic, we used the FY 2021 Hospital IPPS Proposed Rule Impact File.
These analyses include 2,986 non-Maryland hospitals eligible to receive a penalty during the performance period. Hospitals are eligible to receive a penalty if they have 25 or more eligible discharges for at least one measure between July 1, 2016 and June 30, 2019. The second column in the table indicates the total number of non-Maryland hospitals with available data for each characteristic that have an estimated payment adjustment factor less than 1 (that is penalized hospitals).
The third column in the table indicates the percentage of penalized hospitals among those eligible to receive a penalty by hospital characteristic. For example, 82.17 percent of eligible hospitals characterized as non-teaching hospitals are expected to be penalized. Among teaching hospitals, 89.70 percent of eligible hospitals with fewer than 100 residents and 92.64 percent of eligible hospitals with 100 or more residents are expected to be penalized.
The fourth column in the table estimates the financial impact on hospitals by hospital characteristic. The table shows the share of penalties as a percentage of all base operating DRG payments for hospitals with each characteristic. This is calculated as the sum of penalties for all hospitals with that characteristic over the sum of all base operating DRG payments for those hospitals between October 1, 2018 and September 30, 2019 (FY 2019). For example, the penalty as a share of payments for urban hospitals is 0.68 percent. This means that total penalties for all urban hospitals are 0.68 percent of total payments for urban hospitals. Measuring the financial impact on hospitals as a percentage of total base operating DRG payments accounts for differences in the amount of base operating DRG payments for hospitals with the characteristic when comparing the financial impact of the program on different groups of hospitals.
We did not receive any public comments regarding the impact of our proposals.
In section IV.L. of the preamble of this final rule, we discuss the Hospital VBP Program under which the Secretary makes value-based incentive payments to hospitals based on their performance on measures during the performance period with respect to a fiscal year. These incentive payments will be funded for FY 2021 through a reduction to the FY 2021 base operating DRG payment amounts for discharges during the fiscal year, as required by section 1886(o)(7)(B) of the Act. The applicable percentage for FY 2021 and subsequent years is 2 percent. The total amount available for value-based incentive payments must be equal to the total amount of reduced payments for all hospitals for the fiscal year, as estimated by the Secretary.
In section IV.L.1.b. of the preamble of this final rule, we estimated the available pool of funds for value-based incentive payments in the FY 2021 program year, which, in accordance with section 1886(o)(7)(C)(v) of the Act, will be 2.00 percent of base operating DRG payment amounts, or a total of approximately $1.9 billion. This estimated available pool for FY 2021 is based on the historical pool of hospitals that were eligible to participate in the FY 2020 program year and the payment information from the March 2020 update to the FY 2019 MedPAR file.
The estimated impacts of the FY 2021 program year by hospital characteristic, found in the table in this section, are based on historical TPSs. We used the FY 2020 program year's TPSs to calculate the proxy adjustment factors used for this impact analysis. These are the most recently available scores that hospitals were given an opportunity to review and correct. The proxy adjustment factors use estimated annual base operating DRG payment amounts derived from the March 2020 update to the FY 2019 MedPAR file. The proxy adjustment factors can be found in Table 16A associated with this final rule (available via the internet on the CMS website at
The impact analysis shows that, for the FY 2021 program year, the number of hospitals that are expected to receive an increase in their base operating DRG payment amount is higher than the number of hospitals that are expected to receive a decrease. On average, among urban hospitals, hospitals in the West North Central region are expected to have the largest positive percent change in base operating DRG payment amounts, and among rural hospitals, hospitals in the Pacific region are expected to have the largest positive percent change in base operating DRG payment amounts. Urban Middle Atlantic, Urban East South Central, and Urban West South Central regions are expected to experience, on average, a decrease in base operating DRG payment amounts. All other regions, both urban and rural, are expected to experience, on average, an increase in base operating DRG payment amounts.
As DSH patient percentage increases, the average percent change in base operating DRG payment amounts is expected to decrease. With respect to hospitals' Medicare utilization as a percent of inpatient days (MCR), as the MCR percent increases, the average percent change in base operating DRG payment amounts is expected to increase for MCR percent 0 to 65, but for MCR percent greater than 65, the average percent change in base operating DRG payment amounts is expected to decrease. On average, teaching hospitals are expected to have a decrease in base operating DRG payment amounts while non-teaching hospitals are expected to have an increase in base operating DRG payment amounts.
Actual FY 2021 program year's TPSs will not be reviewed and corrected by hospitals until after the FY 2021 IPPS/LTCH PPS final rule has been published. Therefore, the same historical universe of eligible hospitals and corresponding TPSs from the FY 2020 program year were used for the updated impact analysis in this final rule. We did not receive any public comments regarding the financial impact of our proposals.
We are presenting the estimated impact of the FY 2021 Hospital-Acquired Condition (HAC) Reduction Program on hospitals by hospital characteristic. These FY 2021 HAC Reduction Program results were calculated using the Equal Measure Weights approach finalized in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41486 through 41489). Each hospital's Total HAC Score was calculated as the equally weighted average of the hospital's measure scores. The table in this section presents the estimated proportion of hospitals in the worst performing quartile of Total HAC Scores by hospital characteristic. Hospitals' CMS Patient Safety and Adverse Events Composite (CMS PSI 90) measure results are based on Medicare FFS discharges from July 1, 2017 through June 30, 2019 and version 10.0 of the PSI software. Hospitals' measure results for CDC Central Line-Associated Bloodstream Infection (CLABSI), Catheter-Associated Urinary Tract Infection (CAUTI), Colon and Abdominal Hysterectomy Surgical Site Infection (SSI), Methicillin-resistant
This table includes 3,111 non-Maryland hospitals with a FY 2021 Total HAC Score. Maryland hospitals and hospitals without a Total HAC Score are excluded from the table. Of these 3,111 hospitals, 3,102 hospitals had information for geographic location with bed size, Safety-net status, DSH percent, teaching status and ownership; 3,111 had information on region; and 3,084 had information for MCR percent. The first column presents a breakdown of each characteristic.
The third column in the table indicates the number of hospitals for each characteristic that would be in the worst-performing quartile of Total HAC Scores. These hospitals would receive a payment reduction under the FY 2021 HAC Reduction Program. For example, with regard to teaching status, 425 hospitals out of 1,968 hospitals characterized as non-teaching hospitals would be subject to a payment reduction. Among teaching hospitals, 224 out of 876 hospitals with fewer than 100 residents and 123 out of 258 hospitals with 100 or more residents would be subject to a payment reduction.
The fourth column in the table indicates the proportion of hospitals for each characteristic that would be in the worst performing quartile of Total HAC Scores and thus receive a payment reduction under the FY 2021 HAC Reduction Program. For example, 21.6 percent of the 1,968 hospitals characterized as non-teaching hospitals, 25.6 percent of the 876 teaching hospitals with fewer than 100 residents, and 47.7 percent of the 258 teaching hospitals with 100 or more
In section IV.N. of the preamble of this final rule, we are amending the Medicare policy with regard to closing teaching hospitals and closing residency programs to address the needs of residents attempting to find alternative hospitals in which to complete their training and the incentives of home and receiving hospitals with regard to seamless Medicare IME and direct GME funding. There are no new Medicare funded slots being created by this amendment; as under current policy, the maximum number of FTE cap slots that may be transferred with displaced residents is the number equal to the closing hospital's IME and direct GME FTE caps. Additionally, all of the funding for residents due to a hospital closure would eventually be transferred permanently to new hospitals under current law (section 5506 of the Affordable Care Act, which provides for permanent redistribution of slots due to hospital closure. As a result, we believe that ultimately, there is no new cost generated for the Medicare program as a result of this amendment.
Section 108 of the Further Consolidated Appropriations Act, 2020 (Public Law 116–94) provides that, effective for cost reporting periods beginning on or after October 1, 2020, payment to a subsection (d) hospital that furnishes an allogeneic hematopoietic stem cell transplant for hematopoietic stem cell acquisition shall be made on a reasonable cost basis, and that the Secretary shall specify the items included in such hematopoietic stem cell acquisition in rulemaking. This statutory provision also requires that, beginning in FY 2021, the payments made based on reasonable cost for the acquisition costs of allogeneic hematopoietic stem cells be made in a budget neutral manner. Our implementation of section 108 of the Further Consolidated Appropriations Act, 2020 is discussed in section II.H. of the preamble of this final rule, including our adjustment to the standardized amount to ensure the effects of the additional payments for allogeneic hematopoietic stem cell acquisition costs are budget neutral, as required under that law.
In section IV.O. of the preamble of this final rule for FY 2021, we discussed our implementation and budget neutrality methodology for section 410A of Public Law 108–173, as amended by sections 3123 and 10313 of Public Law 111–148, and more recently, by section 15003 of Public Law 114–255, which requires the Secretary to conduct a demonstration that would modify payments for inpatient services for up to 30 rural hospitals.
Section 15003 of Public Law 114–255 requires the Secretary to conduct the Rural Community Hospital Demonstration for a 10-year extension period (in place of the 5-year extension period required by the Affordable Care Act), beginning on the date immediately following the last day of the initial 5-year period under section 410A(a)(5) of Public Law 108–173. Specifically, section 15003 of Public Law 114–255 amended section 410A(g)(4) of Public Law 108–173 to require that, for hospitals participating in the demonstration as of the last day of the initial
Section 15003 of Public Law 114–255 also requires that no later than 120 days after enactment of Public Law 114–255 that the Secretary issue a solicitation for applications to select additional hospitals to participate in the demonstration program for the second 5 years of the 10-year extension period so long as the maximum number of 30 hospitals stipulated by Public Law 111–148 is not exceeded. Section 410A(c)(2) of Public Law 108–173 requires that in conducting the demonstration program under this section, the Secretary shall ensure that the aggregate payments made by the Secretary do not exceed the amount which the Secretary would have paid if the demonstration program under this section was not implemented (budget neutrality).
In the preamble to this final rule, we described the terms of participation for the extension period authorized by Public Law 114–255. In the FY 2018 IPPS/LTCH PPS final rule, we finalized our policy with regard to the effective date for the application of the reasonable cost-based payment methodology under the demonstration for those among the hospitals that had previously participated and were choosing to participate in the second 5-year extension period. According to our finalized policy, each of these previously participating hospitals began the second 5 years of the 10-year extension period on the date immediately after the date the period of performance under the 5-year extension period ended. Seventeen of the 21 hospitals that completed their periods of participation under the extension period authorized by the Affordable Care Act elected to continue in the second 5-year extension period, while 13 additional hospitals were selected to participate. One of the hospitals selected in 2017 withdrew from the demonstration prior to beginning participation on July 1, 2018, while each of the remaining newly participating hospitals began its 5-year period of participation effective the start of the first cost reporting period on or after October 1, 2017. In addition, one among the previously participating hospitals closed effective January 2019, while two have withdrawn effective September 1 and October 1, 2019, respectively. Therefore, 27 hospitals were participating in the demonstration as of this date—15 previously participating and 12 newly participating. For four of the previously participating hospitals, this 5-year period of participation will end during FY 2020; while one of the previously participating hospitals, scheduled to end in 2021, chose in February of this past year to withdraw effective September 2019. Therefore, the budget neutrality calculations in this final rule are based on 22 hospitals. For seven of the remaining 10 hospitals among the original group, participation will end during FY 2021, with participation ending for the other three on December 31, 2021. The newly participating hospitals are all scheduled to end their participation either at the end of FY 2022 or during FY 2023.
In the FY 2018 IPPS/LTCH PPS final rule, we finalized the budget neutrality methodology in accordance with our policies for implementing the demonstration, adopting the general methodology used in previous years, whereby we estimated the additional payments made by the program for each of the participating hospitals as a result of the demonstration. In order to achieve budget neutrality, we adjusted the national IPPS rates by an amount sufficient to account for the added costs of this demonstration. In other words, we have applied budget neutrality across the payment system as a whole rather than across the participants of this demonstration. The language of the statutory budget neutrality requirement permits the agency to implement the budget neutrality provision in this manner. The statutory language requires that aggregate payments made by the Secretary do not exceed the amount which the Secretary would have paid if the demonstration was not implemented, but does not identify the range across which aggregate payments must be held equal.
For this final rule, the resulting amount applicable to FY 2021 is $39,825,670, which we are including in the budget neutrality offset adjustment for FY 2021. This estimated amount is based on the specific assumptions regarding the data sources used, that is, recently available “as submitted” cost reports and historical and currently finalized update factors for cost and payment.
In previous years, we have incorporated a second component into the budget neutrality offset amounts identified in the final IPPS rules. As finalized cost reports became available, we determined the amount by which the actual costs of the demonstration for an earlier, given year differed from the estimated costs for the demonstration set forth in the final IPPS rule for the corresponding fiscal year, and we incorporated that amount into the budget neutrality offset amount for the upcoming fiscal year. We have calculated this difference for FYs 2005 through 2015 between the actual costs of the demonstration as determined from finalized cost reports once available, and estimated costs of the demonstration as identified in the applicable IPPS final rules for these years.
With the extension of the demonstration for another 5-year period, as authorized by section 15003 of Public Law 114–255, we will continue this general procedure. All finalized cost reports are not yet all available for the 19 hospitals that completed a cost reporting period beginning in FY 2016 according to the demonstration cost-based payment methodology. Therefore, we are expecting to include in the FY2022 IPPS/LTCH PPS proposed and final rules the difference between the actual costs of the demonstration as determined from these cost reports and the estimated costs as determined in the FY 2016 final rule.
For this final rule for FY 2021, the total amount that we are applying to the national IPPS rates is $39,825,670.
In section VI.B.2. of the preamble of this final rule we discuss the implementation of the FCHIP demonstration, which allowed eligible entities to develop and test new models for the delivery of health care services in eligible counties in order to improve access to and better integrate the delivery of acute care, extended care, and other health care services to Medicare beneficiaries in no more than four States. Budget neutrality estimates for the demonstration will be based on the demonstration period of August 1, 2016, through July 31, 2019. The demonstration included three intervention prongs, under which specific waivers of Medicare payment rules allowed for enhanced payment: Telehealth, skilled nursing facility/nursing facility services, and ambulance services. These waivers were implemented with the goal of increasing access to care with no net increase in costs. (We also discussed this policy in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38294 through 38296), the FY 2019 IPPS/LTCH PPS final rule (83 FR 41516 through 41517), and the FY 2020 IPPS/LTCH PPS final rule (84 FR 42044 through 42701), but did not make any changes to the policy that was adopted in FY 2017.)
We specified the payment enhancements for the demonstration and selected CAHs for participation with the goal of maintaining the budget neutrality of the demonstration on its own terms (that is, the demonstration would produce savings from reduced transfers and admissions to other health care providers, thus offsetting any increase in payments resulting from the demonstration). However, because of the small size of this demonstration program and uncertainty associated with projected Medicare utilization and costs, in the FY 2017 IPPS/LTCH PPS final rule we adopted a contingency plan (81 FR 57064 through 57065) to ensure that the budget neutrality requirement in section 123 of Public Law 110–275 is met. Accordingly, if analysis of claims data for the Medicare beneficiaries receiving services at each of the participating CAHs, as well as of other data sources, including cost reports, shows that increases in Medicare payments under the demonstration during the 3-year period are not sufficiently offset by reductions elsewhere, we will recoup the additional expenditures attributable to the demonstration through a reduction in payments to all CAHs nationwide. The demonstration is projected to impact payments to participating CAHs under both Medicare Part A and Part B. Thus, in the
Under the policy adopted in FY 2017 IPPS/LTCH PPS final rule, in the event the demonstration is found not to have been budget neutral, any excess costs will be recouped beginning in CY 2020. Based on the currently available data, the determination of budget neutrality results is preliminary and the amount of any reduction to CAH payments that would be needed in order to recoup excess costs under the demonstration remains uncertain. Therefore, in this final rule, we are finalizing our proposal in the FY 2021 IPPS/LTCH PPS proposed rule to revise the policy originally adopted in the FY 2017 IPPS/LTCH PPS final rule, to delay the implementation of any budget neutrality adjustment. We will revisit this policy in rulemaking for FY 2022 when we expect to have complete data for the demonstration period. Since our data analysis is incomplete, it is not possible to determine the impact of this policy for any national payment system for FY 2021.
In section IX.A. of this final rule, we specify the changes we are adopting regarding the reimbursement to providers, practitioners and institutions for electronic submission of patient records required for QIO purposes. Over the last several years, numerous healthcare providers subject to QIO review activity under §§ 476.78 and 480.111 have requested reimbursement for submitting requested patient records in an electronic format. However, our regulations concerning reimbursement to providers and practitioners for submitting patient records and information required for QIO review activity under § 476.78 only permitted reimbursement for records sent via photocopying and mailing or facsimile. This had the unintended consequence of discouraging providers from using the more efficient and cost effective means of submitting patient records and information to the QIOs in an electronic format solely because reimbursement was available only for patient records and information submitted via photocopying and mailing.
The updates we are making to the regulation with this final rule respond to requests from providers, by addressing reimbursement for submitting records to the QIO in electronic format as well as by photocopying and mailing and facsimile. According to 2017 Office of National Coordinator survey result, 96 percent of all non-federal acute care hospitals possessed certified health IT. Ninety-nine percent of large hospitals (more than 300 beds) had certified health IT, while 97 percent of medium-sized hospitals (more than 100 beds) had certified health IT. Also nearly 9 in 10 (86 percent) of office-based physicians had adopted any EHR, and nearly 4 in 5 (80 percent) had adopted a certified EHR (
We expect that implementation of the requirement for providers and practitioners to submit records to QIOs in and electronic format will have significant implications in terms of cost savings. Because CMS reimburses the QIOs directly for all payments to providers and practitioners for sending records to the QIOs and pays QIOs for their work, including the additional time and overhead expenses related to using paper records instead of electronic records. Therefore, any cost savings to the QIOs as a result of the adoption of electronic formats for submission of patient records would result in a cost savings to CMS. The less it costs to send records to the QIOs, the less CMS has to reimburse for those costs.
To estimate savings, we assumed 100 percent compliance with the proposed requirements at § 476.78(c). Although we assumed that 20 percent of providers, practitioners or institutions would seek a waiver, given the percentage of providers that currently have access to Certified Electronic Health Record Technology (CEHRT), we believe that ultimately all providers will be able to submit patient records in electronic format in the future.
We did not receive any comments regarding our proposal to require providers to submit requested patient records to QIOs for the purpose of fulfilling one or more QIO functions unless they have an approved waiver. We continue to believe that it is reasonable to require providers to submit patient records in electronic format unless they have a QIO approved waiver.
We estimated the total savings by subtracting the total cost of sending records electronically from the total cost of sending records by photocopying and mailing. Over the last 5 years, providers and practitioners have sent about 1.2 million patient records to the QIOs, totaling approximately 342 million pages of documents. Currently, providers are reimbursed at the rate of $0.12 per page, which results in a total reimbursement cost of about $41 million over 5 years. In contrast, we proposed, sending 1.2 million records electronically at a rate of reimbursement of $3 per record would amount to a total reimbursement cost of roughly $3.6 million. Subtracting $3.6 million (the estimated cost of sending records electronically over 5 years) from $41 million (the cost of sending records by fax or by mail), would result in a total estimated savings to CMS of $37.4 million. We would save money on the efforts of the QIOs to scan and process the paper records before sending them on for review electronically. However, these longer-run savings would be preceded by short-run transition costs, which we have not estimated.
Based on our estimates for case volume set forth previously, and assuming the QIOs cost for scanning and labor is $0.10 per page, based on the information set out in Table 1 of this Appendix, we estimate that it would save CMS about $34.3 million if the agency no longer needed to scan 342 million pages of records. Savings in payments for the labor and materials costs provided to both providers and QIOs for photocopying, scanning, and uploading results in total savings to CMS of $71.8 million. Tables 2 and 3 of this Appendix illustrate the cost savings to CMS over 5 years.
The BFCC–QIO contracts under the 12th scope of work currently have four task orders that are awarded on a staggered 5-year basis. Currently CMS has budgeted $95.8 million per year for each of the four BFCC–QIOs task orders, for an estimated 5-year cost of $479 million. We estimate that the costs of file transfer through photocopying and mailing, facsimile and in electronic formats would be a small fraction of the total operations budget of the QIOs. We believe that the changes we are adopting to the requirements governing reimbursement to providers, practitioners and institutions for submitting requested patient records to the QIO would also benefit providers, practitioners and institutions in fulfilling their responsibilities under § 476.78 (obligating providers and practitioners to, among other things, furnish records to QIOs) and § 480.111 (obligating institutions and practitioners to provide access, records and information to QIOs), by providing reimbursement for the submission of requested patient records to the QIOs in an electronic format.
Given our estimate, discussed in section IX.A.2.d. of this final rule that an appropriate employee can reasonably photocopy 6 pages of documents per minute and scan documents at the rate of 6 documents per minute, we estimate that the changes we are adopting would save providers and CMS a total of approximately 1.9 million labor hours over 5 years. We expect these proposed changes would also result in a positive environmental impact by avoiding printing, photocopying, faxing, scanning, and recycling about 342.2 million pages of medical records by providers and QIOs over 5 years.
We did not receive public comments on the methodologies used to calculate the reimbursement rates for electronic submission of patient records, submission of patient records via photocopying and mailing, or submission of patient records via facsimile. Since we did not receive comments on the methodologies used to calculate these rates, we continue to believe that the rates are reasonable, and that the cost savings we have calculated for the adopted changes are reasonable.
In section IX.B. of the preamble of this final rule, we are implementing the proposed changes regarding PRRB appeals. The burden associated with the requirements is the time and effort necessary to review instructions and register for the electronic submission system as well as the time and effort to gather, develop and submit various documents associated with a PRRB appeal. We also believe that requiring all parties involved in PRRB appeals to use OH CDMS would create efficiencies and reduce the burden and cost to external users in that, when a file or document is uploaded into the system and filed with the Board, the system simultaneously serves it on the opposing party. As a result, the system will eliminate the need to print documents and pay for postage for most submissions. Additionally, there is no material out-of-pocket direct cost or investment to utilize OH CDMS; parties do not need to purchase separate software. Finally, the required use of the system would also reduce the administrative burden on OH staff to enter data and scan correspondence, and will free up government resources to adjudicate cases and manage the docket. Similarly, it will enhance the PRRB's ability to strategically manage the PRRB's complex docket as it will provide better analytics for case management activities such as scheduling, jurisdictional and procedural reviews, and long-range docket planning. Last, the required use of the system would also reduce paper documents and the related costs associated with processing and securely storing the PRRB's records.
In section IX.C. of the preamble of this final rule, we are implementing the proposed clarifications and codification of certain longstanding Medicare bad debt reimbursement provisions and requirements for all Medicare providers, suppliers, and other entities eligible to receive Medicare payment for bad debt by revising 42 CFR 413.89, Bad debts, charity, and courtesy allowances. We are also implementing our proposal to codify our longstanding reasonable collection effort to require a Medicaid remittance advice (RA) for dual eligible beneficiaries. In the proposed rule, we sought suggestions from stakeholders regarding the best alternative documentation to the Medicaid RA that a provider could obtain and submit to Medicare to evidence the State's Medicare cost sharing liability (or absence thereof) in instances where the State does not process a Medicare crossover claim and issue a Medicaid RA for certain dual eligible beneficiaries. In addition, we are finalizing our proposal to recognize the new Accounting Standard Update—Topic 606 for revenue recognition and classification of Medicare bad debts. We also made a technical correction to the cross references in 42 CFR 412.622(b)(2)(i) and 42 CFR 417.536(g) to Medicare bad debt reimbursement policy. As a result of our proposed changes, there would be no costs to the Medicare Program and no increased burden placed upon providers, suppliers or other entities. In addition, there would be a savings to the Medicare Program by the reduction of appeal and litigation costs. Providers would benefit and realize a burden reduction with the finalization of a policy to accept alternative documentation to evidence a provider's reasonable collection effort for certain dual eligible beneficiaries, as doing so would serve an important public interest by allowing providers with cases currently pending before the PRRB an avenue for timely and cost-effective resolution, as well as an avenue for providers and contractors to resolve open cost reports containing these dual eligible crossover bad debt matters.
After consideration of the public comments we received, we are finalizing our proposals to codify some of our longstanding Medicare bad debt policies as set forth in section IX.C. of this final rule. Some of the longstanding bad debt policy clarifications will be effective retroactively, while others will have effective dates for cost reporting periods beginning on or after October 1, 2020. We believe the retroactive effective dates of the policy clarifications and acceptance of alternative documentation to the Medicaid RA will serve to benefit providers with greater clarity and resolution of pending PRRB cases.
In section IV.P.4. of the preamble of this final rule, we finalizing the adoption of a market-based methodology for estimating the MS–DRG relative weights beginning in FY 2024, utilizing the median payer-specific negotiated charge information we are finalizing to collect on the Medicare cost report. We are finalizing our data collection proposal with modification to only collect the median payer-specific negotiated charge by MS–DRG for payers that are MA organizations, rather than collecting both the median payer-specific negotiated charge by MS–DRG for payers that are MA organization and third party payers, as proposed. We note that in response to comments, we have increased the estimated total annual burden hours by 5 hours for this data collection requirement; 20 hours per hospital times 3,189 total hospitals equals 63,780 annual burden hours and $4,315,993 annually for all hospitals nationally. We refer readers to
We are applying a budget neutrality factor to ensure that the overall payment impact of any MS–DRG relative weight changes is budget neutral, as required by section 1886(d)(4)(C)(iii) of the Act and consistent with our current practice.
Once we have access to the payer-specific negotiated charge information at the MS–DRG level, we will be able to more precisely estimate the payment impact of adopting this market based MS–DRG relative weight methodology for payments beginning in FY 2024. However, to explore the potential impacts more generally, we conducted a literature review to compare the payment rates of Medicare FFS, MA organizations, and other commercial payers. As noted in section IV.P.2.b. of the preamble of the proposed rule and this final rule, Berenson et al.
We next researched empirically based comparisons of Medicare FFS rates, MA organization rates, and rates of other commercial payers. Baker et al.
Maeda and Nelson
In their study, Maeda and Nelson also examined whether the ratio of MA prices to FFS prices varied across DRGs to assess whether there were certain DRGs for which MA plans tended to pay more or less than FFS. They ranked the ratio of MA prices to FFS prices and adjusted for outlier payments. They found that there were some DRGs where the average MA price was much higher than FFS and there were some DRGs where the average MA price was a bit lower than FFS. For example, for the time period in question on average MA plans paid 129 percent more than FFS for rehabilitation stays (DRG 945), 33 percent more for depressive neuroses (DRG 881), and 27 percent more for stays related to psychoses (DRG 885). But MA plans paid an average of 9 percent less than FFS for stays related to pathological fractures (DRG 542) and wound debridement and skin graft (DRG 464) (see Online Appendix Table 5 from their study). The authors state these results suggest that there may be certain services where MA plans pay more than FFS, possibly because the FFS rate for those services is too low, but there may be other services where MA plans pay less than FFS, possibly because the FFS rate for those DRGs is too high.
As described previously, this body of research suggests that while the payer-specific charges negotiated between hospitals and MA organizations are generally well-correlated with Medicare IPPS payment rates, there may be instances where those negotiated charges may reflect the relative hospital resources used within an MS–DRG differently than our current cost-based methodology. Payer-specific charges negotiated between hospitals and commercial payers are generally not as well-correlated with Medicare IPPS payment rates.
As previously noted, once we have access to the payer-specific negotiated charge information at the MS–DRG level, we can more precisely estimate the potential payment impact, which we intend to do in future rulemaking, prior to the FY 2024 effective date of the market-based MS–DRG relative weight methodology. As under the current methodology, the impact of any MS–DRG relative weight changes on an individual hospital would depend on the mix of services provided by that particular hospital.
For the impact analysis presented in this section, we used data from the March 2020 update of the FY 2019 MedPAR file and the March 2020 update of the Provider-Specific File (PSF) that was used for payment purposes. Although the analyses of the changes to the capital prospective payment system do not incorporate cost data, we used the March 2020 update of the most recently available hospital cost report data (FYs 2017 and 2018) to categorize hospitals. Our analysis has several qualifications. We use the best data available and make assumptions about case-mix and beneficiary enrollment, as described later in this section.
Due to the interdependent nature of the IPPS, it is very difficult to precisely quantify the impact associated with each change. In addition, we draw upon various sources for the data used to categorize hospitals in the tables. In some cases (for instance, the number of beds), there is a fair degree of variation in the data from different sources. We have attempted to construct these variables with the best available sources overall. However, it is possible that some individual hospitals are placed in the wrong category.
Using cases from the March 2020 update of the FY 2019 MedPAR file, we simulated payments under the capital IPPS for FY 2020 and the payments for FY 2021 for a comparison of total payments per case. Short-term, acute care hospitals not paid under the general IPPS (for example, hospitals in Maryland) are excluded from the simulations.
The methodology for determining a capital IPPS payment is set forth at § 412.312. The basic methodology for calculating the capital IPPS payments in FY 2021 is as follows:
(Standard Federal rate) × (DRG weight) × (GAF) × (COLA for hospitals located in Alaska and Hawaii) × (1 + DSH adjustment factor + IME adjustment factor, if applicable).
In addition to the other adjustments, hospitals may receive outlier payments for those cases that qualify under the threshold established for each fiscal year. We modeled payments for each hospital by multiplying the capital Federal rate by the GAF and the hospital's case-mix. Then we added estimated payments for indirect medical education, disproportionate share, and outliers, if applicable. For purposes of this impact analysis, the model includes the following assumptions:
• The capital Federal rate was updated, beginning in FY 1996, by an analytical framework that considers changes in the prices associated with capital-related costs and adjustments to account for forecast error, changes in the case-mix index, allowable
• In addition to the FY 2021 update factor, the FY 2021 capital Federal rate was calculated based on a GAF/DRG budget neutrality adjustment factor of 0.9971 and an outlier adjustment factor of 0.9466.
We used the payment simulation model previously described in section I.I. of Appendix A of this final rule to estimate the potential impact of the changes for FY 2021 on total capital payments per case, using a universe of 3,201 hospitals. As previously described, the individual hospital payment parameters are taken from the best available data, including the March 2020 update of the FY 2019 MedPAR file, the March 2020 update to the PSF, and the most recent cost report data from the March 2020 update of HCRIS. In Table III, we present a comparison of estimated proposed total payments per case for FY 2020 and estimated total payments per case for FY 2021 based on the FY 2021 payment policies. Column 2 shows estimates of payments per case under our model for FY 2020. Column 3 shows estimates of payments per case under our model for FY 2021. Column 4 shows the total percentage change in payments from FY 2020 to FY 2021. The change represented in Column 4 includes the 1.1 percent update to the capital Federal rate and other changes in the adjustments to the capital Federal rate. The comparisons are provided by: (1) Geographic location; (2) region; and (3) payment classification.
The simulation results show that, on average, capital payments per case in FY 2021 are expected to increase as compared to capital payments per case in FY 2020. This expected increase overall is primarily due to the 1.1 percent update to the capital Federal rate for FY 2021, in conjunction with estimated changes in outlier payments and DSH payments. Under § 412.320, in order to receive capital DSH payments a hospital must be located in an urban area for payment purposes and have 100 or more beds. As discussed in section III.A.2. of the preamble of this final rule, there are counties that will become rural beginning October 1, 2020 based on our adoption of the revised OMB delineations, and therefore, hospitals in those areas (that have 100 or more beds) will no longer be eligible for capital DSH payments beginning in FY 2021. In general, regional variations in estimated capital payments per case in FY 2021 as compared to capital payments per case in FY 2020 are primarily due to changes in GAFs, and are generally consistent with the projected changes in payments due to changes in the wage index (and policies affecting the wage index), as shown in Table I in section I.G. of this Appendix A.
The net impact of these changes is an estimated 0.3 percent increase in capital payments per case from FY 2020 to FY 2021 for all hospitals (as shown in Table III).
The geographic comparison shows that, on average, hospitals in both urban and rural classifications would experience an increase in capital IPPS payments per case in FY 2021 as compared to FY 2020. Capital IPPS payments per case would increase by an estimated 0.3 percent for hospitals in urban areas while payments to hospitals in rural areas would increase by 0.6 percent in FY 2020 to FY 2021.
The comparisons by region show that the estimated changes in capital payments per case from FY 2020 to FY 2021 would increase in certain urban areas, ranging from a 0.6 percent increase for the East South Central region to a 1.0 percent increase for the New England region. We estimate a decrease for certain other urban regions ranging from 0.1 percent for the South Atlantic region to 0.8 percent for the Mountain region for the capital payments per case from FY 2020 to FY 2021. We estimate no change for the East North Central region for the capital payments per case from FY 2020 to FY 2021. However, nearly all rural regions are expected to increase in capital payments per case from FY 2020 to FY 2021, ranging from 0.1 percent for the West North Central to a 1.3 percent increase for the East North Central rural region. We estimate no change in capital payment per case from FY 2020 to FY 2021 for the South Atlantic rural region. These regional differences are primarily due to the changes in the GAFs and estimated changes in outlier and DSH payments.
All Hospital ownership types are expected to experience an increase in capital payments per case from FY 2020 to FY 2021. Voluntary hospitals are expected to experience an increase in capital IPPS payments of 0.2 percent, and the projected increase in capital payments for Proprietary hospitals is estimated to be 0.3 percent. We also estimate an increase in capital payments per case from FY 2020 to FY 2021 for the Government type hospital to be 0.5 percent.
Section 1886(d)(10) of the Act established the MGCRB. Hospitals may apply for reclassification for purposes of the wage index for FY 2021. Reclassification for wage index purposes also affects the GAFs because that factor is constructed from the hospital wage index. To present the effects of the hospitals being reclassified as of the publication of this final rule for FY 2021, we show the average capital payments per case for reclassified hospitals for FY 2021. Urban reclassified hospitals are expected to experience a decrease in capital payments of 0.3 percent; urban nonreclassified hospitals are expected to experience an increase in capital payments of 0.7 percent. The estimated percentage increase for rural reclassified hospitals is 0.6 percent, and for rural nonreclassified hospitals, the estimated percentage increase in capital payments is 0.5 percent.
In section VII. of the preamble of this final rule and section V. of the Addendum to this final rule, we set forth the annual update to the payment rates for the LTCH PPS for FY 2021. In the preamble of this final rule, we specify the statutory authority for the provisions that are presented, identify the policies for FY 2021, and present rationales for our decisions as well as alternatives that were considered. In this section of Appendix A to this final rule, we discuss the impact of the changes to the payment rate, factors, and other payment rate policies related to the LTCH PPS that are presented in the preamble of this final rule in terms of their estimated fiscal impact on the Medicare budget and on LTCHs.
There are 363 LTCHs included in this impact analysis. We note that, although there are currently approximately 373 LTCHs, for purposes of this impact analysis, we excluded the data of all-inclusive rate providers consistent with the development of the FY 2021 MS–LTC–DRG relative weights (discussed in section VII.B.3.c. of the preamble of this final rule. Moreover, in the claims data used for this final rule, 3 of these 363 LTCHs only have claims for site neutral payment rate cases and, therefore, do not affect our impact analysis for LTCH PPS standard Federal payment rate cases.) In the
Under the dual rate LTCH PPS payment structure, payment for LTCH discharges that meet the criteria for exclusion from the site neutral payment rate (that is, LTCH PPS standard Federal payment rate cases) is based on the LTCH PPS standard Federal payment rate. Consistent with the statute, the site neutral payment rate is the lower of the IPPS comparable per diem amount as determined under § 412.529(d)(4), including any applicable outlier payments as specified in § 412.525(a), reduced by 4.6 percent for FYs 2018 through 2026; or 100 percent of the estimated cost of the case as determined under § 412.529(d)(2). In addition, there are two separate high cost outlier targets—one for LTCH PPS standard Federal payment rate cases and one for site neutral payment rate cases. The statute also establishes a transitional payment method for cases that are paid the site neutral payment rate for LTCH discharges occurring in cost reporting periods beginning during FY 2016 through FY 2019. For FY 2021, we expected no site neutral payment rate cases would still be eligible for the transitional payment method since it only applies to those site neutral payment rate cases whose discharges occur during a LTCH's cost reporting period that begins before October 1, 2019. Site neutral payment rate cases whose discharges from an LTCH occur during the LTCH's cost reporting period that begins on or after October 1, 2019 are paid the site neutral payment rate amount determined under § 412.522(c)(1).
Based on the best available data for the 363 LTCHs in our database that were considered in the analyses used for this final rule, we estimate that overall LTCH PPS payments in FY 2021 will decrease by approximately 1.1 percent (or approximately $40 million) based on the rates and factors presented in section VII. of the preamble and section V. of the Addendum to this final rule.
The applicability of this transitional payment method for site neutral payment rate cases is dependent upon both the discharge date of the case and the start date of the LTCH's FY 2020 cost reporting period. The statutory transitional payment method for cases that are paid the site neutral payment rate for LTCH discharges occurring in cost reporting periods beginning during FY 2019 uses a blended payment rate, which is determined as 50 percent of the site neutral payment rate amount for the discharge and 50 percent of the LTCH PPS standard Federal prospective payment rate amount for the discharge (§ 412.522(c)(3)). There are LTCHs that have a cost reporting period that began during FY 2019 that includes discharges that occur during Federal FY 2020. For example, an LTCH with a January 1, 2019 through December 31, 2019 cost reporting period had 3 months of discharges that occurred during Federal FY 2020 (that is, discharges that occur from October 1, 2019 through December 31, 2019).
Therefore, when estimating FY 2020 LTCH PPS payments for site neutral payment rate cases for this impact analysis, because the statute specifies that the site neutral payment rate effective date for a given LTCH is based on the date that the LTCH's cost reporting period begins during FY 2020, we included an adjustment to account for this rolling effective date, consistent with the general approach used for the LTCH PPS impact analysis presented in the FY 2016 IPPS/LTCH PPS proposed rule (80 FR 49831). This approach accounts for the fact that site neutral payment rate cases in FY 2020 that are in an LTCH's cost reporting period that begins before October 1, 2019 continue to be paid under the transitional payment method until the start of the LTCH's first cost reporting period beginning on or after October 1, 2019. Site neutral payment rate cases whose discharges from LTCHs occurring during an LTCH's cost reporting period that begins on or after October 1, 2019 will no longer be paid under the transitional payment method and will instead be paid the site neutral payment rate amount as determined under § 412.522(c)(1).
For purposes of this impact analysis, to estimate total FY 2020 LTCH PPS payments for site neutral payment rate cases, as we proposed, we used the same general approach as was used in the FY 2016 IPPS/LTCH PPS proposed rule with modifications to account for the rolling end date to the transitional blended payment rate in FY 2020 instead of the rolling effective date for implementation of the transitional site neutral payment rate in FY 2016. (We note, this is the same approach as was used in the FY 2018 IPPS/LTCH PPS proposed and final rules, which was prior to the extension of the transitional blended payment for LTCH cost reporting periods beginning in FY 2018 and FY 2019 provided by the provisions of section 51005(a) of the Bipartisan Budget Act of 2018 (Pub. L. 115–123). In summary, under this approach, we grouped LTCHs based on the quarter their cost reporting periods will begin during FY 2020. For example, LTCHs with cost reporting periods that begin during October through December 2020 begin during the first quarter of FY 2020. For LTCHs grouped in each quarter of FY 2020, we modeled those LTCHs' estimated FY 2020 site neutral payment rate payments under the transitional blended payment rate based on the quarter in which the LTCHs in each group will continue to be paid the transitional payment method for the site neutral payment rate cases.
For purposes of this estimate, then, we assume the cost reporting period is the same for all LTCHs in each of the quarterly groups and that this cost reporting period begins on the first day of that quarter. (For example, the first group consists of 38 LTCHs whose cost reporting period begins in the first quarter of FY 2020 so that, for purposes of this estimate, we assume all 38 LTCHs began their FY 2020 cost reporting period on October 1, 2019.) Second, we estimated the proportion of FY 2020 site neutral payment rate cases in each of the quarterly groups, and we then assume this proportion is applicable for all four quarters of FY 2020. (For example, as discussed in more detail later in this section, we estimate the first quarter group will discharge 7.9 percent of all FY 2020 site neutral payment rate cases; and therefore, we estimate that group of LTCHs will discharge 7.9 percent of all FY 2020 site neutral payment rate cases in each quarter of FY 2020.) Then, we modeled estimated FY 2020 payments on a quarterly basis under the LTCH PPS standard Federal payment rate based on the assumptions described previously. We continue to believe that this approach is a reasonable means of taking the rolling effective date into account when estimating FY 2020 payments.
For purposes of this impact analysis, to estimate total FY 2021 LTCH PPS payments for site neutral payment rate cases, the transitional blended payment rate was not applied to such cases because all discharges in FY 2021 are either in the LTCH's cost reporting period that began during FY 2020 or in the LTCH's cost reporting period that will begin during FY 2021. Site neutral payment rate cases whose discharges from an LTCH occur during the LTCH's cost reporting period that begins on or after October 1, 2019 are paid the site neutral payment rate amount determined under § 412.522(c)(1).
Based on the fiscal year begin date information in the March 2020 update of the provider specific file (PSF) and the LTCH claims from the March 2020 update of the FY 2019 MedPAR files for the 363 LTCHs in our database used for this final rule, we found the following: 7.9 percent of site neutral payment rate cases are from 38 LTCHs whose cost reporting periods began during the first quarter of FY 2020; 19.8 percent of site neutral payment rate cases are from 81 LTCHs whose cost reporting periods will begin in the second quarter of FY 2020; 9.4 percent of site neutral payment rate cases are from 48 LTCHs whose cost reporting periods will begin in the third quarter of FY 2020; and 62.9 percent of site neutral payment rate cases are from 193 LTCHs whose cost reporting periods will begin in the fourth quarter of FY 2020. (We note, three of the 363 LTCHs in our database used for this final rule did not have any site neutral payment rate cases.) Therefore, the following percentages apply in the approach described previously:
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•
•
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Based on the FY 2019 LTCH cases that were used for the analysis in this final rule, approximately 25 percent of those cases were classified as site neutral payment rate cases (that is, 25 percent of LTCH cases did not meet the patient-level criteria for exclusion from the site neutral payment rate). Our Office of the Actuary currently estimates that the percent of LTCH PPS cases that will be paid at the site neutral payment rate in FY 2021 will not change significantly from the most recent historical data. Taking into account the transitional blended payment rate and other changes that will apply to the site neutral payment rate cases in FY 2021, we estimate that aggregate LTCH PPS payments for these site neutral payment rate cases will decrease by approximately 24 percent (or approximately $114 million). We note, we estimate payments to site neutral payment rate cases in FY 2021 represent approximately 10 percent of estimated aggregate FY 2021 LTCH PPS payments.
Based on the FY 2019 LTCH cases that were used for the analysis in this final rule, approximately 75 percent of LTCH cases will meet the patient-level criteria for exclusion from the site neutral payment rate in FY 2021, and will be paid based on the LTCH PPS standard Federal payment rate for the full year. We estimate that total LTCH PPS payments for these LTCH PPS standard Federal payment rate cases in FY 2021 will increase approximately 2.2 percent (or approximately $74 million). This estimated increase in LTCH PPS payments for LTCH PPS standard Federal payment rate cases in FY 2021 is primarily due to the 2.3 percent annual update to the LTCH PPS standard Federal payment rate for FY 2021.
Based on the 363 LTCHs that were represented in the FY 2019 LTCH cases that were used for the analyses in this final rule presented in this Appendix, we estimate that aggregate FY 2020 LTCH PPS payments will be approximately $3.774 billion, as compared to estimated aggregate FY 2021 LTCH PPS payments of approximately $3.733 billion, resulting in an estimated overall decrease in LTCH PPS payments of approximately $40 million. As discussed earlier, this estimated decrease in payments is primarily due to the rolling end to the statutory transitional blended payment rate for site neutral payment rate cases. We also note that the estimated $40 million decrease in LTCH PPS payments in FY 2021 does not reflect changes in LTCH admissions or case-mix intensity, which will also affect the overall payment effects of the policies in this final rule.
The LTCH PPS standard Federal payment rate for FY 2020 is $42,677.64. For FY 2021, we are establishing an LTCH PPS standard Federal payment rate of $43,755.34 which reflects the 2.3 percent annual update to the LTCH PPS standard Federal payment rate, the incremental change in the one-time budget neutrality adjustment factor of 0.991249 for eliminating the 25-percent threshold policy in FY 2021 as discussed in section VII.D. of the preamble of this final rule, and the budget neutrality factor for general updates to the area wage level adjustment of 1.0016837 (discussed in section V.B.6. of the Addendum to this final rule). For LTCHs that fail to submit data for the LTCH QRP, in accordance with section 1886(m)(5)(C) of the Act, we are establishing an LTCH PPS standard Federal payment rate of $42,899.90. This LTCH PPS standard Federal payment rate reflects the updates and factors previously described, as well as the required 2.0 percentage point reduction to the annual update for failure to submit data under the LTCH QRP. We note that the factors previously described to determine the FY 2021 LTCH PPS standard Federal payment rate are applied to the FY 2020 LTCH PPS standard Federal rate set forth under § 412.523(c)(3)(xvi) (that is, $42,677.64).
Table IV shows the estimated impact for LTCH PPS standard Federal payment rate cases. The estimated change attributable solely to the annual update of 2.3 percent to the LTCH PPS standard Federal payment rate is projected to result in an increase of 2.3 percent in payments per discharge for LTCH PPS standard Federal payment rate cases from FY 2020 to FY 2021, on average, for all LTCHs (Column 6). The estimated increase of 2.3 percent shown in Column 6 of Table IV also includes estimated payments for short-stay outlier (SSO) cases, a portion of which are not affected by the annual update to the LTCH PPS standard Federal payment rate, as well as the reduction that is applied to the annual update for LTCHs that do not submit the required LTCH QRP data. However, for most hospital categories, the projected increase in payments based on the LTCH PPS standard Federal payment rate to LTCH PPS standard Federal payment rate cases still rounds to approximately 2.3 percent, the same as the annual update for FY 2021.
For FY 2021, we are updating the wage index values based on the most recent available data (data from cost reporting periods beginning during FY 2017 which is the same data used for the FY 2021 IPPS wage index), the labor-related share of 68.1 for FY 2021, based on the most recent available data (IGI's second quarter 2020 forecast) on the relative importance of the labor-related share of operating and capital costs of the 2017-based LTCH market basket, and the changes to the labor market areas based on the revisions to the CBSA delineations. We also are applying an area wage level budget neutrality factor of 1.0016837 to ensure that the changes to the area wage level adjustment, including the 5-percent cap transition policy, would not result in any change in estimated aggregate LTCH PPS payments to LTCH PPS standard Federal payment rate cases.
For LTCH PPS standard Federal payment rate cases, we currently estimate high cost outlier payments as a percentage of total LTCH PPS standard Federal payment rate payments will decrease slightly from FY 2020 to FY 2021. Based on the FY 2019 LTCH cases that were used for the analyses in this final rule, we estimate that the FY 2020 high cost outlier threshold of $26,778 (as established in the FY 2020 IPPS/LTCH PPS final rule) would result in estimated high cost outlier payments for LTCH PPS standard Federal payment rate cases in FY 2020 that are projected to exceed the 7.975 percent target. Specifically, we currently estimate that high cost outlier payments for LTCH PPS standard Federal payment rate cases will be approximately 8.005 percent of the estimated total LTCH PPS standard Federal payment rate payments in FY 2020. Combined with our estimate that FY 2021 high cost outlier payments for LTCH PPS standard Federal payment rate cases will be 7.975 percent of estimated total LTCH PPS standard Federal payment rate payments in FY 2021, this will result in an estimated decrease in high cost outlier payments of approximately 0.03 percent between FY 2020 and FY 2021. We note that, consistent with past practice, in calculating these estimated high cost outlier payments, we increased estimated costs by an inflation factor of 4.3 percent (determined by the Office of the Actuary) to update the FY 2019 costs of each case to FY 2021.
Table IV shows the estimated impact of the payment rate and policy changes on LTCH PPS payments for LTCH PPS standard Federal payment rate cases for FY 2021 by comparing estimated FY 2020 LTCH PPS payments to estimated FY 2021 LTCH PPS payments. (As noted earlier, our analysis does not reflect changes in LTCH admissions or case-mix intensity.) We note that these impacts do not include LTCH PPS site neutral payment rate cases for the reasons discussed in section I.J.3. of this Appendix.
As we discuss in detail throughout this final rule, based on the most recent available data, we believe that the provisions of this final rule relating to the LTCH PPS, which are projected to result in an overall decrease in estimated aggregate LTCH PPS payments, and the resulting LTCH PPS payment amounts will result in appropriate Medicare payments that are consistent with the statute.
A commenter stated that since FY 2019 site neutral payment rate cases have seen a significant drop in reimbursement as a result of the end of the transitional blended payment rate. The commenter stated that the payment-to-cost ratio for site neutral payment rate cases without the blended payment rate will be 45 percent and treatment costs for these cases are comparable to LTCH PPS standard Federal payment rate cases as these site neutral cases have significant comorbidities which make it difficult to discharge them to lower levels of care. They also stated that their site neutral payment rate cases are almost three times costlier than IPPS cases with fewer than three ICU days.
A commenter acknowledged that the number of site neutral payment rate cases have dropped to 25 percent of total LTCH PPS cases in FY 2019. Because site neutral payment rate cases will longer receive the transitional blended payment rate in the FY 2021, the commenter believes this will lead to a continued decrease in the overall LTCH case volume.
For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of an urban area and has fewer than 100 beds. As shown in Table IV, we are projecting a 1.7 percent increase in estimated payments for LTCH PPS standard Federal payment rate cases for LTCHs located in a rural area. This estimated impact is based on the FY 2019 data for the 18 rural LTCHs (out of 363 LTCHs) that were used for the impact analyses shown in Table IV.
Section 123(a)(1) of the BBRA requires that the PPS developed for LTCHs “maintain budget neutrality.” We believe that the statute's mandate for budget neutrality applies only to the first year of the implementation of the LTCH PPS (that is, FY 2003). Therefore, in calculating the FY 2003 standard Federal payment rate under § 412.523(d)(2), we set total estimated payments for FY 2003 under the LTCH PPS so that estimated aggregate payments under the LTCH PPS were estimated to equal the amount that would have been paid if the LTCH PPS had not been implemented.
Section 1886(m)(6)(A) of the Act establishes a dual rate LTCH PPS payment structure with two distinct payment rates for LTCH discharges beginning in FY 2016. Under this statutory change, LTCH discharges that meet the patient-level criteria for exclusion from the site neutral payment rate (that is, LTCH PPS standard Federal payment rate cases) are paid based on the LTCH PPS standard Federal payment rate. LTCH discharges paid at the site neutral payment rate are generally paid the lower of the IPPS comparable per diem amount, reduced by 4.6 percent for FYs 2018 through 2026, including any applicable HCO payments, or 100 percent of the estimated cost of the case, reduced by 4.6 percent. The statute also establishes a transitional payment method for cases that are paid at the site neutral payment rate for LTCH discharges occurring in cost reporting periods beginning during FY 2016 through FY 2019, under which the site neutral payment rate cases are paid based on a blended payment rate calculated as 50 percent of the applicable site neutral payment rate amount for the discharge and 50 percent of the applicable LTCH PPS standard Federal payment rate for the discharge.
As discussed in section I.J.2. of this Appendix, we project a decrease in aggregate LTCH PPS payments in FY 2021 of approximately $40 million. This estimated decrease in payments reflects the projected increase in payments to LTCH PPS standard Federal payment rate cases of approximately $74 million and the projected decrease in payments to site neutral payment rate cases of approximately $114 million under the dual rate LTCH PPS payment rate structure required by the statute beginning in FY 2016. (We note that these calculations are based on unrounded numbers and thus may not sum as expected.)
As discussed in section V.D. of the Addendum to this final rule, our actuaries project cost and resource changes for site neutral payment rate cases due to the site neutral payment rates required under the statute. Specifically, our actuaries project that the costs and resource use for cases paid at the site neutral payment rate will likely be lower, on average, than the costs and resource use for cases paid at the LTCH PPS standard Federal payment rate, and will likely mirror the costs and resource use for IPPS cases assigned to the same MS–DRG.
The basic methodology for determining a per discharge payment for LTCH PPS standard Federal payment rate cases is currently set forth under §§ 412.515 through 412.533 and 412.535. In addition to adjusting the LTCH PPS standard Federal payment rate by the MS–LTC–DRG relative weight, we make adjustments to account for area wage levels and SSOs. LTCHs located in Alaska and Hawaii also have their payments adjusted by a COLA. Under our application of the dual rate LTCH PPS payment structure, the LTCH PPS standard Federal payment rate is generally only used to determine payments for LTCH PPS standard Federal payment rate cases (that is, those LTCH PPS cases that meet the statutory criteria to be excluded from the site neutral payment rate). LTCH discharges that do not meet the patient-level criteria for exclusion are paid the site neutral payment rate, which we are calculating as the lower of the IPPS comparable per diem amount as determined under § 412.529(d)(4), reduced by 4.6 percent for FYs 2018 through 2026, including any applicable outlier payments, or 100 percent of the estimated cost of the case as determined under existing § 412.529(d)(2). In addition, when certain thresholds are met, LTCHs also receive HCO payments for both LTCH PPS standard Federal payment rate cases and site neutral payment rate cases that are paid at the IPPS comparable per diem amount.
To understand the impact of the changes to the LTCH PPS payments for LTCH PPS standard Federal payment rate cases presented in this final rule on different categories of LTCHs for FY 2021, it is necessary to estimate payments per discharge for FY 2020 using the rates, factors, and the policies established in the FY 2020 IPPS/LTCH PPS final rule and estimate payments per discharge for FY 2021 using the rates, factors, and the policies in this FY 2021 IPPS/LTCH PPS final rule (as discussed in section VII. of the preamble of this final rule and section V. of the Addendum to this final rule). As discussed elsewhere in this final rule, these estimates are based on the best available LTCH claims data and other factors, such as the application of inflation factors to estimate costs for HCO cases in each year. The resulting analyses can then be used to compare how our policies applicable to LTCH PPS standard Federal payment rate cases affect different groups of LTCHs.
For the following analysis, we group hospitals based on characteristics provided in the OSCAR data, cost report data in HCRIS, and PSF data. Hospital groups included the following:
• Location: large urban/other urban/rural.
• Participation date.
• Ownership control.
• Census region.
• Bed size.
For purposes of this impact analysis, to estimate the per discharge payment effects of our policies on payments for LTCH PPS standard Federal payment rate cases, we simulated FY 2020 and FY 2021 payments on a case-by-case basis using historical LTCH claims from the FY 2019 MedPAR files that met or would have met the criteria to be paid at the LTCH PPS standard Federal payment rate if the statutory patient-level criteria had been in effect at the time of discharge for all cases in the FY 2019 MedPAR files. For modeling FY 2020 LTCH PPS payments, we used the FY 2020 standard Federal payment rate of $42,677.64 (or $41,844.90 for LTCHs that failed to submit quality data as required under the requirements of the LTCH QRP). Similarly, for modeling payments based on the FY 2021 LTCH PPS standard Federal payment rate, we used the FY 2021 standard Federal payment rate of $43,755.34 (or $42,899.90 for LTCHs that failed to submit quality data as required under the requirements of the LTCH QRP). In each case, we applied the applicable adjustments for area wage levels and the COLA for LTCHs located in Alaska and Hawaii. Specifically, for modeling FY 2020 LTCH PPS payments, we used the current FY 2020 labor-related share (66.3 percent), the wage index values established in the Tables 12A and 12B listed in the Addendum to the FY 2020 IPPS/LTCH PPS final rule (which are available via the internet on the CMS website), the FY 2020 HCO fixed-loss amount for LTCH PPS standard Federal payment rate cases of $26,778 (as reflected in the FY 2020 IPPS/LTCH PPS final rule), and the FY 2020 COLA factors (shown in the table in section V.C. of the Addendum to that final rule) to adjust the FY 2020 nonlabor-related share (33.7 percent) for LTCHs located in Alaska and Hawaii. Similarly, for modeling FY 2021 LTCH PPS payments, we used the FY 2021 LTCH PPS labor-related share (68.1 percent), the FY 2021 wage index values from Tables 12A and 12B listed in section VI. of the Addendum to this final rule (which are available via the internet on the CMS website), the FY 2021 fixed-loss amount for LTCH PPS standard Federal payment rate cases of $27,195 (as discussed in section V.D.3. of the Addendum to this final rule), and the FY 2021 COLA factors (shown in the table in section V.C. of the Addendum to this final rule) to adjust the FY 2021 nonlabor-related share (31.9 percent) for LTCHs located in Alaska and Hawaii. We note that in modeling payments for HCO cases for LTCH PPS standard Federal payment rate cases, we applied an inflation factor of 2.0 percent (determined by the Office of the Actuary) to update the FY 2019 costs of each case to FY 2020, and an inflation factor of 4.3 percent (determined by the Office of the Actuary) to update the FY 2019 costs of each case to FY 2021.
The impacts that follow reflect the estimated “losses” or “gains” among the various classifications of LTCHs from FY 2020 to FY 2021 based on the payment rates and policy changes applicable to LTCH PPS standard Federal payment rate cases presented in this final rule. Table IV illustrates the estimated aggregate impact of the change in LTCH PPS payments for LTCH PPS standard Federal payment rate cases among various classifications of LTCHs. (As discussed previously, these impacts do not include LTCH PPS site neutral payment rate cases.)
• The first column, LTCH Classification, identifies the type of LTCH.
• The second column lists the number of LTCHs of each classification type.
• The third column identifies the number of LTCH cases expected to meet the LTCH PPS standard Federal payment rate criteria.
• The fourth column shows the estimated FY 2020 payment per discharge for LTCH cases expected to meet the LTCH PPS standard Federal payment rate criteria (as described previously).
• The fifth column shows the estimated FY 2021 payment per discharge for LTCH cases expected to meet the LTCH PPS standard Federal payment rate criteria (as described previously).
• The sixth column shows the percentage change in estimated payments per discharge for LTCH cases expected to meet the LTCH PPS standard Federal payment rate criteria from FY 2020 to FY 2021 due to the annual update to the standard Federal rate (as discussed in section V.A.2. of the Addendum to this final rule).
• The seventh column shows the percentage change in estimated payments per discharge for LTCH PPS standard Federal payment rate cases from FY 2020 to FY 2021 for changes due to the changes to the area wage level adjustment (that is, the updated hospital wage data, labor-related share, and the to the geographic labor-market area designations, including the 5-percent cap transition policy), and the application of the corresponding budget neutrality factor (as discussed in section V.B.6. of the Addendum to this final rule).
• The eighth column shows the percentage change in estimated payments per discharge for LTCH PPS standard Federal payment rate cases from FY 2020 (Column 4) to FY 2021 (Column 5) for all changes.
Based on the FY 2019 LTCH cases (from 363 LTCHs) that were used for the analyses in this final rule, we have prepared the following summary of the impact (as shown in Table IV) of the LTCH PPS payment rate and policy changes for LTCH PPS standard Federal payment rate cases presented in this final rule. The impact analysis in Table IV shows that estimated payments per discharge for LTCH PPS standard Federal payment rate
As stated previously, we are updating the LTCH PPS standard Federal payment rate for FY 2021 by 2.3 percent. For LTCHs that fail to submit quality data under the requirements of the LTCH QRP, as required by section 1886(m)(5)(C) of the Act, a 2.0 percentage point reduction is applied to the annual update to the LTCH PPS standard Federal payment rate. In addition, we are applying the incremental change in the one-time budget neutrality adjustment factor of 0.991249 for the cost of eliminating the 25-percent threshold policy in FY 2021 as discussed in section VII.D. of the preamble of this final rule. Consistent with § 412.523(d)(4), we also are applying a budget neutrality factor for changes to the area wage level adjustment of 1.0016837 (discussed in section V.B.6. of the Addendum to this final rule), based on the best available data at this time, to ensure that any changes to the area wage level adjustment will not result in any change (increase or decrease) in estimated aggregate LTCH PPS standard Federal payment rate payments. As we also explained earlier in this section, for most categories of LTCHs (as shown in Table IV, Column 6), the estimated payment increase due to the 2.3 percent annual update to the LTCH PPS standard Federal payment rate is projected to result in approximately a 2.3 percent increase in estimated payments per discharge for LTCH PPS standard Federal payment rate cases for all LTCHs from FY 2020 to FY 2021. We note our estimate of the changes in payments due to the update to the LTCH PPS standard Federal payment rate also reflects estimated payments for SSO cases that are paid using a methodology that is not entirely affected by the update to the LTCH PPS standard Federal payment rate. Consequently, for certain hospital categories, we estimate that payments to LTCH PPS standard Federal payment rate cases may differ slightly from 2.3 percent due to the annual update to the LTCH PPS standard Federal payment rate for FY 2021.
Based on the most recent available data, the vast majority of LTCHs are located in urban areas. Only approximately 5 percent of the LTCHs are identified as being located in a rural area, and approximately 4 percent of all LTCH PPS standard Federal payment rate cases are expected to be treated in these rural hospitals. The impact analysis presented in Table IV shows that the overall average percent increase in estimated payments per discharge for LTCH PPS standard Federal payment rate cases from FY 2020 to FY 2021 for all hospitals is 2.2 percent. The projected increase for urban hospitals is 2.3 percent for urban hospitals, while the projected increase for rural hospitals is 1.7 percent. This smaller than average projected increase for rural LTCHs is primarily due to the changes to the area wage adjustment, including the changes to the labor market areas.
LTCHs are grouped by participation date into four categories: (1) Before October 1983; (2) between October 1983 and September 1993; (3) between October 1993 and September 2002; and (4) October 2002 and after. Based on the most recent available data, the categories of LTCHs with the largest expected percentage of LTCH PPS standard Federal payment rate cases (approximately 41 percent and 43 percent, respectively) are in LTCHs that began participating in the Medicare program between October 1993 and September 2002 and after October 2002. These LTCHs are expected to both experience an increase in estimated payments per discharge for LTCH PPS standard Federal payment rate cases from FY 2020 to FY 2021 of 2.2 percent. LTCHs that began participating in the Medicare program between October 1983 and September 1993 are projected to experience the largest percent increase, 2.4 percent, in estimated payments per discharge for LTCH PPS standard Federal payment rate cases from FY 2020 to FY 2021, as shown in Table IV. Approximately 3 percent of LTCHs began participating in the Medicare program before October 1983, and these LTCHs are projected to experience an average percent increase of 2.2 percent in estimated payments per discharge for LTCH PPS standard Federal payment rate cases from FY 2020 to FY 2021
LTCHs are grouped into three categories based on ownership control type: Voluntary, proprietary, and government. Based on the most recent available data, approximately 17 percent of LTCHs are identified as voluntary (Table IV). The majority (approximately 81 percent) of LTCHs are identified as proprietary, while government owned and operated LTCHs represent approximately 3 percent of LTCHs. Based on ownership type, voluntary and proprietary LTCHs are each expected to experience an increase of 2.3 percent and 2.2 percent in payments to LTCH PPS standard Federal payment rate cases, respectively. Government owned and operated LTCHs, meanwhile, are expected to experience a 2.4 percent increase in payments to LTCH PPS standard Federal payment rate cases from FY 2020 to FY 2021.
Estimated payments per discharge for LTCH PPS standard Federal payment rate cases for FY 2021 are projected to increase across all census regions. LTCHs located in the Pacific region are projected to experience the largest increase at 2.9 percent. The remaining regions are projected to experience an increase in payments in the range of 1.8 to 2.3 percent. These regional variations are primarily due to the changes to the area wage adjustment, including the changes to the labor market areas.
LTCHs are grouped into six categories based on bed size: 0–24 beds; 25–49 beds; 50–74 beds; 75–124 beds; 125–199 beds; and greater than 200 beds. We project that LTCHs with 0–24 beds will experience the smallest increase in payments for LTCH PPS standard Federal payment rate cases, 1.9 percent. LTCHs with 50–74 beds, 75–124 beds, 125–199 beds, and with 200 or more beds, will all experience the largest increase in payments for LTCH PPS standard Federal payment rate cases of 2.3 percent. LTCHs with 25–49 beds are projected to experience a 2.1 percent increase in payments.
As stated previously, we project that the provisions of this final rule will result in an increase in estimated aggregate LTCH PPS payments to LTCH PPS standard Federal payment rate cases in FY 2021 relative to FY 2020 of approximately $74 million (or approximately 2.2 percent) for the 363 LTCHs in our database. Although, as stated previously, the hospital-level impacts do not include LTCH PPS site neutral payment rate cases, we estimate that the provisions of this final rule will result in a decrease in estimated aggregate LTCH PPS payments to site neutral payment rate cases in FY 2021 relative to FY 2020 of approximately $114 million (or approximately −24 percent) for the 363 LTCHs in our database. (As noted previously, we estimate payments to site neutral payment rate cases in FY 2021 represent approximately 10 percent of total estimated FY 2021 LTCH PPS payments.) Therefore, we project that the provisions of this final rule will result in a decrease in estimated aggregate LTCH PPS payments for all LTCH cases in FY 2021 relative to FY 2020 of approximately $40 million (or approximately −1.1 percent) for the 363 LTCHs in our database.
Under the LTCH PPS, hospitals receive payment based on the average resources consumed by patients for each diagnosis. We do not expect any changes in the quality of care or access to services for Medicare beneficiaries as a result of this final rule, but we continue to expect that paying prospectively for LTCH services will enhance the efficiency of the Medicare program. As discussed previously, we do not expect the continued implementation of the site neutral payment system to have a negative impact on access to or quality of care, as demonstrated in areas where there is little or no LTCH presence, general short-term acute care hospitals are effectively providing treatment for the same types of patients that are treated in LTCHs.
In section VIII.A. of the preamble of this final rule, we are finalizing our proposed requirements for hospitals to report quality data under the Hospital IQR Program in order to receive the full annual percentage increase for the FY 2022 payment determination and subsequent years.
In this final rule, we are finalizing our proposed reporting, submission, and public
We also are finalizing several proposed changes to streamline validation processes under the Hospital IQR Program. We will: (1) Require the use of electronic file submissions via a CMS-approved secure file transmission process and no longer allow the submission of paper copies of medical records or copies on digital portable media such as CD, DVD, or flash drive starting with validation affecting the FY 2024 payment determination; (2) combine the validation processes for chart-abstracted measures and eCQMs for validation affecting the FY 2024 payment determination and subsequent years by: (a) Aligning data submission quarters; (b) combining hospital selection, including: (i) Reducing the pool of hospitals randomly selected for chart-abstracted measure validation; and (ii) integrating and applying targeting criteria for eCQM validation; (c) removing previous exclusion criteria; and (d) combining scoring processes by providing one combined validation score for the validation of chart-abstracted measures and eCQMs with the eCQM portion of the combined score weighted at zero; and (3) formalize the process for conducting educational reviews beginning with eCQM validation affecting the FY 2023 payment determination in alignment with current processes for providing feedback for chart-abstracted validation results.
We estimate that the policies finalized in this final rule will result in an increase of 6,533 hours (6,660−67 hours) for 3,300 IPPS hospitals across a 4-year period from the CY 2021 reporting period/FY 2023 payment determination through the CY 2024 reporting period/FY 2026 payment determination. The total cost increase associated with these policies is approximately $253,480 (6,533 hours × $38.80) (which also reflects use of an updated hourly wage rate as previously discussed). We refer readers to section XI.B.7. of the preamble of this final rule (information collection requirements) for a detailed discussion of the calculations estimating the changes to the information collection burden for submitting data to the Hospital IQR Program.
With regard to our finalized policy to combine the hospital selection process, including the reduction of the pool of hospitals randomly selected for chart-abstracted measure validation from 400 hospitals to up to 200 hospitals, while we expect no change to the information collection burden for the Hospital IQR Program as discussed in section XI.B.7.b. of the preamble of this final rule because we directly reimburse hospitals for medical records, we believe there may be other cost savings beyond information collection burden due to 200 fewer hospitals being selected for Hospital IQR Program validation each year.
Historically, 100 hospitals, on average, that participate in the Hospital IQR Program do not receive the full annual percentage increase in any fiscal year due to the failure to meet all requirements of this Program. We anticipate that the number of hospitals not receiving the full annual percentage increase will be approximately the same as in past years.
A number of commenters expressed concern about an increase in burden related to our eCQM related proposals to increase the number of required reporting quarters for eCQM data and our proposal to begin publicly reporting eCQM data.
We believe the long-term benefits associated with reporting a full year of electronic data will outweigh the burdens and that increasing the number of quarters for which hospitals are required to report eCQM data will produce more comprehensive and reliable quality information for patients and providers. We stated our intention in the FY 2018 IPPS/LTCH PPS final rule to gradually transition toward more robust eCQM reporting (82 FR 38356). We reiterated this stated goal to incrementally increase the use of EHR data for quality measurement in a subsequent final rule (84 FR 42502). We believe that taking an incremental approach to increasing eCQM reporting over a 3-year period will help to ease the burdens associated with reporting larger amounts of data and will provide hospitals and vendors with additional time to plan and sufficiently allocate resources for more robust eCQM reporting. We also believe the increase in reporting quarters does not represent a significant increase in burden beyond the existing requirement to report one quarter of eCQM data. Once the eCQM updates are implemented in hospital EHRs, reporting an additional quarter of data should not require the same level of effort as reporting one initial quarter of data because hospitals should not need to update the eCQM specifications each quarter. Thus, we do not expect hospitals to experience a significant amount of added burden reporting three additional quarters of data over a 3-year period. The data submission deadline for eCQM data under the Hospital IQR Program, regardless of how many quarters of data are required to be reported for a given calendar year, will continue to be the end of 2 months following the close of the respective calendar year. There is no additional information collection burden associated with our proposal to publically reporting eCQM data, however we acknowledge that there are other types of burden associated with this proposal. For example, there is burden associated with the optional reviewing of hospital-specific reports during the public reporting preview period; however, we believe this burden is nominal because hospitals already review these reports with respect to other types of measures for the Hospital IQR Program.
We agree with the majority of commenters who expressed that the finalization of the validation proposals would be less burdensome overall. Combining and aligning the hospital pool for validation between the programs would reduce burden by 400 hospitals per year starting with validation affecting the FY 2024 payment determination. This is supported by the majority of comments that we received in response to this proposal, which indicate that most hospitals believe that the combined process will be less burdensome. In addition, our proposal to reduce the overall number of hospitals selected for validation from 800 to up to 400, further reduces the overall validation burden.
For a detailed discussion of comments we received on the information collection burden associated with the finalization of these proposals, please see section VIII.A.10 of the preamble of this final rule. We believe the finalization of these proposals effectively balances the burdens associated with increased reporting of eCQM data and the benefits of providing that quality data to patients and consumers.
In section VIII.B. of the preamble of this final rule, we finalize our proposed policies for the quality data reporting program for PPS-exempt cancer hospitals (PCHs), which we refer to as the PPS-exempt Cancer Hospital Quality Reporting (PCHQR) Program. The PCHQR Program is authorized under section 1866(k) of the Act, which was added by section 3005 of the Affordable Care Act. There is no financial impact to PCH Medicare reimbursement if a PCH does not submit data.
In section VIII.B.4. of the preamble of this final rule, we adopt refined versions of two existing measures: The Catheter-Associated Urinary Tract Infection (CAUTI) Outcome Measure and the Central Line-Associated Bloodstream Infection (CLABSI) Outcome Measure, beginning with the FY 2023
We received no comments in response to the effects of requirements section specifically discussed above.
We did not propose any policies and, therefore, are not finalizing any policies in this final rule for the LTCH QRP.
In section VIII.D. of the preamble of this final rule, we finalize our proposed requirements for eligible hospitals and CAHs participating in the Medicare and Medicaid Promoting Interoperability Programs. Specifically, we are finalizing the following proposed changes for eligible hospitals and CAHs that attest to CMS under the Medicare Promoting Interoperability Program: (1) An EHR reporting period of a minimum of any continuous 90-day period in CY 2022 for new and returning participants (eligible hospitals and CAHs); (2) to maintain the Electronic Prescribing Objective's Query of PDMP measure as optional and worth 5 bonus points in CY 2021; (3) to modify the name of the Support Electronic Referral Loops by Receiving and Incorporating Health Information measure; (4) to progressively increase the number of quarters for which hospitals are required to report eCQM data, from the current requirement of one self-selected calendar quarter of data, to four calendar quarters of data, over a 3-year period. Specifically, we will require: (a) 2 self-selected calendar quarters of data for the CY 2021 reporting period; (b) 3 self-selected calendar quarters of data for the CY 2022 reporting period; and (c) 4 calendar quarters of data beginning with the CY 2023 reporting period, where the submission period for the Medicare Promoting Interoperability Program will be the 2 months following the close of the respective calendar year; (5) to begin publicly reporting eCQM performance data beginning with the eCQM data reported by eligible hospitals and CAHs for the reporting period in CY 2021 on the
We did not receive individual comments in response to the numerical impacts specifically discussed above, therefore, we are finalizing our impacts as proposed without modification. For a complete, detailed discussion of comments we received on the Promoting Interoperability Program's policy proposals, please see section VIII.D. of the preamble of this final rule.
This final rule contains a range of policies. It also provides descriptions of the statutory provisions that are addressed, identifies the final policies, and presents rationales for our decisions and, where relevant, alternatives that were considered.
As discussed in section III.A.2. of the preamble of this final rule, the wage index is calculated and assigned to hospitals on the basis of the labor market area in which the hospital is located. Under section 1886(d)(3)(E) of the Act, beginning with FY 2005, we delineate hospital labor market areas based on OMB-established Core-Based Statistical Areas (CBSAs). Generally, OMB issues major revisions to statistical areas every 10 years, based on the results of the decennial census. However, OMB occasionally issues minor updates and revisions to statistical areas in the years between the decennial censuses through OMB Bulletins. On September 14, 2018, OMB issued OMB Bulletin No. 18–04. 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 are some new CBSAs, urban counties that become rural, rural counties that become urban, and existing CBSAs that are split apart. In addition, the revised OMB delineations will affect various hospital reclassifications, the out-migration 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 considered whether we should finalize the implementation of the revised OMB delineations as described in OMB Bulletin No. 18–04, beginning with the FY 2021 IPPS wage index, or whether we should wait to implement any further changes to the hospital labor market areas until OMB issues revisions to the statistical areas based on the results of the upcoming decennial census. We believe it is important for the IPPS to use updated labor market area delineations as soon as reasonably possible in order to maintain a more accurate and up-to-date payment system that reflects the reality of population shifts and labor market conditions. Furthermore, we believe that using the updated delineations in OMB Bulletin No. 18–04 will increase the integrity of the IPPS wage index system by creating a more accurate representation of geographic variations in wage levels. Therefore, we decided not to wait until OMB issues revisions to the statistical areas based on the results of the upcoming decennial census, but are finalizing the implementation of 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. We note that as described in section III.A.2.c. of the preamble of this final rule, we are finalizing a transition for hospitals that would see a decrease of more than 5 percent in their FY 2021 wage index compared to their FY 2020 wage index.
In section IV.P.2.c. of the preamble of this final rule, we are finalizing the adoption of a market-based methodology for estimating the MS–DRG relative weights beginning in FY 2024, based on the median payer-specific negotiated charge information we are finalizing to collect on the cost report. We are finalizing our data collection proposal with modification to only collect the median payer-specific negotiated charge by MS–DRG for payers that are MA organizations, rather than collecting both the median payer-specific negotiated charge by MS–DRG for payers that are MA organizations and for all third party payers, as proposed. The market-based rate information we are finalizing to collect on the Medicare cost report would be the median of the payer-specific negotiated charges by MS–DRG, as described previously, for a hospital's MA organization payers. The payer-specific negotiated charges used by hospitals to calculate these medians would be the payer-specific negotiated charges for service packages that hospitals are required to make public under the requirements finalized in the Hospital Price Transparency final rule (84 FR 65524) that can be cross-walked to an MS–DRG. Hospitals would use the payer-specific negotiated charge data that they would be required to make public, as a result of the Hospital Price Transparency final rule, to then calculate the median payer-specific negotiated charges (as described further in section IV.P.2.c. of this final rule) to report on the Medicare cost report. We are not finalizing the collection of alternative market-based data, such as the median negotiated reimbursement amount, as initially discussed in section IV.P.2.c. of the proposed rule, or any refinements to the definition of median payer-specific negotiated charge.
In section IV.P.2.d. of the preamble of this final rule, we also finalize the adoption of a new market-based methodology for estimating the MS–DRG relative weights, beginning in FY 2024. This market-based methodology is based on the median payer-specific negotiated charge information collected on the Medicare cost report. In the proposed rule we considered alternatives to this approach, such as the use of the median payer-specific negotiated charge for all third-party payers (instead of the median payer-specific negotiated charge for all MA organizations), other alternative collections
We stated in the proposed rule that the same MS–DRG relative weight calculation described in section IV.P.2.d. would be used if we finalized an alternative to the median payer-specific negotiated charge information that we proposed to collect on the Medicare cost report, as further described in that section. We are not finalizing at this time a transition period to this market-based MS–DRG relative weight methodology, but did consider this, and will continue to consider this for future rulemaking prior to the FY 2024 effective date. We remain open to adjusting any finalized policy, through future rulemaking, prior to the FY 2024 effective date.
Executive Order 13771, titled Reducing Regulation and Controlling Regulatory Costs, was issued on January 30, 2017. This final rule is considered to be an E.O. 13771 regulatory action.
Acute care hospitals are estimated to experience an increase of approximately $3.528 billion in FY 2021, including operating, capital, and new technology changes as modeled for this final rule. The estimated change in operating payments is approximately $3.022 billion (discussed in section I.G. and I.H. of this Appendix). The estimated change in capital payments is approximately $0.027 billion (discussed in section I.I. of this Appendix). The estimated change in new technology add-on payments is approximately $0.479 billion as discussed in section I.H. of this Appendix. The change in new technology add-on payments reflects the net impact of new, continuing, and expiring current new technology add on payments. Total may differ from the sum of the components due to rounding.
Table I. of section I.G. of this Appendix also demonstrates the estimated redistributional impacts of the IPPS budget neutrality requirements for the final MS–DRG and wage index changes, and for the wage index reclassifications under the MGCRB.
We estimate that hospitals would experience a 0.2 percent increase in capital payments per case, as shown in Table III. of section I.I. of this Appendix. We project that there would be a $27 million increase in capital payments in FY 2021 compared to FY 2020.
The discussions presented in the previous pages, in combination with the remainder of this final rule, constitute a regulatory impact analysis.
Overall, LTCHs are projected to experience a decrease in estimated payments in FY 2021. In the impact analysis, we are using the final rates, factors, and policies presented in this final rule based on the best available claims and CCR data to estimate the change in payments under the LTCH PPS for FY 2021. Accordingly, based on the best available data for the 363 LTCHs in our database, we estimate that overall FY 2021 LTCH PPS payments will decrease approximately $40 million relative to FY 2020 primarily as a result of the end of the statutory transition period for site neutral payment rate cases.
If regulations impose administrative costs on private entities, such as the time needed to read and interpret a rule, we should estimate the cost associated with regulatory review. In the FY 2021 IPPS/LTCH PPS proposed rule, due to the uncertainty involved with accurately quantifying the number of entities that would review the proposed rule, we assumed that the total number of timely pieces of correspondence on last year's proposed rule will be the number of reviewers of this proposed rule. We acknowledge that this assumption may understate or overstate the costs of reviewing the rule. It is possible that not all commenters reviewed last year's rule in detail, and it is also possible that some reviewers chose not to comment on the proposed rule. For those reasons, and consistent with our approach in previous rulemakings (82 FR 38585; 83 FR 41777), we believe that the number of past commenters would be a fair estimate of the number of reviewers of the rule. We welcomed any public comments on the approach in estimating the number of entities that will review this final rule. We did not receive any public comments specific to our solicitation.
We also recognize that different types of entities are in many cases affected by mutually exclusive sections of the rule. Therefore, for the purposes of our estimate, and consistent with our approach in previous rulemaking (82 FR 38585; 83 FR 41777), we assume that each reviewer read approximately 50 percent of the rule. In the proposed rule, we welcomed public comments on this assumption. We did not receive any public comments specific to our solicitation.
We have used the number of timely pieces of correspondence on the FY 2021 IPPS/LTCH PPS proposed rule as our estimate for the number of reviewers of the final rule. We continue to acknowledge the uncertainty involved with using this number, but we believe it is a fair estimate due to the variety of entities affected and the likelihood that some of them choose to rely (in full or in part) on press releases, newsletters, fact sheets, or other sources rather than the comprehensive review of preamble and regulatory text. Using the wage information from the BLS for medical and health service managers (Code 11–9111), we estimate that the cost of reviewing this rule is $110.74 per hour, including overhead and fringe benefits
As required by OMB Circular A–4 (available at
As shown in Table V. of this Appendix, the net costs to the Federal Government associated with the policies adopted in this final rule are estimated at $3.528 billion.
As discussed in section I.J. of this Appendix, the impact analysis of the final payment rates and factors presented in this final rule under the LTCH PPS is projected to result in a decrease in estimated aggregate LTCH PPS payments in FY 2021 relative to FY 2020 of approximately $40 million based on the data for 363 LTCHs in our database
As shown in Table VI. of this Appendix, the net cost to the Federal Government associated with the policies for LTCHs in this final rule are estimated at −$40 million.
The RFA requires agencies to analyze options for regulatory relief of small entities. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small government jurisdictions. We estimate that most hospitals and most other providers and suppliers are small entities as that term is used in the RFA. The great majority of hospitals and most other health care providers and suppliers are small entities, either by being nonprofit organizations or by meeting the SBA definition of a small business (having revenues of less than $7.5 million to $38.5 million in any 1 year). (For details on the latest standards for health care providers, we refer readers to page 36 of the Table of Small Business Size Standards for NAIC 622 found on the SBA website at:
For purposes of the RFA, all hospitals and other providers and suppliers are considered to be small entities. Individuals and States are not included in the definition of a small entity. We believe that the provisions of this final rule relating to acute care hospitals will have a significant impact on small entities as explained in this Appendix. For example, because all hospitals are considered to be small entities for purposes of the RFA, the hospital impacts described in this final rule are impacts on small entities. For example, we refer readers to “Table I.—Impact Analysis of Changes to the IPPS for Operating Costs for FY 2021.” Because we lack data on individual hospital receipts, we cannot determine the number of small proprietary LTCHs. Therefore, we are assuming that all LTCHs are considered small entities for the purpose of the analysis in section I.J. of this Appendix. MACs are not considered to be small entities because they do not meet the SBA definition of a small business. Because we acknowledge that many of the affected entities are small entities, the analysis discussed throughout the preamble of this final rule constitutes our regulatory flexibility analysis. This final rule contains a range of policies. It provides descriptions of the statutory provisions that are addressed, identifies the policies, and presents rationales for our decisions and, where relevant, alternatives that were considered.
For purposes of the RFA, as stated previously, all hospitals and other providers and suppliers are considered to be small entities. We estimate the provisions of this final rule would result in an estimated $3.528 billion increase in FY 2021 payments to IPPS hospitals, primarily driven by the applicable percentage increase to the IPPS rates in conjunction with other payment changes including uncompensated care payments, capital payments, and new technology add-on payments, as discussed in section I.B. of this Appendix. As discussed in section I.J. of this Appendix, the impact analysis of the payment rates and factors presented in this final rule under the LTCH PPS is projected to result in a decrease in estimated aggregate LTCH PPS payments in FY 2021 relative to FY 2020 of approximately $40 million. We solicited public comments on our estimates and analysis of the impact of our proposals on those small entities. Any public comments that we received and our responses are presented throughout this final rule.
Section 1102(b) of the Act requires us to prepare a regulatory impact analysis for any proposed or final rule that may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. With the exception of hospitals located in certain New England counties, for purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of an urban area and has fewer than 100 beds. Section 601(g) of the Social Security Amendments of 1983 (Pub. L. 98–21) designated hospitals in certain New England counties as belonging to the adjacent urban area. Thus, for purposes of the IPPS and the LTCH PPS, we continue to classify these hospitals as urban hospitals. (As shown in Table I. in section I.G. of this Appendix, rural IPPS hospitals with 0–49 beds and 50–99 beds are expected to experience an increase in payments from FY 2020 to FY 2021 of 2.0 percent and 2.1 percent, respectively. We refer readers to Table I. in section I.G. of this Appendix for additional information on the quantitative effects of the final policy changes under the IPPS for operating costs.)
Section 202 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104–4) also requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation. In 2020, that threshold level is approximately $156 million. This final rule would not mandate any requirements for State, local, or tribal governments, nor would it affect private sector costs.
Executive Order 13175 directs agencies to consult with Tribal officials prior to the formal promulgation of regulations having tribal implications. Section 1880(a) of the Act states that a hospital of the Indian Health Service, whether operated by such Service or by an Indian tribe or tribal organization, is eligible for Medicare payments so long as it meets all of the conditions and requirements for such payments which are applicable generally to hospitals. Consistent with section 1880(a) of the Act, this final rule contains general provisions also applicable to hospitals and facilities operated by the Indian Health Service or Tribes or Tribal organizations under the Indian Self-Determination and Education Assistance Act.
As discussed in section IV.G.4 of the preamble of this final rule, CMS sought comment in the proposed rule on a potential restructuring of the Medicare DSH and uncompensated care payments specific to IHS and Tribal hospitals beginning in FY 2022. Consistent with Executive Order 13175, we continue to engage in consultation with Tribal officials on this issue. We intend to use input received from these consultations with Tribal officials, as well as the comments on the proposed rule, to inform future rulemaking.
In accordance with the provisions of Executive Order 12866, the Executive Office of Management and Budget reviewed this final rule.
Section 1886(e)(4)(A) of the Act requires that the Secretary, taking into consideration the recommendations of MedPAC, recommend update factors for inpatient hospital services for each fiscal year that take into account the amounts necessary for the efficient and effective delivery of medically appropriate and necessary care of high quality. Under section 1886(e)(5) of the Act, we are required to publish update factors recommended by the Secretary in the proposed and final IPPS rules. Accordingly, this Appendix provides the recommendations for the update factors for the IPPS national standardized amount, the hospital-specific rate for SCHs and MDHs, and the rate-of-increase limits for certain hospitals excluded from the IPPS, as well as LTCHs. In prior years, we made a recommendation in the IPPS proposed rule and final rule for the update factors for the payment rates for IRFs and IPFs. However, for FY 2021, consistent with our approach for FY 2020, we are including the Secretary's recommendation for the update factors for IRFs and IPFs in separate
As discussed in section IV.B. of the preamble to this final rule, for FY 2021, consistent with section 1886(b)(3)(B) of the Act, as amended by sections 3401(a) and 10319(a) of the Affordable Care Act, we are setting the applicable percentage increase by applying the following adjustments in the following sequence. Specifically, the applicable percentage increase under the IPPS is equal to the rate-of-increase in the hospital market basket for IPPS hospitals in all areas, subject to a reduction of one-quarter of the applicable percentage increase (prior to the application of other statutory adjustments; also referred to as the market basket update or rate-of-increase (with no adjustments)) for hospitals that fail to submit quality information under rules established by the Secretary in accordance with section 1886(b)(3)(B)(viii) of the Act and a reduction of three-quarters of the applicable percentage increase (prior to the application of other statutory adjustments; also referred to as the market basket update or rate-of-increase (with no adjustments)) for hospitals not considered to be meaningful electronic health record (EHR) users in accordance with section 1886(b)(3)(B)(ix) of the Act, and then subject to an adjustment based on changes in economy-wide productivity (the multifactor productivity (MFP) adjustment). Section 1886(b)(3)(B)(xi) of the Act, as added by section 3401(a) of the Affordable Care Act, states that application of the MFP adjustment may result in the applicable percentage increase being less than zero. (We note that section 1886(b)(3)(B)(xii) of the Act required an additional reduction each year only for FYs 2010 through 2019.)
We note that, in compliance with section 404 of the MMA, in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38158 through 38175), we replaced the FY 2010-based IPPS operating and capital market baskets with the rebased and revised 2014-based IPPS operating and capital market baskets effective beginning in FY 2018.
In the FY 2021 IPPS/LTCH PPS proposed rule, in accordance with section 1886(b)(3)(B) of the Act, we proposed to base the proposed FY 2021 market basket update used to determine the applicable percentage increase for the IPPS on IGI's fourth quarter 2019 forecast of the 2014-based IPPS market basket rate-of-increase with historical data through third quarter 2019, which was estimated to be 3.0 percent. In accordance with section 1886(b)(3)(B) of the Act, as amended by section 3401(a) of the Affordable Care Act, in section IV.B. of the preamble of the FY 2021 IPPS/LTCH PPS proposed rule, based on IGI's fourth quarter 2019 forecast, we proposed a MFP adjustment of 0.4 percentage point for FY 2021. We also proposed that if more recent data subsequently became available, we would use such data, if appropriate, to determine the FY 2021 market basket update and MFP adjustment for the final rule.
In the FY 2021 IPPS/LTCH PPS proposed rule, based on IGI's fourth quarter 2019 forecast of the 2014-based IPPS market basket and the MFP adjustment, depending on whether a hospital submits quality data under the rules established in accordance with section 1886(b)(3)(B)(viii) of the Act (hereafter referred to as a hospital that submits quality data) and is a meaningful EHR user under section 1886(b)(3)(B)(ix) of the Act (hereafter referred to as a hospital that is a meaningful EHR user), we presented four possible applicable percentage increases that could be applied to the standardized amount.
In accordance with section 1886(b)(3)(B) of the Act, as amended by section 3401(a) of the Affordable Care Act, we are establishing the applicable percentages increase for the FY 2021 updates based on IGI's second quarter 2020 forecast of the 2014-based IPPS market basket of 2.4 percent and the MFP adjustment of 0.0 percentage point, as discussed in section IV.B., depending on whether a hospital submits quality data under the rules established in accordance with section 1886(b)(3)(B)(viii) of the Act and is a meaningful EHR user under section 1886(b)(3)(B)(ix) of the Act, as shown in the table in this section.
Section 1886(b)(3)(B)(iv) of the Act provides that the FY 2021 applicable percentage increase in the hospital-specific rate for SCHs and MDHs equals the applicable percentage increase set forth in section 1886(b)(3)(B)(i) of the Act (that is, the same update factor as for all other hospitals subject to the IPPS). Under current law, the MDH program is effective for discharges through September 30, 2022, as discussed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41429 through 41430).
As previously stated, the update to the hospital specific rate for SCHs and MDHs is subject to section 1886(b)(3)(B)(i) of the Act, as amended by sections 3401(a) and 10319(a) of the Affordable Care Act. Accordingly, depending on whether a hospital submits quality data and is a meaningful EHR user, we are establishing the same four possible applicable percentage increases in the previous table for the hospital-specific rate applicable to SCHs and MDHs.
As discussed in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56939), prior to January 1, 2016, Puerto Rico hospitals were paid based on 75 percent of the national standardized amount and 25 percent of the Puerto Rico-specific standardized amount. Section 601 of Public Law 114–113 amended section 1886(d)(9)(E) of the Act to specify that the payment calculation with respect to operating costs of inpatient hospital services of a subsection (d) Puerto Rico hospital for inpatient hospital discharges on or after January 1, 2016, shall use 100 percent of the national standardized amount. Because Puerto Rico hospitals are no longer paid with a Puerto Rico-specific standardized amount under the amendments to section 1886(d)(9)(E) of the Act, there is no longer a need for us to make an update to the Puerto Rico standardized amount. Hospitals in Puerto Rico are now paid 100 percent of the national standardized amount and, therefore, are subject to the same update to the national standardized amount discussed under section IV.B.1. of the preamble of this final rule. Accordingly, for FY 2021, we are establishing an applicable percentage increase of 2.4 percent to the standardized amount for hospitals located in Puerto Rico.
Section 1886(b)(3)(B)(ii) of the Act is used for purposes of determining the percentage increase in the rate-of-increase limits for children's hospitals, cancer hospitals, and hospitals located outside the 50 States, the District of Columbia, and Puerto Rico (that is, short-term acute care hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and America Samoa). Section 1886(b)(3)(B)(ii) of the Act sets the percentage increase in the rate-of-increase limits equal to the market basket percentage increase. In accordance with § 403.752(a) of the regulations, RNHCIs are paid under the provisions of § 413.40, which also use section 1886(b)(3)(B)(ii) of the Act to update the percentage increase in the rate-of-increase limits.
Currently, children's hospitals, PPS-excluded cancer hospitals, RNHCIs, and short-term acute care hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa are among the remaining types of hospitals still paid under the reasonable cost methodology, subject to the rate-of-increase limits. In addition, in accordance with § 412.526(c)(3) of the regulations, extended neoplastic disease care hospitals (described in § 412.22(i) of the regulations) also are subject to the rate-of-increase limits. As discussed in section VI. of the preamble of this final rule, in the FY 2018 IPPS/LTCH PPS final rule, we finalized the use of the percentage increase in the 2014-based IPPS operating market basket to update the target amounts for children's hospitals, PPS-excluded cancer hospitals, RNHCIs, and short-term acute care hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa for FY 2018 and subsequent fiscal years. In addition, as discussed in section IV.B. of the preamble of this final rule, the update to the target amount for extended neoplastic disease care hospitals for FY 2021 is the percentage increase in the 2014-based IPPS operating market basket. Accordingly, for FY 2021, the rate-of-increase percentage to be applied to the target amount for these children's hospitals, cancer hospitals, RNHCIs, extended neoplastic disease care hospitals, and short-term acute care hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa is the FY 2021 percentage increase in the 2014-based IPPS operating market basket. For this final rule, the current estimate of the IPPS operating market basket percentage increase for FY 2021 is 2.4 percent.
Section 123 of Public Law 106–113, as amended by section 307(b) of Public Law 106–554 (and codified at section 1886(m)(1) of the Act), provides the statutory authority for updating payment rates under the LTCH PPS.
As discussed in section V.A. of the Addendum to this final rule, we are establishing an update to the LTCH PPS standard Federal payment rate for FY 2021 of 2.3 percent, consistent with section 1886(m)(3) of the Act which provides that any annual update be reduced by the productivity adjustment of 0.0 percentage point described in section 1886(b)(3)(B)(xi)(II) of the Act (that is, the MFP adjustment). Furthermore, in accordance with the LTCHQR Program under section 1886(m)(5) of the Act, we are reducing the annual update to the LTCH PPS standard Federal rate by 2.0 percentage points for failure of a LTCH to submit the required quality data. Accordingly, we are establishing an update factor of 1.023 in determining the LTCH PPS standard Federal rate for FY 2021. For LTCHs that fail to submit quality data for FY 2021, we are establishing an annual update to the LTCH PPS standard Federal rate of 0.3 percent (that is, the annual update for FY 2021 of 2.3 percent less 2.0 percentage points for failure to submit the required quality data in accordance with section 1886(m)(5)(C) of the Act and our rules) by applying a update factor of 1.003 in determining the LTCH PPS standard Federal rate for FY 2021. (We note that, as discussed in section VII.D. of the preamble of this final rule, the update to the LTCH PPS standard Federal payment rate of 2.3 percent for FY 2021 does not reflect any budget neutrality factors).
MedPAC is recommending an inpatient hospital update of 2.0 percent. MedPAC's rationale for this update recommendation is described in more detail in this section. As previously stated, section 1886(e)(4)(A) of the Act requires that the Secretary, taking into consideration the recommendations of MedPAC, recommend update factors for inpatient hospital services for each fiscal year that take into account the amounts necessary for the efficient and effective delivery of medically appropriate and necessary care of high quality. Consistent with current law, depending on whether a hospital submits quality data and is a meaningful EHR user, we are recommending the four applicable percentage increases to the standardized amount listed in the table under section II. of this Appendix B. We are recommending that the same applicable percentage increases apply to SCHs and MDHs.
In addition to making a recommendation for IPPS hospitals, in accordance with section 1886(e)(4)(A) of the Act, we are recommending update factors for certain other types of hospitals excluded from the IPPS. Consistent with our policies for these facilities, we are recommending an update to the target amounts for children's hospitals, cancer hospitals, RNHCIs, short-term acute care hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa and extended neoplastic disease care hospitals of 2.4 percent.
For FY 2021, consistent with policy set forth in section VII. of the preamble of this final rule, for LTCHs that submit quality data, we are recommending an update of 2.3 percent to the LTCH PPS standard Federal rate. For LTCHs that fail to submit quality data for FY 2021, we are recommending an annual update to the LTCH PPS standard Federal rate of 0.3 percent.
In its March 2020 Report to Congress, MedPAC assessed the adequacy of current payments and costs, and the relationship between payments and an appropriate cost base. MedPAC recommended an update to the hospital inpatient rates by 2 percent with the difference between this and the update amount specified in current law to be used to increase payments under MedPAC's Medicare quality program, the “Hospital Value Incentive Program (HVIP).” MedPAC stated that together, these recommendations, paired with the recommendation to eliminate the current hospital quality program incentives, would increase hospital payments by increasing the base payment rate and by increasing the average rewards hospitals receive under MedPAC's Medicare HVIP. We refer readers to the March 2020 MedPAC report, which is available for download at
We note that, because the operating and capital payments in the IPPS remain
Federal Communications Commission.
Proposed rule.
In this document, the Commission seeks to modernize the Commission's rules for the priority services programs by removing outdated requirements that may impede the use of internet Protocol-based technologies. It proposes to amend the Commission's rules to reflect the current administrative responsibilities for the priority services programs, while eliminating burdensome administrative requirements that are no longer needed. It also responds to two Petitions for Rulemaking from the National Telecommunications and Information Administration, on behalf of the Department of Homeland Security, requesting the Commission update its priority services rules.
Interested parties may file comments on or before October 19, 2020, and reply comments on or before November 17, 2020.
You may submit comments, identified by PS Docket No. 20–187, by any of the following methods:
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For detailed instructions for submitting comments and additional information on the rulemaking process, see the
For additional information on this proceeding, contact Chris Smeenk, Attorney Advisor, Operations and Emergency Management Division, Public Safety and Homeland Security Bureau, at (202) 418–1630 or
This is summary of the Commission's Notice of Proposed Rulemaking (NPRM), PS Docket No. 20–187; FCC 20–97, adopted on July 16, 2020, and released on July 17, 2020. The full text of this document is available at
1. For years, National Security and Emergency Preparedness (NSEP) personnel have had access to priority services programs that leverage access to commercial communications infrastructure to support national command, control, and communications by providing prioritized connectivity during national emergencies. This prioritized connectivity may consist of prioritized provisioning and restoration of wired communications circuits or prioritized communications for wireline or wireless calls. These programs are used to “maintain a state of readiness [and] to respond to and manage any event or crisis . . . [that] degrades or threatens the NSEP posture of the United States.” The Department of Homeland Security (DHS) manages these programs through contractual agreements with telecommunications providers, service providers, and other contractors. However, the Commission also has had a long-standing regulatory role with respect to certain elements of these programs.
2. The Commission's rules for the current priority services programs date back to the establishment of the Telecommunications Service Priority (TSP) System in 1988 and the creation of the Priority Access Service (PAS), more commonly referred to as Wireless Priority Service (WPS), in 2000. The Commission adopted these rules for common carriers in large part based on a concern that, without them, the non-discrimination requirement of section 202 of the Communications Act would prevent (or at least deter) common carriers from voluntarily offering priority treatment. These rules, which were developed when communications networks were primarily based on circuit-switched technologies, have not been updated to address the advanced capabilities of internet Protocol (IP)-based communications supporting data as well as voice services, or to enhance the ability of users at different priority levels to share network capacity and resources. While the concerns that motivated the FCC's decision to adopt priority services rules for common carrier offerings do not apply to the contractual arrangements for non-common-carriage services, some have argued that our rules need to be updated to include IP-based communications, and the National Telecommunications and Information Administration (NTIA) filed petitions asking the Commission to initiate a rulemaking to consider updates to the existing rules.
3. We initiate this proceeding to determine whether we should update and streamline the Commission's priority services rules in light of the increase in IP-based technologies since we last examined those rules. As a part of our review, we seek comment on proposals submitted by NTIA to update the rules for both TSP and WPS. By considering both programs in a consolidated proceeding, we seek to promote efficiency and facilitate a holistic approach that addresses priority services on a platform-neutral basis.
4. There are three priority services programs that support prioritized connectivity for NSEP users of telecommunications services. At present, the Emergency Communications Division of the Cybersecurity and Infrastructure Security Agency, within DHS, manages these programs through contractual “carrier service agreements” with telecommunications providers. However, as described below, some elements of these programs are also governed by the Commission's rules.
5. Telecommunications Service Priority (TSP) System. In 1987, the National Communications System—then an interagency group of federal departments and agencies—petitioned the Commission to adopt restoration priority rules. The Commission responded by creating the TSP System, which authorizes the “assignment and approval of priorities for provisioning and restoration of common-carrier provided telecommunication services” and “services which are provided by government and/or non-common carriers and are interconnected to common carrier services.” The Commission's TSP rules require service providers to prioritize the provisioning and restoration of wired communications facilities to “ensure effective NSEP telecommunication services.” The TSP System “allows the assignment of priority levels to any NSEP service” across three time periods, or stress conditions: (1) Peacetime/Crisis/Mobilizations; (2) Attack/War; and (3) Post-Attack/Recovery. There are over 2,000 organizations enrolled in TSP (
6. The Commission designed the mandatory TSP program to provide “a means by which carriers may provide priority provisioning or restoration service to a user without violating the unreasonable preference prohibition of Title II of the Communications Act.” The Commission made clear that “[p]rivate services,
7. Wireless Priority Service (WPS). In 1995, the National Communications System petitioned the Commission to implement what it termed “Cellular Priority Access Service.” The Commission responded by adopting rules creating a program to provide prioritized voice calling for subscribers using Commercial Mobile Radio Service (CMRS) networks. The Commission's WPS rules permit, but do not require, CMRS providers to offer mobile wireless priority services. If a carrier elects to offer WPS, it must comply with the Commission's WPS rules, which include providing priority service based on five priority levels for NSEP users. The five priority levels, which are generally ordered from highest to lowest, are: (1) Executive Leadership and Policy Makers; (2) Disaster Response/Military Command and Control (3) Public Health, Safety and Law Enforcement Command; (4) Public Services/Utilities and Public Welfare; and (5) Disaster Recovery. WPS is provided on an individual-device basis, with users initiating wireless priority calls by entering a specified feature code for each call in order to activate priority treatment for that call. WPS users are responsible for commercial wireless subscription and equipment costs.
8. Like the TSP program, one of the driving forces behind the FCC's decision to codify WPS rules was a concern that, in the absence of such rules, a CMRS provider's decision to give NSEP users priority treatment might be considered a violation of the Act's non-discrimination provisions. Indeed, the Commission noted that compliance with the WPS rules would constitute prima facie evidence that such priority treatment was lawful under the Communications Act. The Commission's WPS rules have not been updated since they were initially adopted in 2000.
9. Government Emergency Telecommunications Service (GETS). In 1993, the Commission received a request from the National Communications System requesting prioritization for wireline services. The Commission responded to the request in 1995, noting that tariffs had since been filed and a new nationwide telephone area code had been established for the Government Emergency Telecommunications Service (GETS) program for wireline services. GETS provides government officials, first responders, and NSEP personnel with “priority access and prioritized processing in the local and long distance segments of the landline networks, greatly increasing the probability of call completion.” Eligible users receive access cards and Personal Identification Numbers, which are used to initiate priority wireline calls. GETS currently operates via contractual arrangements between DHS and service providers. GETS is the only priority services program not included in the Commission's rules and participation is voluntary.
10. Federal Agency Administration/Oversight of Priority Services Programs. While the National Communications System originated the petitions that resulted in the creation of the priority services programs, Executive Order 13618 subsequently dissolved the National Communications System and transferred most of its functions to DHS, which now serves as the Executive Office of the President (EOP) designee for NSEP priority communications. DHS is responsible for overseeing the “development, testing, implementation, and sustainment of NSEP communications,” including the priority services programs. DHS also maintains an industry-government Joint Program Office that assists in the initiation, coordination, restoration, and reconstitution of NSEP communications and infrastructure. DHS qualifies new users to participate in these programs and issues GETS cards and TSP authorization codes. DHS also manages WPS through contract and reimbursement mechanisms.
11. In addition to DHS, other federal departments and agencies are responsible for certain administration and oversight functions related to the priority services programs. EOP is responsible for “policy coordination, guidance, dispute resolution, and periodic in-progress reviews of NSEP telecommunications functions.” The FCC, through the Public Safety and Homeland Security Bureau, works with DHS to ensure the priority services programs operate effectively and efficiently. The Commission supports DHS in the “operation and restoration of critical communications systems and services” by providing information on communications infrastructure, service outages, and restoration. The NSEP Communications Executive Committee “advises and makes policy recommendations to the President” for strategic planning, funding requirements, and communications systems requirements. The Office of Science and Technology Policy advises the President on “prioritization of the radio spectrum and wired communications that support NSEP functions” and issues an annual memorandum highlighting national priorities for NSEP analyses, studies, research, and development.
12. NTIA Petitions for Rulemaking. NTIA filed two petitions for rulemaking on behalf of DHS, requesting that the FCC update its TSP and WPS rules to reflect the current operations of those programs, incorporate the current Executive Branch governance structure for those programs, and address changes in technology and evolving user needs for those programs. The first petition, filed in July 2018, sought a Commission rulemaking to update the WPS rules. The second petition, filed in July 2019, sought to update the TSP rules, and updated NTIA's July 2018 WPS petition to reflect revisions to technical standards and the provisions of the Cybersecurity and Infrastructure Security Agency Act of 2018. The Bureau sought comment on both petitions via public notice.
13. The Commission received several comments in response to the public notices. Commenters generally support NTIA's proposal to update the TSP rules to reflect the current communications marketplace, and support NSEP users having next-generation communications technology. However, most commenters express concerns with NTIA's proposal to collect data on a provider's performance during a disaster and with the proposed rule changes regarding provisioning and restoration timeframes. Likewise, commenters generally support NTIA's proposals to update the WPS rules, but argue the Commission should employ a light touch in developing any new WPS rules and refrain from imposing overly burdensome or prescriptive rules that would limit flexibility and innovation currently inherent in providers' ability to work with the NSEP users and provide services on a contractual basis.
14. Consumers are increasingly moving away from traditional telephone services using copper wire transmissions and traditional time-division multiplexing technology and towards next-generation technologies using a variety of transmission means, including fiber and wireless spectrum-based services. USTelecom asserts the “vast majority” of U.S. consumers have moved from legacy landlines to wireless or IP-based alternatives, as evidenced by the fact that since the year 2000 the number of landlines has fallen by 157 million. This trend is likely to continue, as USTelecom estimates that, by the end of 2020, 79% of voice connections will be wireless and just 5% will be provided through legacy landlines. In addition, USTelecom presents evidence that “the widespread deployment of wired and wireless IP-based networks” has fostered greater reliance on voice alternatives such as text, email, video chat, and social networking applications. The Commission has actively supported the transition from legacy to next-generation networks because of the extraordinary benefits of advanced communications services, and it has taken measures to reduce regulatory barriers to this transition.
15. While the transition from traditional network technology to IP-based technologies promises greater innovation, including for priority services programs, it may pose transitional challenges for NSEP communications that historically have relied on functionality found in legacy technologies. As carriers replace their legacy systems with new technologies and platforms, some of the legacy features in priority services programs that were designed to be used on legacy systems will be more difficult and costly to maintain and ultimately could be rendered inoperable. The Government Accountability Office has observed that it is a “challenge . . . that IP networks may not support existing telecommunications `priority' services, which allow key government and public safety officials to communicate during times of crisis.” We also need to consider the means to modernize access tools for NSEP personnel to reflect today's more technologically advanced emergency response regimes. Availability of priority services only on those traditional voice networks may hamper the ability of NSEP personnel to effectively use cutting edge emergency response tools that rely on IP-supported data network availability. Nonetheless, we recognize that providers have significant if not complete flexibility to provide prioritization similar to that under the TSP and WPS rules on a contractual basis.
16. As we determined when we initially adopted the TSP and WPS rules in 1988 and 2000, respectively, the benefits provided by these priority services exceed the costs incurred by service providers. The NTIA petitions assert that there may be some benefits, if we were to expand the scope of TSP and WPS to include IP-based technologies. One reason is that, given the nation's increase in population over the past 20 years, we expect that the benefit from such programs has grown along with the population itself. Simply stated, there now are more lives to be saved and more infrastructure and homes to be protected. Another reason is that technological advances over the past 20 years have greatly reduced the costs and complexity of coding specific services, messages, and calls for priority treatment.
17. We expect that if we adopt the proposed rules, consistent with our 1988 and 2000 decisions, the benefits of extending these programs to include IP-based services would likely exceed the costs incurred by service providers. However, NTIA concedes that “some non-common carriers (
18. We initiate this proceeding to update and streamline our priority services rules to remove outdated or other requirements that may cause confusion for NSEP personnel and providers and otherwise impede the use of IP-based technologies to support the provision of priority services for voice, data, and video communications.
19. As part of our proposal to streamline and update our priority services rules, we propose certain specific rule changes that would apply to both TSP and WPS. These proposals are intended to reduce regulatory burdens and make our rules flexible enough to respond to changing administrative requirements or technological advances that affect the priority services programs.
20. Program Administration. The Commission's priority services rules have not been substantively updated since they were initially adopted. As a result, some of the authorities, organizations, and requirements specified in the Commission's rules are no longer accurate. Thus, we propose to amend the Commission's rules to reflect the actual, current functions and responsibilities for the priority services program, as specified in Executive Order 13618.
21. We further propose to eliminate the provisions of Part 64, Appendix A and Appendix B that describe the responsibilities of the Executive Office of the President because Executive Order 13618 transferred most of its functions to other federal agencies. We seek comment on these proposals.
22. Program Requirements. As a result of the changes in the priority services programs that have occurred since the rules were initially adopted, some provisions of the rules are outdated and unnecessary. These provisions are no longer relevant and, therefore, we propose to remove such references from our rules. Specifically, we propose to remove sections 2(a)(1), 2(a)(2), 2(b), 2(c), 2(d) of part 64, Appendix A, which outline requirements governing the migration of circuits from the legacy Restoration Priority program and mandating the continuation of certain Commission orders pending the implementation of the TSP program. We also propose to remove section 10 of Appendix A, which specifies procedures for the resubmission of circuits that were assigned restoration priorities before the Commission adopted the TSP rules. We seek comment on these proposals. We also seek comment on whether any other provisions are outdated or unnecessary and should be removed from our rules.
23. Terminology. The telecommunications industry has drastically changed since the priority services rules were first established. However, the Commission's rules have not been updated to reflect the evolution from circuit-switched technology to IP-based technology. NTIA asks the Commission to include definitions to account for new services, such as private NSEP services that consist of non-common carrier services, and non-traditional services, such as broadband internet access and digital video. Further, NTIA asks the Commission to revise the rules not only to include current service offerings, but also other technologies that may someday qualify for priority treatment. Commenters generally agree that NSEP users need next-generation
24. We propose to amend part 64, Appendix A and Appendix B to include definitions to account for new services and technologies. We also propose to amend certain definitions to encompass both telecommunications services and all IP-based services. We seek comment on these proposals and, alternatively, whether a GETS model would be a better approach.
25. This section describes proposed changes to various provisions of the Commission's TSP rules in part 64, Appendix A. The proposed rule changes described below are informed by our careful review of NTIA's TSP Petition and the public comments submitted in response to the TSP Public Notice.
26. Scope of the Rules. The Commission's TSP rules have not been substantively updated since they were initially adopted in 1988. As originally drafted, the rules were intended as a regulatory carveout to allow common carriers to provide telecommunications services, which would ordinarily be subject to the non-discrimination requirements of Section 202, on a prioritized basis. As such, the rules have made no mention of the wide array of innovative information service offerings that are currently available to NSEP personnel. We propose to maintain the current requirement that common carriers must offer prioritized restoration and provisioning of circuit-switched voice communication services.
27. We propose additionally to codify the ability of service providers, on a voluntary basis, to offer prioritized provisioning and restoration of data, video, and IP-based voice services. Therefore, we propose to update our rules to authorize priority treatment of all voice, data, and video services provided by service providers for which provisioning or restoration priority levels are requested, assigned, and approved in accordance with Appendix A.
28. We seek comment on these proposals. Alternately, we note that the current TSP rules already allow the TSP System rules to apply to “other services” including “Government or non-common carrier services which are not connected to common carrier provided services assigned a priority level.” Should service providers that elect to offer prioritized provisioning and restoration of data, video, and IP-based voice service be required to comply with the Commission's TSP rules or, alternatively, should such priority services operate via contractual arrangements between DHS and service providers?
29. Invocation of NSEP Treatment. Currently, to invoke priority treatment for NSEP communications, an authorized federal official within, or acting on behalf of, the service user's organization must inform TSP service providers and the EOP that NSEP treatment is being invoked. The Commission's rules require the “invocation official” to be a senior government official, such as the head or director of a federal agency. However, DHS has determined that requiring senior officials to request TSP participation has produced “unnecessary delays in the approval process given the demands placed on senior officials and their often limited availability.” In addition, DHS claims the current requirements are untenable because senior officials typically do not interact with service providers and often lack direct knowledge of the purpose and need for the NSEP service.
30. NTIA asserts that, although the need still exists for an authorized individual from the requesting service user organization to assume responsibility for validating that the requested service satisfies the TSP program's NSEP criteria, this validation does not need to be performed by a specified senior official from the organization. As such, NTIA asks the Commission to update its TSP rules to redefine “invocation official” as an individual who (1) understands how the requested service ties to the organization's NSEP mission, and (2) is authorized to approve the expenditure of funds necessary for the requested service. NCTA supports this proposal.
31. We propose to modify the Commission's rules to allow DHS to accept invocation by a federal employee within, or acting on behalf of, the service user's organization who can attest to the need for TSP and authorize payment to the service provider. Further, we propose to eliminate the requirement that the invocation official be designated in writing. Both of these proposals reflect changes that DHS has already made, such as lessening the seniority requirement to allow an individual who is able to attest to the need for priority treatment and to obligate funds on behalf of the organization to serve as the “invocation official.” We seek comment on these proposals.
32. Oversight and Industry Engagement. Under the Commission's current TSP rules, the FCC and EOP each have oversight responsibilities for the TSP System. The rules stipulate that the FCC will “provide regulatory oversight of implementation of the NSEP TSP System” and “enforce NSEP TSP System rules and regulations.” On the other hand, the rules stipulate that EOP will test and evaluate the TSP System, conduct audits, and establish a TSP System Oversight Committee to “identify and review any problems developing in the system and recommend actions to correct them or prevent recurrence.”
33. EOP established a TSP System Oversight Committee (Oversight Committee) in accordance with the Commission's rules. However, DHS has since “developed and refined processes and procedures that, in its view, obviate the need for a mandatory oversight committee.” In recent years, DHS has increasingly relied upon the members of the Communications Information Sharing and Analysis Center to “exchange information and gain advice” on issues involving the TSP program. DHS believes the Communications Information Sharing and Analysis Center is a more valuable resource than the Oversight Committee because the office within DHS that administers TSP “directly leverages the expertise of members of the Communications Information Sharing and Analysis Center to address operational concerns in real time,” instead of waiting for a scheduled Oversight Committee meeting. NTIA asks the Commission to eliminate the requirement for an Oversight Committee, replace the quarterly reporting obligation with an annual report to the Commission, and authorize DHS to consult with the Communications Information Sharing and Analysis Center.
34. Similarly, the Commission originally intended for the Oversight Committee to provide oversight of WPS by reviewing any systemic problems with the program and recommending corrective actions. However, DHS believes the GETS/WPS User Council (User Council) should carry out this function because it “better serves the needs and interests of the WPS community.” The User Council includes WPS points of contact from federal, state, local, and Tribal government, industry, and other NSEP organizations,
35. AT&T agrees that the Commission should make administrative changes to the TSP rules to reflect existing practices and oversight responsibilities. However, NCTA disagrees with NTIA's proposal to eliminate the Oversight Committee for the TSP program. While AT&T defers to NTIA/DHS on the entity that should provide oversight of the TSP program, AT&T and Verizon stress that some authority must remain in place to preserve opportunities for meaningful collaboration between industry stakeholders and program administrators and to ensure the program is administered in accordance with the appropriate rules and regulations. No commenters addressed NTIA's proposal to replace the Oversight Committee for WPS with the GETS/WPS User Council. We propose to eliminate the reference to the Oversight Committee within the priority services rules, and instead recognize the flexibility that DHS requires to engage the appropriate segments of industry and oversee the program effectively so long as some measure of oversight remains. We seek comment on this proposal, and we seek further comment on NTIA's requested rule changes.
36. This section describes proposed changes to various provisions of the Commission's WPS rules in part 64, Appendix B. The proposed rule changes described below are informed by our careful review of NTIA's WPS Petition and the public comments submitted in response to the Public Notices.
37. Priority Levels. The Commission's WPS rules include five priority levels, which are used “as a basis for all [WPS] assignments.” The rules indicate that Priority Level 1 communications, which are reserved for the President of the United States and other executive leadership and policy makers, occupy the highest priority level in WPS. DHS, however, is concerned that the rules do not expressly stipulate that users assigned to that category must receive the highest priority in relation to all other users, including those using non-WPS priority services offered through individual service contracts. While that is the existing practice, DHS believes it should be “explicit and conspicuous” in the Commission's rules. NTIA requests that we update our rules accordingly. Verizon supports NTIA's request. We propose to amend the description of Priority Level 1 to clarify that it exceeds all other priority services offered by WPS providers. We seek comment on this proposal. We also seek comment on how the different priority levels used by various priority services programs should interrelate for network management purposes.
38. Preemption and Degradation. Preemption is the process of terminating lower priority communications in favor of higher priority communications. Degradation is the process of reducing the quality of lower priority communications in favor of higher priority communications. NTIA asserts that preemption and degradation are “critical priority feature[s] that will enable the highest priority NS/EP users to communicate and coordinate” during emergency situations—when commercial networks are often the most congested. The Commission's WPS rules currently permit re-ordering of queued (not-yet-established) call requests based on user priority, but do not provide for re-ordering of active (in-progress) calls. NTIA requests changes to the Commission's rules affirmatively to allow Priority Level 1 and 2 voice calls, if necessary, to preempt or degrade other in-progress calls, except for public safety emergency (911) calls.
39. Some commenters disagree with NTIA's assertion that the Commission's WPS rules do not allow for preemption of in-progress calls. AT&T argues that “[n]othing in the Communications Act or the Commission's rules prohibits WPS providers from offering . . . preemption of voice and data services in their private contractual arrangements with WPS users.” Verizon agrees with AT&T and points out that both companies “openly provide competitive service offerings with priority and preemption capabilities via their respective public safety networks and services.” AT&T suggests that rather than updating the current WPS rules as NTIA proposes, the Commission should consider issuing a declaratory ruling to clarify WPS providers' rights and obligations under the current rules. In contrast, TechFreedom agrees with NTIA that the WPS rules do not allow providers to terminate or degrade ongoing calls or data communications, but asserts that additional data and information are needed to properly evaluate NTIA's proposal.
40. Although the current WPS rules do not provide for re-ordering of active (in-progress) calls, we agree with AT&T and Verizon that the rules do not prohibit preemption. However, we recognize that the lack of explicit language authorizing preemption has led to varying interpretations of the rules by WPS providers. Thus, we propose to update our rules to expressly authorize Priority Level 1 and 2 voice calls, when necessary, to preempt or degrade other in-progress calls, except for public safety emergency (911) calls.
41. We seek comment on this proposal. Specifically, we ask commenters to address whether or how our rules should reflect the potential need for preemption during periods of significant congestion. How would service providers determine whether the amount of congestion was significant enough to warrant preemption? Would the burdens of preemption outweigh the benefits? We also seek comment on whether call degradation, on a standalone basis, would ensure successful transport of NSEP communications. In other words, is it necessary to allow both preemption and degradation of in-progress communications? Is degradation more, less, or equally cost-effective when compared to preemption? We also seek comment on whether the TSP approach to preemption/degradation could provide a framework for WPS. The TSP rules expressly allow service providers to preempt or interrupt service to non-NSEP users and to preempt lower priority users as necessary to provide or restore service. Should similar parameters govern WPS?
42. Eligible Services. Since the WPS rules were adopted in 2000, the “capacity and capabilities of [wireless] networks have expanded immensely.” As a result, wireless service providers are now able to offer a wide array of voice, data, and video services which, in turn, has “spawned a multitude of communications applications (
43. We propose to amend our rules to expressly permit wireless service providers, on a voluntary basis, to give NSEP personnel priority access to, and priority use of, all secure and non-secure voice, data, and video services available over their networks. We seek comment on this proposal. What innovative services and applications do NSEP users need for mission-critical communications? Do wireless service providers currently face legal or regulatory obstacles to voluntarily providing prioritized voice, data, and video services on their wireless networks?
44. Eligible users. Under the current rules, WPS priority assignments “should only be requested for key personnel and those individuals in national security and emergency response leadership positions.” As such, the current language excludes multiple categories of NSEP users, such as critical infrastructure protection, financial services, and hospital personnel. However, the Homeland Security Act of 2002 created the ability for critical infrastructure protection personnel to “meet the qualifying criteria” for WPS, and DHS is currently assigning hospital personnel to Priority Level 3 and financial services personnel to Priority Level 4. NTIA requests that we update our WPS rules to include these communities of NSEP users. Verizon supports NTIA's request.
45. We propose to modify the descriptions of priority levels and qualifying criteria in Appendix B to expand WPS eligibility to additional users, particularly those with response and restoration roles during emergency situations. Specifically, we propose to allow entities from any of the 16 critical infrastructure sectors identified in Presidential Policy Directive (PPD)-21 to qualify for WPS. Further, we propose to modify the descriptions of priority levels and qualifying criteria in Appendix B to allow eligible financial services and hospital personnel to qualify for WPS. We seek comment on these proposals. Should the Commission determine which entities qualify for each priority level, or should that function be completed by DHS? How should the priority level assignments for each of the entities from the 16 critical infrastructure sectors be determined? How should eligibility for financial services and hospital personnel be determined?
46. Priority Signaling. As stated in the Commission's rules, WPS “provides the means for NSEP telecommunications users to obtain priority access to available radio channels when necessary to initiate emergency calls.” However, recent emergency situations have demonstrated that “WPS effectiveness can be compromised by the effects of signaling congestion that prevent successful WPS handset network registration and service invocation.” NTIA requests that we update our rules “to make clear that WPS service providers can provide priority signaling.” AT&T argues that NTIA's requested rule change is unnecessary because WPS providers already offer priority signaling via contractual arrangements with DHS.
47. Although the Commission's rules do not expressly authorize priority signaling, we agree with AT&T that it is currently permitted in the context of WPS. To promote consistency and prevent confusion among providers, we propose to update our WPS rules to expressly authorize priority signaling to ensure networks are able to detect WPS handset network registration and service invocation. We seek comment on this proposal.
48. Methods of Invocation. As described above, the WPS rules allow authorized users to invoke priority access on a per call basis by dialing a specified feature code before each call. However, NTIA believes the requirement that WPS must be invoked for each communication “hinder[s] efficient response” during emergency situations, in that vital time may be lost when users must dial that code for every priority call. To address this problem, NTIA requests that we update the WPS rules to allow for a “variety of arrangements” available under current technical standards and capabilities for WPS invocation, including “always on” for certain WPS authorized users. T-Mobile supports this proposal because it would provide greater flexibility for service providers to decide how to offer WPS services in the manner most suitable for their subscribers and networks.
49. We propose to amend our rules to eliminate the requirement that priority access must be invoked on a per call basis. We decline to propose specific methods of WPS invocation because DHS could address that issue via contractual arrangements with service providers. We seek comment on this proposal. Do commenters agree with our approach of not requiring specific methods of invocation?
50. Program Name. As described above, government, industry, and users commonly refer to Priority Access Service as Wireless Priority Service. According to NTIA, the name Wireless Priority Service more accurately reflects the service's current requirements and capabilities.” To reflect the prevailing naming convention, NTIA requests that we amend Part 64, Appendix B to replace all references to Priority Access Service with Wireless Priority Service in Appendix B to reflect the current naming convention. We propose to make the changes that NTIA requests to Appendix B and to make a similar change to section 64.402 of the Commission's rules. We seek comment on these proposals.
51. In addition to the proposed rule changes discussed above, DHS and NTIA request other rule changes that would impose new requirements on TSP and WPS providers. However, some commenters object that these rule changes would increase regulatory burdens on service providers by increasing the costs of complying with the Commission's priority services rules.
52. Protection of TSP Data. Federal, state, local, Tribal, and territorial governments, and other authorized organizations use the TSP System to “protect mission-essential communications at their primary places of operation, as well as at locations designed to maintain continuity of operations. . . and continuity of government.” NTIA notes that the unauthorized disclosure of sensitive information related to TSP circuits, in the aggregate, could pose a national security risk. In addition, NTIA asserts that service providers moving certain operational, administrative, and management functions overseas could create additional risk by exposing TSP data to companies and individuals outside the United States. The TSP rules direct service providers to “not disclose information concerning NSEP services they provide to those not having a need-to-know or might use the information for competitive advantage,” but the rules do not require service providers to take affirmative steps to prevent or detect the unauthorized disclosure of TSP data or to eliminate the risk of TSP data being managed offshore. NTIA requests that we update the TSP rules to address these issues. Commenters generally agree that the Commission should strengthen the TSP rules to prevent unauthorized access to sensitive TSP data. However, some commenters raise concerns regarding NTIA's proposal to prevent TSP data from being managed offshore.
53. We seek further comment on NTIA's requested rule changes and the means by which the Commission's rules
54. Provisioning and Restoration Timeframes. The Commission's TSP rules include three subsections that address the timeframes that service providers must meet to (1) provision service; (2) restore service; and (3) meet requested service dates for TSP-subject facilities. However, each subsection mandates a different standard for the time and level of effort required for service providers to provision or restore TSP facilities. NTIA claims the “varying and ambiguous language” in the current rules “has created confusion, disagreements, dissatisfaction, and unrealistic expectations” between users, providers, and DHS's program staff. As such, NTIA recommends the Commission replace the current language with the single term “promptly” to describe TSP service providers' provisioning and restoration obligations.
55. Commenters raise concerns with NTIA's requested rule changes. For example, some commenters assert that NTIA's proposal to require TSP service providers to “promptly” provision or restore service by allocating “all resources necessary” could place unreasonable demands on service providers. Further, commenters argue that the word “promptly” itself does not offer meaningful clarity because the term is no more specific than the similarly ambiguous phrases in the current rules. Commenters also assert that any rule changes should account for the contextual nature of restoration efforts and take incident-specific factors into consideration.
56. We seek further comment on NTIA's requested rule changes relating to restoration timeframes. We ask commenters to address the threshold question of whether provisioning and restoration timeframes should be the same. Considering that provisioning and restoration consist of different activities, do they require different timeframes? Do commenters agree with NTIA that we should replace the current language with the single term “promptly”? Is “promptly” sufficiently unambiguous, or will it lead to confusion and uncertainty? To the extent commenters believe “all resources” is unreasonable, what would they propose as an alternate standard? How can our rules ensure flexibility for carriers to address event-specific circumstances and resource demands? Should we incorporate language to address external circumstances (
57. Reporting Requirements. Executive Order 13618 directs DHS to ensure the priority services programs operate effectively and meet the needs of NSEP users “under all circumstances, including conditions of crisis or emergency.” DHS considers performance data related to disaster operations to be “essential to determining the effectiveness” of the priority services programs.
58. NTIA requests the Commission amend its TSP rules to require service providers to report to DHS provisioning and restoration times for TSP circuits in areas covered by the activation of the Disaster Information Reporting System (DIRS). Specifically, DHS believes that such reporting obligations would give it access to TSP provisioning and restoration times and aggregate data that would allow it to compare the data for TSP services to similar data for non-TSP services. NTIA does not propose specific obligations concerning the timing and frequency for reporting this information but, instead, proposes that DHS coordinate with the Commission to develop specific data requirements and reporting timeframes.
59. NTIA also requests the Commission amend its WPS rules to require service providers to file implementation, usage, and performance data with DHS so that it can assess the program's readiness, usage, and performance at all times and all places offered, and for specific geographic areas and times. DHS currently collects and analyzes data from WPS providers detailing “usage, performance, implementation, and supporting infrastructure,” but it does not receive consistent information from all providers. NTIA asserts the proposed requirement is necessary to ensure consistency across all WPS providers and to formalize the process by which providers submit WPS data to DHS.
60. Commenters object to NTIA's request to add reporting requirements to the TSP and WPS rules. With regard to TSP, commenters argue that requiring service providers to report TSP restoration times to DHS should be limited to post-disaster reporting so that service providers need not divert resources away from the disaster response efforts. Some commenters suggest that comparing the provisioning and restoration times of TSP services and non-TSP services is unlikely to produce useful results. Other commenters contend that mandatory TSP reporting requirements could undercut the effectiveness of DIRS because service providers could attempt to avoid TSP reporting obligations by declining to participate in DIRS reporting. Commenters also point out practical implementation concerns with NTIA's proposals.
61. Some commenters also oppose NTIA's WPS proposal, arguing that imposing performance data reporting requirements could inhibit providers' flexibility and ability to innovate. Instead, commenters favor contractual solutions that they believe would permit providers the flexibility to customize offerings based on their specific network characteristics. T-Mobile raises concerns regarding the highly sensitive nature of the WPS data and argues that service providers should work with DHS and other federal agencies to determine the “appropriate information disclosure” rather that the Commission “codifying what data should be shared.”
62. We seek further comment on NTIA's request to add reporting requirements to the TSP and WPS rules. Does NTIA's proposed approach strike an appropriate balance between the potential costs/burdens of compliance and the potential benefits to NSEP users? What costs/burdens (in time and expense) would service providers encounter? What public safety and/or national security benefits would result? Would the benefits outweigh the costs? We also seek comment on whether it is necessary for the Commission to adopt rules-based requirements or whether DHS could obtain the same information through contractual negotiations with service providers. Is there an alternative method by which DHS could assess the effectiveness of the priority services programs during crisis or emergency situations? Finally, we seek comment on whether any reporting requirements should include restrictions on DHS's ability to use or share commercially sensitive data.
63. As an alternative to the proposals described above, we seek comment on whether the goals of this proceeding could be achieved by replacing the current rules-based approach to priority services with a “light-touch” regulatory framework for all priority services programs. Under this alternative approach, all service providers, on a voluntary basis, may offer prioritized restoration and provisioning of voice, data, and video services to authorized users. Likewise, all service providers, on a voluntary basis, would be authorized to give NSEP personnel priority access to, and priority use of, all voice, data, and video services available over their networks. Details could be negotiated and administered by DHS via contract. We seek comment on whether there are currently any legal or regulatory barriers to this alternative approach and how to transition to such an approach should we adopt it.
64. We seek comment on whether trends in the current public safety marketplace may favor adoption of a light-touch regulatory approach. We note that in contrast to TSP and WPS, GETS has operated on a contractual basis without FCC rules or regulations. Nonetheless, would this alternative approach require any changes to FCC rules, or could providers and DHS freely begin operating under this approach without further FCC action? This approach appears to have been successful: DHS recently found that GETS call completion rates exceeded their target rates for every fiscal year between 2015 and 2018 (the most recent year for which data is available).
65. Likewise, the recent roll out of the First Responder Network Authority (FirstNet) suggests that priority services programs can operate effectively in a market-driven environment. Congress established FirstNet in 2012 to “ensure the deployment and operation of a nationwide, broadband network for public safety communications.” FirstNet offers service priority and preemption, which allow first responders to communicate over an “always-on” network. Public safety entities using FirstNet can boost their priority levels during emergency situations “to ensure first responder teams stay connected” even when networks are congested. AT&T describes preemption as an “enhanced” form of priority service because it “shifts non-emergency traffic to another line,” which ensures NSEP users' communications are successfully completed. According to AT&T, priority and preemption support voice calls, “text messages, images, videos, location information, [and] data from apps . . . in real time.” In the first half of 2019, the monthly levels of device connections to FirstNet “outperformed expectations at approximately 196% of projected targets.” In May 2019, “a majority of agencies and nearly 50% of FirstNet's total connections were new subscribers (not AT&T migrations).” These trends suggest that first responders recognize the benefits of prioritization, preemption, and other innovative features that enhance public safety communications. We seek comment on the extent to which first responders and providers have already availed themselves of the option to offer prioritized of information services, such as data and video services.
66. We note that other service providers have recently begun offering their own priority services options to compete with FirstNet. For example, Verizon offers priority and preemption services through its public safety private core. In addition, public safety users “have access to several . . . enhanced services,” including Mobile Broadband Priority Service and data preemption. These services “provide public safety users priority service for data transmissions” by giving users priority over commercial users during periods of heavy network congestion and ” reallocat[ing] network resources from commercial data/internet users to first responders” if networks reach full capacity.
67. Similarly, U.S. Cellular offers “enhanced data priority services for first responders and other emergency response teams.” The company uses a “dedicated broadband LTE network that separates mission-critical data from commercial and consumer traffic,” ensuring that NSEP personnel “have access to vital services” during emergency situations. In addition to prioritizing network access, U.S. Cellular uses preemption “to automatically and temporarily reallocate lower priority network resources to emergency responders so they can stay connected during emergencies or other high-traffic events.”
68. Based on these recent industry trends, we seek comment on whether a light-touch regulatory approach to all priority services would be sufficient to meet the needs of NSEP users. We also seek comment on the potential consequences of adopting such an approach. To what extent would it enhance competition and facilitate the development of innovative service offerings for use by NSEP personnel? What would be the overall impacts on public safety communications? Would DHS be able to use contractual provisions to make the programmatic changes it seeks in the TSP and WPS petitions? What impact, if any, would the light-touch approach have on DHS's ability to manage priority services programs and the Commission's ability to satisfy its responsibilities under Executive Order 13618? Would a minimum level of FCC regulation be necessary to provide a “backstop” for the priority services programs?
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Filings can be sent by hand or messenger delivery, by commercial overnight courier or by first-class or overnight U.S. Postal Service mail. All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission.
• Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9050 Junction Drive, Annapolis Junction, MD 20701.
• U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445 12th Street SW, Washington, DC 20554.
• Effective March 19, 2020, and until further notice, the Commission no longer accepts any hand or messenger delivered filings. This is a temporary measure taken to help protect the health and safety of individuals, and to mitigate the transmission of COVID–19. See FCC Announces Closure of FCC Headquarters Open Window and Change in Hand-Delivery Policy, Public Notice, DA 20–304 (Mar. 19, 2020) available
• During the time the Commission's building is closed to the general public and until further notice, if more than one docket or rulemaking number appears in the caption of a proceeding, paper filers need not submit two additional copies for each additional docket or rulemaking number; an original and one copy are sufficient.
71.
72. Availability of Documents. Comments, reply comments, and ex parte submissions will be available via ECFS. Documents will be available for public inspection during regular business hours in the FCC Reference Center, Federal Communications Commission, 445 12th Street SW, Room CY–A257, Washington, DC. These documents will also be available via ECFS. Documents will be available electronically in ASCII, Microsoft Word, and/or Adobe Acrobat.
73. Initial Regulatory Flexibility Analysis. As required by the Regulatory Flexibility Act (RFA), the Commission has prepared an Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact on a substantial number of small entities of the policies and actions considered in this Notice of Proposed Rulemaking (NPRM). The IRFA is set forth in Appendix B. Written public comments are requested on the IRFA. Comments must be identified with a separate and distinct heading designating them as responses to the IRFA and must be filed by the deadlines for comments on the Notice of Proposed Rulemaking. The Commission will send a copy of the Notice of Proposed Rulemaking, including the IRFA, to the Chief Counsel for Advocacy of the Small Business Administration, in accordance with the Regulatory Flexibility Act.
74. Paperwork Reduction Act Analysis. This Notice of Proposed Rulemaking contains proposed new or modified information collection requirements. The Commission, as part of its continuing effort to reduce paperwork burdens, invites the general public and the Office of Management and Budget (OMB) to comment on the information collection requirements contained in this document, as required by the Paperwork Reduction Act of 1995, Public Law 104–13. In addition, pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107–198, see 44 U.S.C. 3506(c)(4), we seek specific comment on how we might further reduce the information collection burden for small business concerns with fewer than 25 employees.
75. Affairs Bureau, Reference Information Center, SHALL SEND a copy of this Notice of Proposed Rulemaking, including the Initial Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration.
1. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), the Commission has prepared this Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact on a substantial number of small entities by the policies and rules proposed in the Notice of Proposed Rule Making (NPRM). Written public comments are requested on this IRFA. Comments must be identified as responses to the IRFA and must be filed by the deadlines in the NPRM. The Commission will send a copy of the NPRM, including this IRFA, to the Chief Counsel for Advocacy of the Small Business Administration (SBA). In addition, the NPRM and IRFA (or summaries thereof) will be published in the
2. In the NPRM, we propose changes to, and seek comment on, our telecommunications priority access rules which include the Telecommunications Services Priority (TSP) program and Wireless Priority Service (WSP), established in 1988 and 2000 respectively. These rules which are currently limited to voice communications, were established when communications networks were primarily based on circuit-switched technologies and have not been updated to address newer communications technologies. We note in the NPRM, that “[t]he Commission has observed that consumers are increasingly moving away from traditional telephone services provided over copper wires and towards next-generation technologies using a variety of transmission means, including fiber, and wireless spectrum-based services.” Indeed, most American consumers have moved from legacy landlines to wireless or internet-based alternatives, evidenced by the number of legacy landlines dropping by 160 million since 2000—a trend that is likely to continue.
3. The need for, and objective of, the proposed rules is to update our priority services requirements to take into account newer forms of both content (
4. To enhance regulatory efficiency and reduce the burden on service providers by making it easier to identify and comply with the applicable priority service rules, we propose to simplify, streamline and, to the extent possible, consolidate our priority service rules into a single appendix in part 64 of the Commission's rules. Under our proposal, the amended appendices would continue to differentiate between the priority services programs.
5. Finally, the NPRM addresses requests from the Department of Homeland Security (DHS) through the National Telecommunications and Information Administration (NTIA) to update the existing rules and requirements for the priority services programs. NTIA filed two Petitions for Rulemaking on behalf of DHS, requesting that the FCC update its TSP and Priority Access Service (PAS) rules to address changes in technology and evolving user needs for these programs. The Bureau sought comment on both petitions via public notice. Accordingly, the rule changes prescribed in the Notice of Proposed Rulemaking are informed by a careful review of NTIA's Petitions for Rulemaking and the public comments submitted in response to the public notices.
6. The proposed action is authorized pursuant to Sections 1, 4(i), 4(j), 4(n), 201–205, 251(e)(3), 254, 301, 303(b), 303(g), 303(r), 307, 309(a), 309(j), 316, 332, 403, 615(a)(1), and 615(c) of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i)–(j) & (n), 201–205, 251(e)(3), 254, 301, 303(b), 303(g), 303(r), 307, 308(a), 309(a), 309(j), 316, 332, 403, 606, 615(a)(1), 615(c); and Executive Order 13618.
7. The RFA directs agencies to provide a description of and, where feasible, an estimate of the number of small entities that may be affected by the proposed rules, if adopted. The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. A small business concern is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the SBA.
8. Small Businesses, Small Organizations, Small Governmental Jurisdictions. Our actions, over time, may affect small entities that are not easily categorized at present. We therefore describe here, at the outset, three broad groups of small entities that could be directly affected herein. First, while there are industry specific size standards for small businesses that are used in the regulatory flexibility analysis, according to data from the SBA's Office of Advocacy, in general a small business is an independent business having fewer than 500 employees. These types of small businesses represent 99.9% of all businesses in the United States, which translates to 30.7 million businesses.
9. Next, the type of small entity described as a “small organization” is generally “any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.” The Internal Revenue Service (IRS) uses a revenue benchmark of $50,000 or less to delineate its annual electronic filing requirements for small exempt organizations. Nationwide, for tax year 2018, there were approximately 571,709 small exempt organizations in the U.S. reporting revenues of $50,000 or less according to the registration and tax data for exempt organizations available from the IRS.
10. Finally, the small entity described as a “small governmental jurisdiction” is defined generally as “governments of cities, counties, towns, townships, villages, school districts, or special districts, with a population of less than fifty thousand.” U.S. Census Bureau data from the 2017 Census of Governments indicate that there were 90,075 local governmental jurisdictions consisting of general purpose governments and special purpose governments in the United States. Of this number there were 36,931 general purpose governments (county, municipal and town or township) with populations of less than 50,000 and 12,040 special purpose governments—independent school districts with enrollment populations of less than 50,000. Accordingly, based on the 2017 U.S. Census of Governments data, we estimate that at least 48,971 entities fall into the category of “small governmental jurisdictions.”
11. Pursuant to 47 CFR 9.10(a), the Commission's 911 service requirements are only applicable to Commercial Mobile Radio Service (CMRS) “[providers], excluding mobile satellite service operators, to the extent that they: (1) Offer real-time, two way switched voice service that is interconnected with the public switched network; and (2) Utilize an in-network switching facility that enables the provider to reuse frequencies and accomplish seamless hand-offs of subscriber calls. These requirements are applicable to entities that offer voice service to consumers by purchasing airtime or capacity at wholesale rates from CMRS licensees.”
12. Below, for those services subject to auctions, we note that, as a general matter, the number of winning bidders that qualify as small businesses at the close of an auction does not necessarily represent the number of small businesses currently in service. Also, the Commission does not generally track subsequent business size unless, in the context of assignments or transfers, unjust enrichment issues are implicated.
13. All Other Telecommunications. The “All Other Telecommunications” category is comprised of establishments primarily engaged in providing specialized telecommunications services, such as satellite tracking, communications telemetry, and radar station operation. This industry also includes establishments primarily engaged in providing satellite terminal stations and associated facilities connected with one or more terrestrial systems and capable of transmitting telecommunications to, and receiving telecommunications from, satellite systems. Establishments providing internet services or voice over internet protocol (VoIP) services via client-supplied telecommunications connections are also included in this industry. The SBA has developed a small business size standard for All Other Telecommunications, which consists of all such firms with annual receipts of $35 million or less. For this category, U.S. Census Bureau data for 2012 shows that there were 1,442 firms that operated for the entire year. Of those firms, a total of 1,400 had annual receipts less than $25 million and 42 firms had annual receipts of $25 million to $49,999,999. Thus, the Commission estimates that the majority of “All Other Telecommunications” firms potentially affected by our action can be considered small.
14. AWS Services (1710–1755 MHz and 2110–2155 MHz bands (AWS–1); 1915–1920 MHz, 1995–2000 MHz, 2020–2025 MHz and 2175–2180 MHz bands (AWS–2); 2155–2175 MHz band (AWS–3)). For the AWS–1 bands, the Commission has defined a “small business” as an entity with average annual gross revenues for the preceding three years not exceeding $40 million, and a “very small business” as an entity with average annual gross revenues for the preceding three years not exceeding $15 million. For AWS–2 and AWS–3, although we do not know for certain which entities are likely to apply for these frequencies, we note that the AWS–1 bands are comparable to those used for cellular service and personal communications service. The Commission has not yet adopted size standards for the AWS–2 or AWS–3 bands but proposes to treat both AWS–2 and AWS–3 similarly to broadband PCS service and AWS–1 service due to the comparable capital requirements and other factors, such as issues involved in relocating incumbents and developing markets, technologies, and services.
15. Competitive Local Exchange Carriers (Competitive LECs). Competitive Access Providers (CAPs), Shared-Tenant Service Providers, and Other Local Service Providers. Neither the Commission nor the SBA has developed a small business size standard specifically for these service providers. The appropriate NAICS Code category is Wired Telecommunications Carriers and under that size standard, such a business is small if it has 1,500 or fewer employees. U.S. Census Bureau data for 2012 indicate that 3,117 firms operated during that year. Of that number, 3,083 operated with fewer than 1,000 employees. Based on these data, the Commission concludes that the majority of Competitive LECS, CAPs, Shared-Tenant Service Providers, and Other Local Service Providers, are small entities. According to Commission data, 1,442 carriers reported that they were engaged in the provision of either competitive local exchange services or competitive access provider services. Of these 1,442 carriers, an estimated 1,256 have 1,500 or fewer employees. In addition, 17 carriers have reported that they are Shared-Tenant Service Providers, and all 17 are estimated to have 1,500 or fewer employees. Also, 72 carriers have reported that they are Other Local Service Providers. Of this total, 70 have 1,500 or fewer employees. Consequently, based on internally researched FCC data, the Commission estimates that most providers of competitive local exchange service, competitive access providers, Shared-Tenant Service Providers, and Other Local Service Providers are small entities.
16. Incumbent Local Exchange Carriers (LECs). Neither the Commission nor the SBA has developed a small business size standard specifically for incumbent local exchange services. The closest applicable NAICS Code category is Wired Telecommunications Carriers. Under the applicable SBA size standard, such a business is small if it has 1,500 or fewer employees. U.S. Census Bureau data for 2012 indicate that 3,117 firms operated the entire year. Of this total, 3,083 operated with fewer than 1,000 employees. Consequently, the Commission estimates that most providers of incumbent local exchange service are small businesses that may be affected by our actions. According to Commission data, one thousand three hundred and seven (1,307) Incumbent Local Exchange Carriers reported that they were incumbent local exchange service providers. Of this total, an estimated 1,006 have 1,500 or fewer employees. Thus using the SBA's size standard the majority of Incumbent LECs can be considered small entities.
17. Narrowband Personal Communications Services. Two auctions of narrowband personal communications services (PCS) licenses have been conducted. To ensure meaningful participation of small business entities in future auctions, the Commission has adopted a two-tiered small business size standard in the Narrowband PCS Second Report and Order. Through these auctions, the Commission has awarded a total of 41 licenses, out of which 11 were obtained by small businesses. A “small business” is an entity that, together with affiliates and controlling interests, has average gross revenues for the three preceding years of not more than $40 million. A “very small business” is an entity that, together with affiliates and controlling interests, has average gross revenues for the three preceding years of not more than $15 million. The SBA has approved these small business size standards.
18. Offshore Radiotelephone Service. This service operates on several UHF television broadcast channels that are not used for television broadcasting in the coastal areas of states bordering the Gulf of Mexico. The closest applicable SBA size standard is for Wireless Telecommunications Carriers (except Satellite), which is an entity employing no more than 1,500 persons. U.S. Census Bureau data in this industry for 2012 show that there were 967 firms that operated for the entire year. Of this total, 955 firms had employment of 999 or fewer employees and 12 had employment of 1000 employees or more. Thus, under this SBA category and the associated small business size standard, the majority of Offshore Radiotelephone Service firms can be considered small. There are presently approximately 55 licensees in this service. However, the Commission is unable to estimate at this time the number of licensees that would qualify as small under the SBA's small business size standard for the category of Wireless Telecommunications Carriers (except Satellite).
19. Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing. This industry comprises establishments primarily engaged in manufacturing radio and television broadcast and wireless communications equipment. Examples of products made by these establishments are: Transmitting and receiving antennas, cable television equipment, GPS equipment, pagers, cellular phones, mobile communications equipment, and radio and television studio and broadcasting equipment. The SBA has established a small business size standard for this industry of 1,250 employees or less. U.S. Census Bureau data for 2012 shows that 841 establishments operated in this industry in that year. Of that number, 828 establishments operated with fewer than 1,000 employees, 7 establishments operated with between 1,000 and 2,499 employees and 6 establishments operated with 2,500 or more employees. Based on this data, we conclude that a majority of manufacturers in this industry are small.
20. Rural Radiotelephone Service. The Commission has not adopted a size standard for small businesses specific to the Rural Radiotelephone Service. A significant subset of the Rural Radiotelephone Service is the Basic Exchange Telephone Radio System (BETRS). The closest applicable SBA size standard is for Wireless Telecommunications Carriers (except Satellite), which is an entity employing no more than 1,500 persons. For this industry, U.S. Census Bureau data for 2012 show that there were 967 firms that operated for the entire year. Of this total, 955 firms had employment of 999 or fewer employees and 12 had employment of 1000 employees or more. Thus under this category and the associated size standard, the Commission estimates that the majority of Rural Radiotelephone Services firm are small entities. There are approximately 1,000 licensees in the
21. Wireless Communications Services. This service can be used for fixed, mobile, radiolocation, and digital audio broadcasting satellite uses. The Commission defined “small business” for the wireless communications services (WCS) auction as an entity with average gross revenues of $40 million for each of the three preceding years, and a “very small business” as an entity with average gross revenues of $15 million for each of the three preceding years. The SBA has approved these small business size standards. In the Commission's auction for geographic area licenses in the WCS there were seven winning bidders that qualified as “very small business” entities, and one that qualified as a “small business” entity.
22. Wireless Telecommunications Carriers (except Satellite). This industry comprises establishments engaged in operating and maintaining switching and transmission facilities to provide communications via the airwaves. Establishments in this industry have spectrum licenses and provide services using that spectrum, such as cellular services, paging services, wireless internet access, and wireless video services. The appropriate size standard under SBA rules is that such a business is small if it has 1,500 or fewer employees. For this industry, U.S. Census Bureau data for 2012 show that there were 967 firms that operated for the entire year. Of this total, 955 firms had employment of 999 or fewer employees and 12 had employment of 1,000 employees or more. Thus under this category and the associated size standard, the Commission estimates that the majority of wireless telecommunications carriers (except satellite) are small entities.
23. Wireless Telephony. Wireless telephony includes cellular, personal communications services, and specialized mobile radio telephony carriers. The closest applicable SBA category is Wireless Telecommunications Carriers (except Satellite). Under the SBA small business size standard, a business is small if it has 1,500 or fewer employees. For this industry, U.S. Census Bureau data for 2012 show that there were 967 firms that operated for the entire year. Of this total, 955 firms had fewer than 1,000 employees and 12 firms had 1000 employees or more. Thus under this category and the associated size standard, the Commission estimates that a majority of these entities can be considered small. According to Commission data, 413 carriers reported that they were engaged in wireless telephony. Of these, an estimated 261 have 1,500 or fewer employees and 152 have more than 1,500 employees. Therefore, more than half of these entities can be considered small.
24. 700 MHz Guard Band Licensees. In 2000, in the 700 MHz Guard Band Order, the Commission adopted size standards for “small businesses” and “very small businesses” for purposes of determining their eligibility for special provisions such as bidding credits and installment payments. A small business in this service is an entity that, together with its affiliates and controlling principals, has average gross revenues not exceeding $40 million for the preceding three years. Additionally, a very small business is an entity that, together with its affiliates and controlling principals, has average gross revenues that are not more than $15 million for the preceding three years. SBA approval of these definitions is not required. An auction of 52 Major Economic Area licenses commenced on September 6, 2000, and closed on September 21, 2000. Of the 104 licenses auctioned, 96 licenses were sold to nine bidders. Five of these bidders were small businesses that won a total of 26 licenses. A second auction of 700 MHz Guard Band licenses commenced on February 13, 2001 and closed on February 21, 2001. All eight of the licenses auctioned were sold to three bidders. One of these bidders was a small business that won a total of two licenses.
25. Lower 700 MHz Band Licenses. The Commission previously adopted criteria for defining three groups of small businesses for purposes of determining their eligibility for special provisions such as bidding credits. The Commission defined a “small business” as an entity that, together with its affiliates and controlling principals, has average gross revenues not exceeding $40 million for the preceding three years. A “very small business” is defined as an entity that, together with its affiliates and controlling principals, has average gross revenues that are not more than $15 million for the preceding three years. Additionally, the lower 700 MHz Service had a third category of small business status for Metropolitan/Rural Service Area (MSA/RSA) licenses—“entrepreneur”—which is defined as an entity that, together with its affiliates and controlling principals, has average gross revenues that are not more than $3 million for the preceding three years. The SBA approved these small size standards. An auction of 740 licenses (one license in each of the 734 MSAs/RSAs and one license in each of the six Economic Area Groupings (EAGs)) commenced on August 27, 2002, and closed on September 18, 2002. Of the 740 licenses available for auction, 484 licenses were won by 102 winning bidders. Seventy-two of the winning bidders claimed small business, very small business or entrepreneur status and won a total of 329 licenses. A second auction commenced on May 28, 2003, closed on June 13, 2003, and included 256 licenses: 5 EAG licenses and 476 Cellular Market Area licenses. Seventeen winning bidders claimed small or very small business status and won 60 licenses, and nine winning bidders claimed entrepreneur status and won 154 licenses. On July 26, 2005, the Commission completed an auction of 5 licenses in the Lower 700 MHz band (Auction No. 60). There were three winning bidders for five licenses. All three winning bidders claimed small business status.
26. In 2007, the Commission reexamined its rules governing the 700 MHz band in the 700 MHz Second Report and Order. An auction of 700 MHz licenses commenced January 24, 2008, and closed on March 18, 2008, which included: 176 Economic Area licenses in the A-Block, 734 Cellular Market Area licenses in the B-Block, and 176 EA licenses in the E-Block. Twenty winning bidders, claiming small business status (those with attributable average annual gross revenues that exceed $15 million and do not exceed $40 million for the preceding three years) won 49 licenses. Thirty-three winning bidders claiming very small business status (those with attributable average annual gross revenues that do not exceed $15 million for the preceding three years) won 325 licenses.
27. Upper 700 MHz Band Licenses. In the 700 MHz Second Report and Order, the Commission revised its rules regarding Upper 700 MHz licenses. On January 24, 2008, the Commission commenced Auction 73 in which several licenses in the Upper 700 MHz band were available for licensing: 12 Regional Economic Area Grouping licenses in the C Block, and one nationwide license in the D Block. The auction concluded on March 18, 2008, with 3 winning bidders claiming very small business status (those with attributable average annual gross revenues that do not exceed $15 million for the preceding three years) and winning five licenses.
28. Wireless Resellers. The SBA has not developed a small business size standard specifically for Wireless Resellers. The SBA category of Telecommunications Resellers is the closest NAICS code category for wireless resellers. The Telecommunications Resellers industry comprises establishments engaged in purchasing access and network capacity from owners and operators of telecommunications networks and reselling wired and wireless telecommunications services (except satellite) to businesses and households. Establishments in this industry resell telecommunications; they do not operate transmission facilities and infrastructure. Mobile virtual network operators (MVNOs) are included in this industry. Under the SBA's size standard, such a business is small if it has 1,500 or fewer employees. U.S. Census Bureau data for 2012 show that 1,341 firms provided resale services for the entire year. Of that number, all operated with fewer than 1,000 employees. Thus, under this category and the associated small business size standard, the majority of these resellers can be considered small entities. According to Commission data, 213 carriers have reported that they are engaged in the provision of local resale services. Of these, an estimated 211 have 1,500 or fewer employees. Consequently, the Commission estimates that the majority of Wireless Resellers are small entities.
29. Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing. This industry comprises establishments primarily engaged in manufacturing radio and television broadcast and wireless communications equipment. Examples of products made by these establishments are: Transmitting and receiving antennas, cable television equipment, GPS equipment, pagers, cellular phones, mobile communications equipment, and radio and television studio and broadcasting equipment. The SBA has established a small business size standard for this industry of 1,250 employees or less. U.S. Census Bureau data for 2012 shows that 841 establishments operated in this industry in that year. Of that number, 828 establishments operated with fewer than 1,000 employees, 7 establishments operated with between 1,000 and 2,499 employees and 6 establishments operated with 2,500 or more employees. Based on this data, we conclude that a majority of manufacturers in this industry can be considered small.
30. Semiconductor and Related Device Manufacturing. This industry comprises establishments primarily engaged in manufacturing semiconductors and related solid state devices. Examples of products made by these establishments are integrated circuits, memory chips, microprocessors, diodes, transistors, solar cells and other optoelectronic devices. The SBA has developed a small business size standard for Semiconductor and Related Device Manufacturing, which consists of all such companies having 1,250 or fewer employees. U.S. Census Bureau data for 2012 show that there were 862 establishments that operated that year. Of this total, 843 operated with fewer than 1,000 employees. Thus, under this size standard, the majority of firms in this industry can be considered small.
31. The NPRM proposes and seeks comment on changes to Commission rules related to priority access services that may affect reporting, recordkeeping, and other compliance requirements for small entities, if adopted. Specifically, regarding TSP, service providers would be required to have policies and procedures in place to prevent and detect the unauthorized disclosure of TSP data, and report provisioning and restoration times for TSP circuits in areas covered by the activation of the Disaster Information Reporting System (DIRS). Service providers would also be required to report provisioning and restoration times, and aggregate data that would allow the DHS to compare the data for TSP services to similar data for non-TSP services. Additionally, non-common carriers that voluntarily provide TSP-like services would be required to abide by the rules currently contained in Appendix A of part 64 of the Commission's rules.
32. Regarding PAS, Commercial Mobile Radio Service (CMRS) providers that offer priority access service (PAS providers) to NSEP users would be required to allow Priority Level 1 and 2 voice calls, if needed, to preempt or degrade in-progress public communications and provision next-generation voice, data, and video services on a priority basis. Priority Level 1 exceeds all other priority services offered by PAS providers. PAS providers would also be required to provide priority signaling to ensure networks are able to detect PAS handset network registration and service invocation; would be subject to additional methods of invocating PAS priority treatment for NSEP communications; and would be subject to DHS specific requirements to ensure PAS providers meet the survivability of NSEP communications, as required in Executive Order 13618. In addition, PAS providers would be required to file implementation and performance data with DHS so that DHS can assess the program's readiness, usage, and performance at all times and in all places offered, and for specific geographic areas and times.
33. We note that NTIA seeks substantial reporting and record-keeping requirements regarding the TSP and PAS programs. For TSP, NTIA asks that service providers report to DHS provisioning and restoration times for TSP circuits in areas covered by the activation of the Disaster Information Reporting System (DIRS), on belief that such reporting obligations would give it access to TSP provisioning and restoration times and aggregate data that would allow it to compare the data for TSP services to similar data for non-TSP services. NTIA also requests the Commission amend its WPS rules to require service providers to file implementation, usage, and performance data with DHS so that it can assess the program's readiness, usage, and performance at all times and all places offered, and for specific geographic areas and times. We are not prepared to propose the requests as rules, until we have a better understanding of the balance between the costs to providers and the benefits to DHS as program administrator.
34. If the Commission ultimately determines that it will adopt the rules proposed in the NPRM, small entities may need to hire engineers, consultants, or other professionals to comply with the rules generally, and the rules noted above specifically (
35. The RFA requires an agency to describe any significant, specifically small business, alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): (1) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or reporting requirements under the rule for such small entities; (3) the use of performance, rather than design, standards; and (4) an exemption from coverage of the rule, or any part thereof, for such small entities.
36. The Commission has taken steps and considered alternatives that could minimize the economic impact on small entities as a result of the proposals and matters upon which we seek comments in the NPRM; we believe, for example, that something as straight-forward as proposing to remove the requirement that an agency's TSP “invocation official” must be at or near the top of an agency's management hierarchy can lower costs for small entities. Similarly, our proposal to amend our PAS rules to authorize additional methods of invoking priority treatment for NSEP communications will most likely have an effect of lowering costs.
37. We note that our proposal does not currently seek adoption of several of the rule changes requested by NTIA and DHS, on belief that these rule changes would increase regulatory burdens on service providers/providers by increasing the costs of complying with the Commission's priority services rules. Further, we believe that considering a “light touch” regulatory framework and amending the Commission's priority services rules would enhance regulatory efficiency and reduce the burdens on small entities and other service providers by making it easier to identify and comply with the applicable rules.
38. Next, we raise the issue of rule waivers in light of the importance of end-to-end support of priority services in an IP-based network environment and seek comment on how the Commission might consider requests for waiver of its rules should our proposals be adopted. To the extent waivers are allowed, in order to determine what criteria should the Commission consider in determining whether there is good cause for waiver, we ask among other things, whether the size of the carrier should be a consideration. We also ask whether we should use our existing waiver rules which small entities may already be familiar with or adopt new requirements. New requirements have the potential to be less rigorous than the current rules. Another alternative upon which we seek comment that could be of particular benefit to small entities is whether and what type of mechanism should there be for extending the allowable time to achieve compliance with any rules adopted in this proceeding.
39. Finally, as a general matter, the Commission seeks comment on the minimum benefit expected to result from the policy changes we propose, and on the costs that NSEP providers would incur in order to achieve compliance. To assist in evaluating the economic impact on small entities, the Commission seeks comment on the costs and benefits of the proposed rules and any alternatives raised in the NPRM that will accomplish our goal of protecting life and property through the provisioning of NSEP communications services, while tailoring implementation of our proposals to minimize compliance costs and any potential burdens. The Commission is particularly interested in how the proposed rules on requiring service providers to have policies and procedures in place to prevent and detect the unauthorized disclosure of TSP data; requiring those providers to report provisioning and restoration times for TSP circuits in areas covered by the activation of the DIRS; and requiring PAS providers to file implementation and performance data with DHS so that DHS can assess the program's readiness, usage, and performance at all times and all places offered, and for specific geographic areas and times, will affect, and economically impact, small entities. While we believe there would be little adverse economic impact on small entities and other service providers because most of the proposed rule changes are administrative in nature, the Commission seeks to understand, with a degree of specificity, how complying with the proposed rules (were they to be adopted) would impact small entities. The Commission expects to consider more fully the economic impact on small entities following its review of comments filed in response to the NPRM, including costs and benefits analyses. The Commission's evaluation of the comments filed in this proceeding will shape the final alternatives it considers, the final conclusions it reaches, and any final actions it ultimately takes in this proceeding to minimize any significant economic impact that may occur on small entities.
40. None.
41.
Communications, Communications common carriers, Communications equipment, Computer technology, Emergency preparedness, internet, Priority access, Priority services, Provisioning, Radio, Restoration, Telecommunications, Telephone.
For the reasons discussed in the preamble, the Federal Communications Commission proposes to amend 47 CFR part 64 as follows:
47 U.S.C. 154, 201, 202, 217, 218, 220, 222, 225, 226, 227, 227b, 228, 251(a), 251(e), 254(k), 262, 403(b)(2)(B), (c), 616, 620, 1401–1473, unless otherwise noted; Pub. L. 115–141, Div. P, sec. 503, 132 Stat. 348, 1091.
Wireless service providers that elect to provide wireless priority service to National Security and Emergency Preparedness personnel shall provide wireless priority service in accordance with the policies and procedures set forth in appendix B to this part.
a. This appendix establishes policies and procedures and assigns responsibilities for the National Security Emergency Preparedness (NSEP) Telecommunications Service Priority (TSP) System. The NSEP TSP System authorizes priority treatment to certain telecommunications services and internet Protocol-based services (including voice, data, and video services), for which provisioning or restoration priority (RP) levels are requested, assigned, and approved in accordance with this appendix.
b. This appendix is issued pursuant to sections 1, 4(i), 4(j), 4(o), 201–205, 251(e)(3), 254, 301, 303(b), 303(g), 303(r), 307, 308(a), 309(a), 309(j), 316, 332, 403, 615a–1, 615c, and 606 of the Communications Act of 1934, as amended, codified at 47 U.S.C. 151, 154(i)–(j), (n) & (o), 201–205, 251(e)(3), 254, 301, 303(b), 303(g), 303(r), 307, 308(a), 309(a), 309(j), 316, 332, 403, 615a–1, 615c, 606; Section 706 of the Telecommunications Act of 1996, codified at 47 U.S.C 1302; and Executive Order 13618. These authorities grant to the Federal Communications Commission (FCC) the authority over the assignment and approval of priorities for provisioning and restoration of telecommunications services and internet Protocol-based services. Under section 706 of the Communications Act, this authority may be superseded, and the mandatory provisions of this section may be expanded to include non-common carrier telecommunications services, by the war emergency powers of the President of the United States.
c. Together, this appendix and the regulations and procedures issued by the Department of Homeland Security (DHS) establish one uniform system of priorities for provisioning and restoration of NSEP telecommunications services and internet Protocol-based services both before and after invocation of the President's war emergency powers. In order that government and industry resources may be used effectively under all conditions, a single set of rules, regulations, and procedures is necessary, and they must be applied on a day-to-day basis to all NSEP services so that the priorities they establish can be implemented at once when the need arises.
As used in this appendix:
a. Assignment means the designation of priority level(s) for a defined NSEP telecommunications service or internet Protocol-based service for a specified time period.
b. Audit means a quality assurance review in response to identified problems.
c. Government refers to the Federal Government or any foreign, state, county, municipal or other local government agency or organization. Specific qualifications will be supplied whenever reference to a particular level of government is intended (
d. National Coordinating Center for Communications (NCC) refers to the joint telecommunications industry-Federal Government operation that assists in the initiation, coordination, restoration, and reconstitution of NSEP telecommunications services or facilities.
e. National Security Emergency Preparedness (NSEP) services, or “NSEP services,” means telecommunications services or internet Protocol-based services which are used to maintain a state of readiness or to respond to and manage any event or crisis (local, national, or international), which causes or could cause injury or harm to the population, damage to or loss of property, or degrades or threatens the NSEP posture of the United States. These services fall into two specific categories, Emergency NSEP and Essential NSEP, and are assigned priority levels pursuant to section 8 of this appendix.
f. NSEP treatment refers to the provisioning of a specific NSEP service before others based on the provisioning priority level assigned by DHS.
g. Priority action means assignment, revision, revocation, or revalidation by DHS of a priority level associated with an NSEP service.
h. Priority level means the level that may be assigned to an NSEP service specifying the order in which provisioning or restoration of the service is to occur relative to other NSEP and/or non-NSEP telecommunications services. Priority levels authorized by this appendix are designated (highest to lowest) “E,” “1,” “2,” “3,” “4,” and “5,” for provisioning and “1,” “2,” “3,” “4,” and “5,” for restoration.
i. Priority level assignment means the priority level(s) designated for the provisioning and/or restoration of a specific NSEP service under section 8 of this appendix.
j. Private NSEP services include non-common carrier telecommunications services.
k. Provisioning means the act of supplying service to a user, including all associated transmission, wiring, and equipment. As used herein, “provisioning” and “initiation” are synonymous and include altering the state of an existing priority service or capability.
l. Public switched NSEP services include those NSEP services using public switched networks.
m. Reconciliation means the comparison of NSEP service information and the resolution of identified discrepancies.
n. Restoration means the repair or returning to service of one or more services that have experienced a service outage or are unusable for any reason, including a damaged or impaired facility. Such repair or returning to service may be done by patching, rerouting, substitution of component parts or pathways, and other means, as determined necessary by a service provider.
o. Revalidation means the re-justification by a service user of a priority level assignment. This may result in extension by DHS of the expiration date associated with the priority level assignment.
p. Revision means the change of priority level assignment for an NSEP service. This includes any extension of an existing priority level assignment to an expanded NSEP service.
q. Revocation means the elimination of a priority level assignment when it is no longer valid. All priority level assignments for an NSEP service are revoked upon service termination.
r. Service identification refers to the information uniquely identifying an NSEP service to the service provider and/or service user.
s. Service user refers to any individual or organization (including a service provider) supported by an NSEP service for which a priority level has been requested or assigned pursuant to section 7 or 8 of this appendix.
t. Service provider refers to any person, association, partnership, corporation, organization, or other entity (including government organizations) that offers to supply any equipment, facilities, or services (including customer premises equipment and wiring) or combination thereof. The term includes resale carriers, prime contractors, subcontractors, and interconnecting carriers.
u. Spare circuits or services refers to those not being used or contracted for by any customer.
v. Telecommunications services means the offering of telecommunications for a fee directly to the public, or to such classes of users as to be effectively available directly to the public, regardless of the facilities used.
w. Telecommunications Service Priority (TSP) system user refers to any individual, organization, or activity that interacts with the NSEP TSP System.
a. Service providers.
(1) This appendix applies to the provision and restoration of certain telecommunications services or internet Protocol-based services for which priority levels are requested, assigned, and approved pursuant to section 8 of this appendix.
(2) Common carriers must offer prioritized provisioning and restoration of circuit-switched voice communication services. Any service provider may, on a voluntary basis, offer prioritized provisioning and restoration of data, video, and IP-based voice services.
b. Eligible services. The NSEP TSP System and procedures established by this appendix authorize priority treatment to the following domestic services (including portions of U.S. international services offered by U.S. service providers) for which provisioning or restoration priority levels are requested, assigned, and approved in accordance with this appendix:
(1) Common carrier services which are:
(a) Interstate or foreign telecommunications services,
(b) Intrastate telecommunications services inseparable from interstate or foreign telecommunications services, and intrastate telecommunications services to which priority levels are assigned pursuant to section 8 of this appendix.
(2) Services which are provided by government and/or non-common carriers and are interconnected to common carrier services assigned a priority level pursuant to section 8 of this appendix.
c. Control services and orderwires. The NSEP TSP System and procedures established by this appendix are not applicable to authorize priority treatment to control services or orderwires owned by a service provider and needed for provisioning, restoration, or maintenance of other services owned by that service provider. Such control services and orderwires shall have priority provisioning and restoration over all other services (including NSEP services) and shall be exempt from preemption. However, the NSEP TSP System and procedures established by this appendix are applicable to control services or orderwires leased by a service provider.
d. Other services. The NSEP TSP System may apply, at the discretion of and upon special arrangements by the NSEP TSP System users involved, to authorize priority treatment to the following services:
(1) Government or non-common carrier services which are not connected to common carrier provided services assigned a priority level pursuant to section 8 of this appendix.
(2) Portions of U.S. international services which are provided by foreign correspondents. (U.S. service providers are encouraged to ensure that relevant operating arrangements are consistent to the maximum extent practicable with the NSEP TSP System. If such arrangements do not exist, U.S. service providers should handle service provisioning and/or restoration in accordance with any system acceptable to their foreign correspondents which comes closest to meeting the procedures established in this appendix.)
The NSEP TSP System is the regulatory, administrative, and operational system authorizing and providing for priority treatment,
a. The FCC will:
(1) Provide regulatory oversight of implementation of the NSEP TSP System.
(2) Enforce NSEP TSP System rules and regulations, which are contained in this appendix.
(3) Act as final authority for approval, revision, or disapproval of priority actions by DHS and adjudicate disputes regarding either priority actions or denials of requests for priority actions by DHS, until superseded by the President's war emergency powers under section 706 of the Communications Act.
(4) Perform such functions as are required by law and Executive Order 13618, including:
(a) With respect to all entities licensed or regulated by the FCC: The extension, discontinuance, or reduction of common carrier facilities or services; the control of common carrier rates, charges, practices, and classifications; the construction, authorization, activation, deactivation, or closing of radio stations, services, and facilities; the assignment of radio frequencies to licensees; the investigation of violations of pertinent law; and the assessment of communications service provider emergency needs and resources; and
(b) support the continuous operation and restoration of critical communications systems and services by assisting the Secretary of Homeland Security with infrastructure damage assessment and restoration, and by providing the Secretary of Homeland Security with information collected by the FCC on communications infrastructure, service outages, and restoration, as appropriate.
(5) Function (on a discretionary basis) as a sponsoring Federal organization. (See section 5(b) below.)
b. Sponsoring Federal organizations will:
(1) Review and decide whether to sponsor foreign, state, and local government and private industry (including service providers) requests for priority actions. Federal organizations will forward sponsored requests with recommendations for disposition to DHS. Recommendations will be based on the categories and criteria in section 10 of this appendix.
(2) Forward notification of priority actions or denials of requests for priority actions from DHS to the requesting foreign, state, and local government and private industry entities.
(3) Cooperate with DHS during reconciliation, revalidation, and audits.
(4) Comply with any regulations and procedures supplemental to and consistent with this appendix which are issued by DHS.
c. Service users will:
(1) Identify services requiring priority level assignments and request and justify priority level assignments in accordance with this appendix and any supplemental regulations and procedures issued by DHS that are consistent with this appendix.
(2) Request and justify revalidation of all priority level assignments at least every three years.
(3) For services assigned priority levels, ensure (through contractual means or otherwise) availability of customer premises equipment and wiring necessary for end-to-end service operation by the service due date, and continued operation; and, for such services in the Emergency NSEP category, by the time that providers are prepared to provide the services. Additionally, designate the organization responsible for the service on an end-to-end basis.
(4) Be prepared to accept services assigned priority levels by the service due dates or, for services in the Emergency NSEP category, when they are available.
(5) Pay providers any authorized costs associated with services that are assigned priority levels.
(6) Report to providers any failed or unusable services that are assigned priority levels.
(7) Designate a 24-hour point-of-contact for matters concerning each request for priority action and apprise DHS thereof.
(8) Upon termination of services that are assigned priority levels, or circumstances warranting revisions in priority level assignment (
(9) When NSEP treatment is invoked under section 8(c) of this appendix, within 90 days following provisioning of the service involved, forward to the National Coordinating Center (see section 2(d) of this appendix) complete information identifying the time and event associated with the invocation and regarding whether the NSEP service requirement was adequately handled and whether any additional charges were incurred.
(10) Cooperate with DHS during reconciliation, revalidation, and audits.
(11) Comply with any regulations and procedures supplemental to and consistent with this appendix that are issued by DHS.
d. Non-federal service users, in addition to responsibilities prescribed above in section 6(d), will obtain a sponsoring Federal organization for all requests for priority actions. If unable to find a sponsoring Federal organization, a non-federal service user may submit its request, which must include documentation of attempts made to obtain a sponsor and reasons given by the sponsor for its refusal, directly to DHS.
e. Service providers will:
(1) When NSEP treatment is invoked by service users, provision NSEP services before non-NSEP services, based on priority level assignments made by DHS. Provisioning will require service providers to:
(a) Allocate resources to ensure best efforts to provide NSEP services by the time required. When limited resources constrain response capability, providers will address conflicts for resources by:
(i) Providing NSEP services in order of provisioning priority level assignment (
(ii) Providing Emergency NSEP services (
(iii) Providing Essential NSEP services (
(iv) Referring any conflicts which cannot be resolved (to the mutual satisfaction of service providers and users) to the Executive Office of the President (EOP) for resolution.
(b) Comply with NSEP service requests by:
(i) Allocating resources necessary to provide Emergency NSEP services as soon as possible, dispatching outside normal business hours when necessary;
(ii) Ensuring best efforts to meet requested service dates for Essential NSEP services, negotiating a mutually (authorized user and provider) acceptable service due date when the requested service due date cannot be met; and
(iii) Seeking NCC assistance as authorized under the NCC Charter (see section 1.3, NCC Charter, dated October 9, 1985).
(2) Restore NSEP services which suffer outage or are reported as unusable or otherwise in need of restoration, before non-NSEP services, based on restoration priority level assignments. (Note: For broadband or multiple service facilities, restoration is permitted even though it might result in restoration of services assigned no or lower priority levels along with, or sometimes ahead of, some higher priority level services.) Restoration will require service providers to restore NSEP services in order of restoration priority level assignment (
(a) Allocating available resources to restore NSEP services as quickly as practicable, dispatching outside normal business hours to restore services assigned priority levels “1”, “2”, and “3” when necessary, and services assigned priority level “4” and “5” when the next business day is more than 24 hours away;
(b) Restoring NSEP services assigned the same restoration priority level based upon which can be first restored. (However, restoration actions in progress should not normally be interrupted to restore another NSEP service assigned the same restoration priority level);
(c) Patching and/or rerouting NSEP services assigned restoration priority levels from “1” through “5,” when use of patching and/or rerouting will hasten restoration;
(d) Seeking NCC assistance authorized under the NCC Charter; and
(e) Referring any conflicts which cannot be resolved (to the mutual satisfaction of service providers and users) to EOP for resolution.
(3) Respond to provisioning requests of authorized users and/or other service providers, and to restoration priority level assignments when an NSEP service suffers an outage or is reported as unusable, by:
(a) Ensuring that provider personnel understand their responsibilities to handle NSEP provisioning requests and to restore NSEP service;
(b) Providing a 24-hour point-of-contact for receiving provisioning requests for Emergency NSEP services and reports of NSEP service outages or unusability; and
(c) Seeking verification from an authorized entity if legitimacy of a priority level assignment or provisioning request for an NSEP service is in doubt. However, processing of Emergency NSEP service requests will not be delayed for verification purposes.
(4) Cooperate with other service providers involved in provisioning or restoring a portion of an NSEP service by honoring provisioning or restoration priority level assignments, or requests for assistance to provision or restore NSEP services, as detailed in section 5(e)(1), (2), and (3).
(5) All service providers, including resale carriers, are required to ensure that service providers supplying underlying facilities are provided information necessary to implement priority treatment of facilities that support NSEP services.
(6) Preempt, when necessary, existing services to provide an NSEP service as authorized in section 6 of this appendix.
(7) Assist in ensuring that priority level assignments of NSEP services are accurately identified “end-to-end” by:
(a) Seeking verification from an authorized Federal Government entity if the legitimacy of the restoration priority level assignment is in doubt;
(b) Providing to subcontractors and/or interconnecting carriers the restoration priority level assigned to a service;
(c) Supplying, to DHS, when acting as a prime contractor to a service user, confirmation information regarding NSEP service completion for that portion of the service they have contracted to supply;
(d) Supplying, to DHS, NSEP service information for the purpose of reconciliation;
(e) Cooperating with DHS during reconciliation; and
(f) Periodically initiating reconciliation with their subcontractors and arranging for subsequent subcontractors to cooperate in the reconciliation process.
(8) Receive compensation for costs authorized through tariffs or contracts by:
(a) Provisions contained in properly filed state or Federal tariffs; or
(b) Provisions of properly negotiated contracts where the carrier is not required to file tariffs.
(9) Provision or restore only the portions of services for which they have agreed to be responsible (
(10) Cooperate with DHS during audits.
(11) Comply with any regulations or procedures supplemental to and consistent with this appendix that are issued by DHS and reviewed by the FCC.
(12) Ensure that at all times a reasonable number of public switched network services are made available for public use.
(13) Not disclose information concerning NSEP services they provide to those not having a need-to-know or might use the information for competitive advantage.
(14) Comply with all relevant Commission rules regarding TSP.
When necessary to provision or restore NSEP services, service providers may preempt services they provide as specified below. “User” as used in this Section means any user of a telecommunications service or internet Protocol-based service, including both NSEP and non-NSEP services. Prior consent by a preempted user is not required.
a. The sequence in which existing services may be preempted to provision NSEP services assigned a provisioning priority level “E” or restore NSEP services assigned a restoration priority level from “1” through “5”:
(1)
(2)
(3) Service providers who are preempting services will ensure their best effort to notify the service user of the preempted service and state the reason for and estimated duration of the preemption.
b. Service providers may, based on their best judgment, determine the sequence in which existing services may be preempted to provision NSEP services assigned a provisioning priority of “1” through “5”. Preemption is not subject to the consent of the user whose service will be preempted.
All service users are required to submit requests for priority actions to DHS in the format and following the procedures prescribed by DHS.
a. Assignment and approval of priority levels. Priority level assignments will be based upon the categories and criteria specified in section 10 of this appendix. A priority level assignment made by DHS will serve as DHS's recommendation to the FCC. Until the President's war emergency powers are invoked, priority level assignments must be approved by the FCC. However, service providers are ordered to implement any priority level assignments that are pending FCC approval. After invocation of the President's war emergency powers, these requirements may be superseded by other procedures issued by DHS.
b. Use of Priority Level Assignments.
(1) All provisioning and restoration priority level assignments for services in the Emergency NSEP category will be included in initial service orders to providers. Provisioning priority level assignments for Essential NSEP services, however, will not usually be included in initial service orders to providers. NSEP treatment for Essential NSEP services will be invoked and provisioning priority level assignments will
(2) Any revision or revocation of either provisioning or restoration priority level assignments will also be transmitted to providers.
(3) Service providers shall accept priority levels and/or revisions only after assignment by DHS.
Service providers acting as prime contractors will accept assigned NSEP priority levels only when they are accompanied by the DHS designated service identification,
c. Invocation of NSEP treatment. To invoke NSEP treatment for the priority provisioning of an NSEP service, an authorized federal employee within, or acting on behalf of, the service user's organization must make a declaration to concerned service provider(s) and DHS that NSEP treatment is being invoked. An authorized invocation official is one who (1) understands how the requested service ties to the organization's NSEP mission, and (2) is authorized by the organization to approve the expenditure of funds necessary for the requested service.
Service users or sponsoring Federal organizations may appeal any priority level assignment, denial, revision, revocation, approval, or disapproval to DHS within 30 days of notification to the service user. The appellant must use the form or format required by DHS and must serve the FCC with a copy of its appeal. DHS will act on the appeal within 90 days of receipt. Service users and sponsoring Federal organizations may only then appeal directly to the FCC. Such FCC appeal must be filed within 30 days of notification of DHS's decision on appeal. Additionally, DHS may appeal any FCC revisions, approvals, or disapprovals to the FCC. All appeals to the FCC must be submitted using the form or format required. The party filing its appeal with the FCC must include factual details supporting its claim and must serve a copy on DHS and any other party directly involved. Such party may file a response within 20 days, and replies may be filed within 10 days thereafter. The Commission will not issue public notices of such submissions. The Commission will provide notice of its decision to the parties of record. Any appeals to DHS that include a claim of new information that has not been presented before for consideration may be submitted at any time.
a. General. NSEP TSP System categories and criteria, and permissible priority level assignments, are defined and explained below.
(1) The Essential NSEP category has four subcategories: National Security Leadership; National Security Posture and U.S. Population Attack Warning; Public Health, Safety, and Maintenance of Law and Order; and Public Welfare and Maintenance of National Economic Posture. Each subcategory has its own criteria. Criteria are also shown for the Emergency NSEP category, which has no sub-categories.
(2) Priority levels of “1,” “2,” “3,” “4,” and “5” may be assigned for provisioning and/or restoration of Essential NSEP services. However, for Emergency NSEP services, a priority level “E” is assigned for provisioning. A restoration priority level from “1” through “5” may be assigned if an Emergency NSEP service also qualifies for such a restoration priority level under the Essential NSEP category.
(3) The NSEP TSP System allows the assignment of priority levels to any NSEP service across three time periods, or stress conditions: Peacetime/Crisis/Mobilization, Attack/War, and Post-Attack/Recovery. Priority levels will normally be assigned only for the first time period. These assigned priority levels will apply through the onset of any attack, but it is expected that they would later be revised by surviving authorized resource managers within DHS based upon specific facts and circumstances arising during the Attack/War and Post-Attack/Recovery time periods.
(4) Service users may, for their own internal use, assign sub-priorities to their services assigned priority levels. Receipt of and response to any such sub-priorities is optional for service providers.
(5) The following paragraphs provide a detailed explanation of the categories, subcategories, criteria, and priority level assignments, beginning with the Emergency NSEP category.
b. Emergency NSEP. Services in the Emergency NSEP category are those new services so critical as to be required to be provisioned at the earliest possible time, without regard to the costs of obtaining them.
(1) Criteria. To qualify under the Emergency NSEP category, the service must meet criteria directly supporting or resulting from at least one of the following NSEP functions:
(a) Federal Government activity responding to a Presidentially declared disaster or emergency as defined in the Disaster Relief Act (42 U.S.C. 5122).
(b) State or local government activity responding to a Presidentially declared disaster or emergency.
(c) Response to a state of crisis declared by the National Command Authorities (
(d) Efforts to protect endangered U.S. personnel or property.
(e) Response to an enemy or terrorist action, civil disturbance, natural disaster, or any other unpredictable occurrence that has damaged facilities whose uninterrupted operation is critical to NSEP or the management of other ongoing crises.
(f) Certification by the head or director of a Federal agency, commander of a unified/specified command, chief of a military service, or commander of a major military command, that the service is so critical to protection of life and property or to NSEP that it must be provided immediately.
(g) A request from an official authorized pursuant to the Foreign Intelligence Surveillance Act (50 U.S.C. 1801
(2) Priority Level Assignment.
(a) Services qualifying under the Emergency NSEP category are assigned priority level “E” for provisioning.
(b) After 30 days, assignments of provisioning priority level “E” for Emergency NSEP services are automatically revoked unless extended for another 30-day period. A notice of any such revocation will be sent to service providers.
(c) For restoration, Emergency NSEP services may be assigned priority levels under the provisions applicable to Essential NSEP services (see section 10(c)). Emergency NSEP services not otherwise qualifying for restoration priority level assignment as Essential NSEP may be assigned a restoration priority level “5” for a 30-day period. Such 30-day restoration priority level assignments will be revoked automatically unless extended for another 30-day period. A notice of any such revocation will be sent to service providers.
c. Essential NSEP. Services in the Essential NSEP category are those required to be provisioned by due dates specified by service users, or restored promptly, normally without regard to associated overtime or expediting costs. They may be assigned priority level of “1,” “2,” “3,” “4,” or “5” for both provisioning and restoration, depending upon the nature and urgency of the supported function, the impact of lack of service or of service interruption upon the supported function, and, for priority access to public switched services, the user's level of responsibility. Priority level assignments will be valid for no more than three years unless revalidated. To be categorized as Essential NSEP, a service must qualify under one of the four following subcategories: National Security Leadership; National Security Posture and U.S. Population Attack Warning; Public Health, Safety and Maintenance of Law and Order; or Public Welfare and Maintenance of National Economic Posture. (Note Under emergency circumstances, Essential NSEP services may be recategorized as Emergency NSEP and assigned a priority level “E” for provisioning.)
(1) National security leadership. This subcategory will be strictly limited to only those NSEP services essential to national survival if nuclear attack threatens or occurs, and critical orderwire and control services necessary to ensure the rapid and efficient provisioning or restoration of other NSEP services. Services in this subcategory are those for which a service interruption of even a few minutes would have serious adverse impact upon the supported NSEP function.
(a) Criteria. To qualify under this subcategory, a service must be at least one of the following:
(i) Critical orderwire, or control service, supporting other NSEP functions.
(ii) Presidential communications service critical to continuity of government and national leadership during crisis situations.
(iii) National Command Authority communications service for military command and control critical to national survival.
(iv) Intelligence communications service critical to warning of potentially catastrophic attack.
(v) Communications service supporting the conduct of diplomatic negotiations critical to arresting or limiting hostilities.
(b) Priority level assignment. Services under this subcategory will normally be assigned priority level “1” for provisioning and restoration during the Peace/Crisis/Mobilization time period.
(2) National security posture and U.S. population attack warning. This subcategory covers those minimum additional NSEP services essential to maintaining an optimum defense, diplomatic, or continuity-of-government postures before, during, and after crises situations. Such situations are those ranging from national emergencies to international crises, including nuclear attack. Services in this subcategory are those for which a service interruption ranging from a few minutes to one day would have serious adverse impact upon the supported NSEP function.
(a) Criteria. To qualify under this subcategory, a service must support at least one of the following NSEP functions:
(i) Threat assessment and attack warning.
(ii) Conduct of diplomacy.
(iii) Collection, processing, and dissemination of intelligence.
(iv) Command and control of military forces.
(v) Military mobilization.
(vi) Continuity of Federal Government before, during, and after crises situations.
(vii) Continuity of state and local government functions supporting the Federal Government during and after national emergencies.
(viii) Recovery of critical national functions after crises situations.
(ix) National space operations.
(b) Priority level assignment. Services under this subcategory will normally be assigned priority level “2,” “3,” “4,” or “5” for provisioning and restoration during Peacetime/Crisis/Mobilization.
(3) Public health, safety, and maintenance of law and order. This subcategory covers the minimum number of NSEP services necessary for giving civil alert to the U.S. population and maintaining law and order and the health and safety of the U.S. population in times of any national, regional, or serious local emergency. These services are those for which a service interruption ranging from a few minutes to one day would have serious adverse impact upon the supported NSEP functions.
(a) Criteria. To qualify under this subcategory, a service must support at least one of the following NSEP functions:
(i) Population warning (other than attack warning).
(ii) Law enforcement.
(iii) Continuity of critical state and local government functions (other than support of the Federal Government during and after national emergencies).
(vi) Hospitals and distributions of medical supplies.
(v) Critical logistic functions and public utility services.
(vi) Civil air traffic control.
(vii) Military assistance to civil authorities.
(viii) Defense and protection of critical industrial facilities.
(ix) Critical weather services.
(x) Transportation to accomplish the foregoing NSEP functions.
(b) Priority level assignment. Service under this subcategory will normally be assigned priority levels “3,” “4,” or “5” for provisioning and restoration during Peacetime/Crisis/Mobilization.
(4) Public welfare and maintenance of national economic posture. This subcategory covers the minimum number of NSEP services necessary for maintaining the public welfare and national economic posture during any national or regional emergency. These services are those for which a service interruption ranging from a few minutes to one day would have serious adverse impact upon the supported NSEP function.
(a) Criteria. To qualify under this subcategory, a service must support at least one of the following NSEP functions:
(i) Distribution of food and other essential supplies.
(ii) Maintenance of national monetary, credit, and financial systems.
(iii) Maintenance of price, wage, rent, and salary stabilization, and consumer rationing programs.
(iv) Control of production and distribution of strategic materials and energy supplies.
(v) Prevention and control of environmental hazards or damage.
(vi) Transportation to accomplish the foregoing NSEP functions.
(b) Priority level assignment. Services under this subcategory will normally be assigned priority levels “4” or “5” for provisioning and restoration during Peacetime/Crisis/Mobilization.
d. Limitations. Priority levels will be assigned only to the minimum number of NSEP services required to support an NSEP function. Priority levels will not normally be assigned to backup services on a continuing basis, absent additional justification,
e. Non-NSEP services. Services in the non-NSEP category will be those which do not meet the criteria for either Emergency NSEP or Essential NSEP.
a. This appendix establishes policies and procedures and outlines responsibilities for the Wireless Priority Service (WPS) to support the needs for National Security Emergency Preparedness (NSEP) personnel and other authorized users. WPS authorizes priority treatment to certain domestic telecommunications services and internet Protocol-based services for which provisioning priority levels are requested, assigned, and approved in accordance with this appendix.
b. This appendix is issued pursuant to sections 1, 4(i), 4(j), 4(o), 201–205, 251(e)(3), 254, 301, 303(b), 303(g), 303(r), 307, 308(a), 309(a), 309(j), 316, 332, 403, 615a–1, 615c, and 606 of the Communications Act of 1934, as amended, codified at 47 U.S.C. 151, 154(i)–(j), (n) & (o), 201–205, 251(e)(3), 254, 301, 303(b), 303(g), 303(r), 307, 308(a), 309(a), 309(j), 316, 332, 403, 615a–1, 615c, 606; Section 706 of the Telecommunications Act of 1996, codified at 47 U.S.C 1302; and Executive Order 13618. Under section 706 of the Communications Act, this authority may be superseded by the war emergency powers of the President of the United States.
c. This appendix is intended to be read in conjunction with regulations and procedures that the Department of Homeland Security (DHS) issues to implement the responsibilities assigned in section 5 of this appendix, or for use in the event this appendix is superseded by the President's emergency war powers. Together, this appendix and the regulations and procedures issued by DHS establish one uniform system of wireless priority access service both before and after invocation of the President's emergency war powers.
As used in this appendix:
1. Authorizing agent refers to a Federal or State entity that authenticates, evaluates, and makes recommendations to DHS regarding the assignment of wireless priority access service levels.
2. Service provider means an FCC-licensed wireless service provider. The term does not include agents of the licensed provider or resellers of wireless service.
3. Service user means an individual or organization (including a service provider) to whom or which a priority access assignment has been made.
4. The following terms have the same meaning as in Appendix A to part 64, as amended:
(a) Assignment;
(b) Government;
(c) National Coordinating Center for Communications (NCC);
(d) National Security Emergency Preparedness (NSEP) services (excluding the last sentence);
(e) Reconciliation;
(f) Revalidation;
(g) Revision;
(h) Revocation;
(i) Telecommunications services (excluding the last sentence).
a. Applicability. This appendix applies to the provision of WPS by wireless service providers to users who qualify under the provisions of section 7 of this appendix.
b. Eligible services. Wireless service providers may, on a voluntary basis, offer
WPS provides the means for NSEP users to obtain priority wireless access to available radio channels when necessary to initiate emergency communications. It does not preempt public safety emergency (911) calls, but priority 1 and 2 voice calls may preempt or degrade other in-progress calls, if necessary. NSEP users are authorized to use priority signaling to ensure networks are able to detect WPS handset network registration and service invocation. WPS is used during situations when network congestion is blocking NSEP call attempts. It is available to authorized NSEP users at all times in markets where the service provider has voluntarily decided to provide such service. WPS priorities 1 through 5 are reserved for qualified and authorized NSEP users, and those users are provided access to radio channels before any other users.
a. The FCC will:
1. Provide regulatory oversight of the implementation of WPS.
2. Enforce WPS rules and regulations.
3. Act as final authority for approval, revision, or disapproval of priority assignments by DHS by adjudicating disputes regarding either priority assignments or the denial thereof by DHS until superseded by the President's war emergency powers under Section 706 of the Communications Act.
4. Perform such functions as are required by law and Executive Order 13618, including:
(a) With respect to all entities licensed or regulated by the FCC: The extension, discontinuance, or reduction of common carrier facilities or services; the control of common carrier rates, charges, practices, and classifications; the construction, authorization, activation, deactivation, or closing of radio stations, services, and facilities; the assignment of radio frequencies to licensees; the investigation of violations of pertinent law; and the assessment of communications service provider emergency needs and resources; and
(b) support the continuous operation and restoration of critical communications systems and services by assisting the Secretary of Homeland Security with infrastructure damage assessment and restoration, and by providing the Secretary of Homeland Security with information collected by the FCC on communications infrastructure, service outages, and restoration, as appropriate.
b. Authorizing agents will:
1. Identify themselves as authorizing agents and their respective communities of interest (State, Federal Agency) to DHS. State authorizing agents will provide a central point of contact to receive priority requests from users within their state. Federal authorizing agents will provide a central point of contact to receive priority requests from federal users or federally sponsored entities.
2. Authenticate, evaluate, and make recommendations to DHS to approve priority level assignment requests using the priorities and criteria specified in section 7 of this appendix. As a guide, WPS authorizing agents should request the lowest priority level that is applicable and the minimum number of wireless services required to support an NSEP function. When appropriate, the authorizing agent will recommend approval or deny requests for WPS.
3. Ensure that documentation is complete and accurate before forwarding it to DHS.
4. Serve as a conduit for forwarding WPS information from DHS to the service user and vice versa. Information will include WPS requests and assignments, reconciliation and revalidation notifications, and other information.
5. Participate in reconciliation and revalidation of WPS information at the request of DHS.
6. Comply with any regulations and procedures supplemental to and consistent with this appendix that are issued by DHS.
7. Disclose content of the WPS database only to those having a need-to-know.
c. Service users will:
1. Determine the need for and request WPS assignments in a planned process, not waiting until an emergency has occurred.
2. Request WPS assignments for the lowest applicable priority level and minimum number of wireless services necessary to provide NSEP management and response functions during emergency/disaster situations.
3. Initiate WPS requests through the appropriate authorizing agent. DHS will make final approval or denial of WPS requests and may direct service providers to remove WPS if appropriate. (Note: State and local government or private users will apply for WPS through their designated State government authorizing agent. Federal users will apply for WPS through their employing agency. State and local users in states where there has been no designation will be sponsored by the Federal agency concerned with the emergency function as set forth in Executive Order 12656. If no authorizing agent is determined using these criteria, DHS will serve as the authorizing agent.)
4. Submit all correspondence regarding WPS to the authorizing agent.
5. Invoke WPS only when congestion blocks network access and the user must establish communications to fulfill an NSEP mission. Calls should be as brief as possible to afford service to other NSEP users.
6. Participate in reconciliation and revalidation of WPS information at the request of the authorizing agent or DHS.
7. Request discontinuance of WPS when the NSEP qualifying criteria used to obtain WPS is no longer applicable.
8. Pay service providers as billed for WPS.
9. Comply with regulations and procedures that are issued by the DHS which are supplemental to and consistent with this appendix.
d. Service providers who offer any form of wireless priority access service for NSEP purposes will provide that service in accordance with this appendix. As currently described in the Priority Access and Channel Assignment Standard (IS–53–A), service providers will:
1. Provide WPS levels 1, 2, 3, 4, or 5 only upon receipt of an authorization from DHS and remove WPS for specific users at the direction of DHS.
2. Ensure that WPS system priorities supersede any other NSEP priority which may be provided.
3. Designate a point of contact to coordinate with DHS regarding WPS.
4. Participate in reconciliation and revalidation of WPS information at the request of DHS.
5. As technically and economically feasible, provide roaming service users the same grade of WPS provided to local service users.
6. Disclose content of the NSEP WPS database only to those having a need-to-know or who will not use the information for economic advantage.
7. Comply with regulations and procedures supplemental to and consistent with this appendix that are issued by DHS.
8. Ensure that at all times a reasonable amount of wireless spectrum is made available for public use.
9. Notify DHS and the service user if WPS is to be discontinued as a service.
e. An appropriate body identified by DHS will identify and review any systemic problems associated with the WPS system and recommend actions to correct them or prevent their recurrence.
Service users and authorizing agents may appeal any priority level assignment, denial, revision, or revocation to DHS within 30 days of notification to the service user. DHS will act on the appeal within 90 days of receipt. If a dispute still exists, an appeal may then be made to the FCC within 30 days of notification of DHS's decision. The party filing the appeal must include factual details supporting its claim and must provide a copy of the appeal to DHS and any other party directly involved. Involved parties may file a response to the appeal made to the FCC within 20 days, and the initial filing party may file a reply within 10 days thereafter. The FCC will provide notice of its decision to the parties of record. Until a decision is made, the service will remain status quo.
a. The following WPS priority levels and qualifying criteria apply equally to all users and will be used as a basis for all WPS assignments. There are five levels of NSEP priorities, priority one being the highest. The five priority levels are:
1. Executive Leadership and Policy Makers.
Users who qualify for the Executive Leadership and Policy Makers priority will be assigned priority one. A limited number of technicians who are essential to restoring wireless networks shall also receive this highest priority treatment. Users assigned to priority one receive the highest priority in relation to all other carrier-provided services. Examples of those eligible include:
(i) The President of the United States, the Secretary of Defense, selected military leaders, and the minimum number of senior staff necessary to support these officials;
(ii) State governors, lieutenant governors, cabinet-level officials responsible for public safety and health, and the minimum number of senior staff necessary to support these officials; and
(iii) Mayors, county commissioners, and the minimum number of senior staff to support these officials.
2. Disaster Response/Military Command and Control.
Users who qualify for the Disaster Response/Military Command and Control priority will be assigned priority two. Individuals eligible for this priority include personnel key to managing the initial response to an emergency at the local, state, regional and federal levels. Personnel selected for this priority should be responsible for ensuring the viability or reconstruction of the basic infrastructure in an emergency area. In addition, personnel essential to continuity of government and national security functions (such as the conduct of international affairs and intelligence activities) are also included in this priority. Examples of those eligible include:
(i) Federal emergency operations center coordinators,
(ii) State emergency Services director, National Guard Leadership, State and Federal Damage Assessment Team Leaders;
(iii) Federal, state and local personnel with continuity of government responsibilities;
(iv) Incident Command Center Managers, local emergency managers, other state and local elected public safety officials; and
(v) Federal personnel with intelligence and diplomatic responsibilities.
3. Public Health, Safety and Law Enforcement Command.
Users who qualify for the Public Health, Safety, and Law Enforcement Command priority will be assigned priority three. Eligible for this priority are individuals who direct operations critical to life, property, and maintenance of law and order immediately following an event. Examples of those eligible include:
(i) Federal law enforcement command;
(ii) State police leadership;
(iii) Local fire and law enforcement command;
(iv) Emergency medical service leaders;
(v) Search and rescue team leaders;
(vi) Emergency communications coordinators; and
(vii) Hospital personnel.
4. Public Services/Utilities and Public Welfare.
Users who qualify for the Public Services/Utilities and Public Welfare priority will be assigned priority four. Eligible for this priority are those users whose responsibilities include managing public works and utility infrastructure damage assessment and restoration efforts and transportation to accomplish emergency response activities. Examples of those eligible include:
(i) Army Corps of Engineers leadership;
(ii) Power, water and sewage and communications utilities;
(iii) Transportation leadership; and
(iv) Financial services personnel.
5. Disaster Recovery.
Users who qualify for the Disaster Recovery priority will be assigned priority five. Eligible for this priority are those individuals responsible for managing a variety of recovery operations after the initial response has been accomplished. These functions may include managing medical resources such as supplies, personnel, or patients in medical facilities. Other activities such as coordination to establish and stock shelters, to obtain detailed damage assessments, or to support key disaster field office personnel may be included. Examples of those eligible include:
(i) Medical recovery operations leadership;
(ii) Detailed damage assessment leadership;
(iii) Disaster shelter coordination and management; and
(iv) Critical Disaster Field Office support personnel.
b. These priority levels were selected to meet the needs of the emergency response community and provide priority access for the command and control functions critical to management of and response to national security and emergency situations, particularly during the first 24 to 72 hours following an event. Priority assignments should only be requested for key personnel and those individuals in national security and emergency response leadership positions. WPS is not intended for use by all emergency service personnel.
WPS will be assigned only to the minimum number of wireless services required to support an NSEP function. Executive Office of the President may also establish limitations upon the relative numbers of services that may be assigned WPS or the total number of WPS users in a service area. These limitations will not take precedence over laws or executive orders. Limitations established shall not be exceeded.
Employee Benefits Security Administration, Department of Labor.
Interim final rule with request for comments.
The Department of Labor (Department) is publishing an interim final regulation regarding the information that must be provided on pension benefit statements required by section 105 of the Employee Retirement Income Security Act of 1974, as amended (ERISA). This regulation reflects amendments made to ERISA section 105 by the Setting Every Community Up for Retirement Enhancement Act of 2019. When applicable, the interim final regulation requires plan administrators of ERISA defined contribution plans to express a participant's current account balance, both as a single life annuity and a qualified joint and survivor annuity income stream. These two income stream illustrations, which must be on the same pension benefit statement, will help participants better understand how the amount of money they have saved so far converts into an estimated monthly payment for the rest of their lives, and how this impacts their retirement planning. The regulation provides plan administrators with a set of assumptions to use in preparing the lifetime income illustrations, as well as model language that may be used for benefit statements by plan administrators who wish to obtain relief from liability for the illustrations. The interim final regulation also requests comments from interested parties on the requirements and methodologies of the regulation.
You may submit written comments, identified by RIN 1210–AB20 to either of the following addresses:
•
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Rebecca Davis or Kristen Zarenko, Office of Regulations and Interpretations, Employee Benefits Security Administration, (202) 693–8500. This is not a toll-free number.
Historically, section 105(a) of the Employee Retirement Income Security Act (ERISA) has required plan administrators of defined contribution plans to provide periodic pension benefit statements to participants and certain beneficiaries.
On May 8, 2013, the Department of Labor (Department) published an advance notice of proposed rulemaking (ANPRM) regarding the pension benefit statement requirements under section 105 of ERISA.
On December 20, 2019, ERISA section 105 was amended by section 203 of the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act).
The required lifetime income streams must be “based on assumptions specified in rules prescribed by the Secretary.” In relevant part, section 105(a)(2)(D)(iii) of ERISA states that
Section 105(a)(2)(D)(ii) of ERISA provides for a model disclosure. In relevant part it states that “[n]ot later than 1 year after the date of enactment of the [SECURE Act], the Secretary shall issue a model lifetime income disclosure, written in a manner so as to be understood by the average plan participant.”
Section 105(a)(2)(D)(iv) of ERISA provides a limitation on liability. In relevant part it states that “[n]o plan fiduciary, plan sponsor, or other person shall have any liability under this title solely by reason of the provision of lifetime income stream equivalents which are derived in accordance with the assumptions and rules [prescribed by the Secretary] and which include the explanations contained in the model lifetime income disclosure [prescribed by the Secretary].”
Section 105(a)(2)(D)(v) sets forth the effective date of the SECURE Act amendments. In relevant part it states that the new lifetime income disclosure provisions “shall apply to pension benefit statements furnished more than 12 months after the latest of the issuance by the Secretary of . . .” the interim final rules, the model disclosure, or the assumptions prescribed by the Secretary. This final rule is considered an E.O. 13771 regulatory action. We estimate that it will impose $12 million in annualized costs at a 7% discount rate, discounted to a 2016 equivalent, over a perpetual time horizon.
The Department is publishing an interim final rule (IFR) requiring, consistent with the SECURE Act amendments to ERISA section 105 and the Department's prior work on issues related to lifetime income options in defined contribution plans, that plan administrators of individual account plans include two lifetime income stream illustrations on participants' pension benefit statements, in addition to the participant's account balance. Specifically, paragraph (a) of the IFR provides that these illustrations must be furnished to participants at least annually. And paragraph (b) requires, in relevant part, that pension benefit statements include: The value of a participant's account balance as of the last day of the statement period (paragraph (b)(2)); such account balance expressed as a lifetime income stream payable in equal monthly payments for the life of the participant (single life annuity) (paragraph (b)(3)); and such account balance expressed as a lifetime income stream payable in equal monthly payments for the joint lives of the participant and spouse as a qualified joint and survivor annuity (QJSA) (paragraph (b)(4)). The Department anticipates that this required information on a participant's pension benefit statement might appear as follows:
The specific requirements concerning these lifetime income illustrations, including the assumptions that must be used in preparing the illustrations, how the illustrations will be explained to participants, and the treatment of in-plan annuities, are discussed in the sections below. For purposes of the IFR, the term “participant” is defined, in paragraph (h)(1), to include an individual beneficiary who has his or her own individual account under the plan, such as an alternate payee for example. Throughout this preamble, unless otherwise specified, the Department intends this definition when using the term “participant.”
The IFR requires that plan administrators provide two lifetime income illustrations of the value of a participant's account balance, at least annually, on the participant's pension benefit statement. Plan administrators must prepare these lifetime income illustrations using the annuitization methodology set forth in the IFR, which will express a participant's account balance as a lifetime monthly payment to the participant, similar in form to a pension payment made from a traditional defined benefit plan. Insurance companies use this approach, for example, to determine payment amounts for their annuity products. Plan administrators, or their service providers, generally must consider four relevant factors when converting a participant's account balance into lifetime income streams. The first is the date the payments would start, referred to as the “commencement date,” and the participant's age on such date. The second is the marital status of the participant. The third is the interest rate that will be applied for the applicable mortality period. And the fourth is the expected mortality of the participant and spouse. The IFR generally addresses the required assumptions for each of these factors in paragraph (c) of the IFR. This section of the preamble discusses the Department's reasoning behind the IFR's assumptions for these four factors, and other matters germane to annuitization illustrations.
Paragraph (c)(1) of the IFR establishes an assumed annuity commencement date and age that plan administrators must use to prepare the required illustrations. Specifically, paragraph (c)(1)(i) provides that the assumed annuity commencement date is the last day of the statement period (the commencement date). Thus, for example, if the benefit statement covers the period ending on December 31, 2025, the assumed annuity commencement date would be December 31, 2025. Paragraph (c)(1)(ii) of the IFR further requires that the required illustrations must assume the participant is age 67 on the commencement date, regardless of the participant's actual age. If, however, the participant is older than age 67, the IFR requires the plan administrator to use the participant's actual age as of the last day of the statement period. The Department understands that a younger assumed age at the assumed annuity commencement date would result in lower monthly payments in illustrations, and vice versa.
The Department considered a number of alternatives to age 67. For example, the Department considered using a plan's “normal retirement age,” as defined in ERISA section 3(34). The Department decided against using this date, because it lacks uniformity and consistency by leaving it to each retirement plan to determine the retirement age for its participants. The Department has placed a premium on uniformity and consistency for the illustrations required by this IFR. The Department also considered age 60, which closely aligns with the earliest age that a participant could withdraw money from a qualified retirement plan without being subject to additional income tax on the early distribution.
Although no specific age will be perfect for this purpose, the Department requests comments on whether age 67 is the most appropriate age. Commenters that believe a different age or approach would be better are encouraged to explain their reasoning and provide any germane literature or data supporting their reasoning. The Department also requests comments on whether the final rule should
Paragraph (c)(2) of the IFR requires plan administrators to assume, for purposes of converting a participant's account balance into the QJSA required under paragraph (b)(4) of the IFR, that the participant is married and that the participant's spouse is the same age as the participant. Although a particular participant may not be married at the time a pension benefit statement is furnished, the statute nonetheless requires plan administrators to illustrate monthly payments reflecting both a single life annuity and a QJSA, and to assume a participant's spouse is the same age as the participant. By requiring both illustrations, participants (whether married or not) can better understand how a survivor benefit, if they are married at retirement and choose an annuity, could impact the amount of the participant's (and spouse's) monthly lifetime payment. According to general data from the Census Bureau, most individuals are or will be married at some point in their lives.
For the QJSA illustration, paragraph (c)(2)(ii) of the IFR requires plan administrators to assume that the survivor annuity percentage is equal to 100% of the monthly payment that is payable during the joint lives of the participant and spouse. The SECURE Act did not prescribe the specific survivor annuity percentage to be used for illustrations under section 105 of ERISA or whether the benefit decreases only upon the participant's death (a contingent annuity) or upon the first death of either spouse (a survivor annuity). Instead, the SECURE Act directed the Department to make these decisions.
The Department considered a contingent annuity percentage of 50 percent, which is the lowest percentage permissible under ERISA section 205(d). The Department decided against a 50 percent contingent annuity, in part, because commenters on the ANPRM indicated that this type of annuity may be uncommon in the commercial insurance market, even though a contingent annuity percentage of 50 percent is common for defined benefit plans. The Department has concerns with illustrating for participants an outcome that may be uncommon in the commercial marketplace. Furthermore, public commentary on the ANPRM implied that economies of scale for a two-person household do not necessarily decrease by exactly 50 percent when one person leaves the household.
The Department, however, has chosen to use an assumption with a survivor benefit of 100 percent, rather than a reduced percentage. By incorporating the most generous benefit for a surviving spouse, a participant's benefit statement will illustrate the largest difference between the monthly payment that would result from a single life annuity and that which would result from a QJSA. The Department believes there is a benefit to showing the participant these extremes because all other annuity options fall somewhere in between.
Paragraph (c)(3)(i) of the IFR contains the interest rate assumption that must be used in preparing lifetime income illustrations under the IFR's annuitization methodology. Plan administrators must assume a rate of interest equal to the 10-year constant maturity Treasury (CMT) securities yield rate for the first business day of the last month of the period to which the benefit statement relates. In response to the ANPRM, one commenter with members representing more than 90% of the assets and premiums in the U.S. life insurance and annuity industry stated that its members believe that the 10-year CMT rate best represents the interest rates that are reflected in the actual pricing of commercial annuities. In addition, the 10-year CMT rate is published daily for the public and is widely recognized by industry participants.
The Department solicits comments on whether the 10-year CMT rate assumption is the best interest rate assumption to use in this context, or whether a different interest rate or combination of rates should be used, and why. For example, should the Department consider using the “applicable interest rate” under Internal Revenue Code (Code) section 417(e)(3)(C)?
Paragraph (c)(3)(ii) of the IFR requires that plan administrators convert participants' account balances assuming mortality “as reflected in the applicable mortality table under Code section 417(e)(3)(B) in effect for the last month of the period to which the statement relates.” Code section 417(e)(3)(B) provides a unisex mortality table that is created and published by the Internal Revenue Service (IRS).
Other commenters offered different suggestions for how to factor participants' life expectancy into required lifetime income illustrations. Alternative recommendations included, for example, allowing plan administrators discretion to select reasonable mortality assumptions; if applicable, using the same mortality assumptions used for existing in-plan annuities; or requiring more conservative lifetime income illustrations (
The Department is not persuaded to use a different mortality assumption than was proposed in the ANPRM. Accordingly, paragraph (c)(3)(ii) of the IFR requires use of Code section 417(e)(3)(B) mortality tables. First, these tables are periodically updated by the Treasury Department. Second, these tables are publicly available and widely known and used by retirement plan service providers—typically for defined benefit pension plans, but many service providers support both defined benefit and defined contribution retirement plans. Third, the Department, by requiring gender-neutral assumptions in the IFR, is matching what a plan would do if it offered its participants an annuity.
Finally, to the extent plan administrators and their service providers do not have gender data for all plan participants, the use of unisex mortality tables reduces administrative burden for plan administrators who lack gender data while still using reasonable assumptions. For example, a gender-distinct approach would require that the plan administrator know a participant's gender. A gender-distinct approach also would require the plan administrator to know the marital status of the participant and the gender of the participant's spouse. Commenters on the ANPRM indicated that plans currently do not consistently collect
The Department requests comments on the IFR's use of the Code section 417(e)(3)(B) mortality tables. Commenters that believe a different approach is preferable are encouraged to identify their preferred approach and provide their reasoning in support of their position. Commenters that prefer a gender-distinct approach are encouraged to identify a table or tables that could be used to promote national uniformity and to identify the most efficient way to address the data gaps identified above.
The IFR's required assumptions in paragraph (c) for converting participants' account balances into the required lifetime income streams do not include an “insurance load.” In this context, the term “insurance load” describes the difference between the market price of lifetime income and the price of actuarially fair lifetime income. Put differently, a load factor refers to the extra amount that an insurance company may charge for a product given extra expenses and costs beyond the basic charges. An insurance load may include, for example, an allowance for an insurance company's profits, costs of insuring against systemic mortality risk, costs of holding cash reserves, advertising costs, the cost of anti-selection (if not accounted for in the mortality table), or other operating costs.
Commenters on the ANPRM expressed different views on whether and how insurance loads should be factored into hypothetical lifetime income illustrations. Some commenters supported the concept of incorporating insurance loads to ensure a more realistic illustration. One commenter, in fact, explained that an insurance load already is effectively factored into the illustrations if plan administrators use the 10-year CMT rate, especially when the Code section 417(e)(3)(B) mortality tables also are used.
The IFR does not include an assumed adjustment to the required lifetime monthly payment illustrations for inflation. Consequently, the IFR requires a fixed nominal annuitized income stream. The Department understands that, even with a low inflation rate, the purchasing power of a fixed nominal income stream can easily be cut in half over the remaining lifespan of the typical retiree. Many commenters on the ANPRM made this very point, and suggested that the Department require plan administrators to illustrate an inflation-indexed income stream. On the other hand, many other commenters cautioned the Department against adopting complex methodologies for what should be a simple hypothetical illustration. These commenters asserted that many plan participants do not properly understand the concept of inflation, and that an inflation-adjusted income illustration (with a resulting lower starting income amount) would add unnecessary complexity and potentially confuse participants. Further, the lower starting income amount might discourage participants from saving, according to some commenters. Commenters did agree, however, that if the Department requires fixed nominal annuitized income streams, then the benefit statement should at least contain a clear disclosure to the effect that the purchasing power of such an income stream will decline over time. The Department chose this approach, and discusses below the explanation requirements about this declining purchase power, but solicits comments on whether the right balance has been achieved.
Commenters are invited to address whether, in lieu of a fixed nominal annuitized income stream, the final rule should require an illustration of monthly payments that increase with inflation. This could be accomplished by substituting the 10-year Treasury Inflation-Protected Securities (TIPS) rate for the 10-year CMT rate in paragraph (c)(3)(i) of the IFR, according to one analysis.
Section 203(b) of the SECURE Act gives the Department discretion to prescribe special rules and assumptions for lifetime income streams with “a term certain or other features.” A number of annuity features and products exist, the
To better assist participants in understanding the lifetime income illustrations required by the IFR and the SECURE Act, it is essential that pension benefit statements include brief, understandable explanations of the assumptions underlying the illustrations. Commenters on the 2010 RFI and the ANPRM agreed with the Department's view that information about the lifetime income illustrations should be disclosed to participants for multiple reasons, but primarily in order to clarify to participants that the projected monthly payments are not guarantees.
Paragraph (d) of the IFR contains the various explanations that plan administrators must provide to participants, as well as model language that may be used to satisfy the explanations required in these paragraphs. The explanations themselves in paragraph (d) are required, but the model language is optional. Plan fiduciaries or other persons who wish to benefit from the liability relief provided in paragraph (f) of the IFR, however, must use the model language—either separately as presented in paragraph (d), or as set forth in the Model Benefit Statement Supplement that is attached as Appendix A to the IFR. Paragraph (d) contains eleven paragraphs, each of which is structured so that it includes the explanation requirements in paragraph (i) and the corresponding model language in paragraph (ii). This approach enables plan administrators to separately insert the model language from each of the eleven paragraphs into their existing pension benefit statements, if they choose to do so, without significantly disturbing the existing format and presentation of the statements. Plan administrators who alternatively prefer a consolidated approach to including the IFR's model language may instead insert into or attach the Model Benefit Statement Supplement to their pension benefit statements.
Paragraph (d)(1) addresses the IFR's assumed annuity commencement date and age that plan administrators must use to prepare the required illustrations. Paragraph (d)(1)(i) requires “[a]n explanation of the commencement date and age assumptions in paragraph (c)(1)” of the IFR. This paragraph also provides model language that the plan administrator may use to satisfy the explanation requirements. Specifically, paragraph (d)(1)(ii) provides the following model language: “The estimated monthly payments in this statement assume that payments begin [
Paragraph (d)(2) addresses the IFR's “single life annuity” illustration. Paragraph (d)(2)(i) requires “[a]n explanation of a single life annuity.” This paragraph also provides model language that the plan administrator may use to satisfy the explanation requirements. Specifically, paragraph (d)(2)(ii) provides the following model language: “A single life annuity is an arrangement that pays you a fixed amount of money each month for the rest of your life. Following your death, no further payments would be made to your spouse or heirs.”
Paragraph (d)(3) addresses the IFR's “survivor annuity” illustration. Paragraph (d)(3)(i) requires “[a]n explanation of a qualified joint and 100% survivor annuity, the availability of other survivor percentage annuities, and the impact of choosing a lower survivor percentage.” This paragraph also provides model language that the plan administrator may use to satisfy the explanation requirements. Specifically, paragraph (d)(3)(ii) provides the following model language: “A qualified joint and 100% survivor annuity is an arrangement that pays you and your spouse a fixed monthly payment for the rest of your joint lives. In addition, after your death, this type of annuity would continue to provide the same fixed monthly payment to your surviving spouse for their life. An annuity with a lower survivor percentage may be available and reducing the survivor percentage (below 100%) would increase monthly payments during your lifetime, but would decrease what your surviving spouse would receive after your death.”
Paragraph (d)(4) addresses the IFR's assumed marital status of the participant. Paragraph (d)(4)(i) requires “[a]n explanation of the marital status assumptions in paragraph (c)(2)” of the IFR. This paragraph also provides model language that the plan administrator may use to satisfy the explanation requirements. Specifically, paragraph (d)(4)(ii) provides the following model language: “The estimated monthly payments for a qualified joint and 100% survivor annuity in this statement assume that you are married with a spouse who is the same age as you (even if you do not currently have a spouse, or if you have a spouse that is a different age). If your spouse is younger, monthly payments would be lower than shown since they would be expected to be paid over more years. If your spouse is older, monthly payments would be higher than shown since they would be expected to be paid over fewer years.”
Paragraph (d)(5) addresses the IFR's assumed interest rate. Paragraph (d)(5)(i) requires “[a]n explanation of the interest rate assumptions in paragraph (c)(3)” of the IFR. This paragraph also provides model language that the plan administrator may use to satisfy the explanation requirements. Specifically, paragraph (d)(5)(ii) provides the following model language: “The estimated monthly payments in this statement are based on an interest rate of [
Paragraph (d)(6) addresses the IFR's mortality assumptions. Paragraph (d)(6)(i) requires “[a]n explanation of the mortality assumptions in paragraph (c)(3) of this section” of the IFR. This paragraph also provides model language that the plan administrator may use to satisfy the explanation requirements. Specifically, paragraph (d)(6)(ii) provides the following model language: “The estimated monthly payments in this statement are based on how long you and a spouse who is assumed to be
Paragraph (d)(7) requires plan administrators to caution participants that the lifetime income illustrations on their pension benefit statements are not guaranteed. Paragraph (d)(7)(i) requires “[a]n explanation that the monthly payment amounts required under paragraphs (b)(3) and (4) of [the IFR] are illustrations only.” This paragraph also provides model language that the plan administrator may use to satisfy the explanation requirements. Specifically, paragraph (d)(7)(ii) provides the following model language: “The estimated monthly payments in this statement are for illustrative purposes only; they are not a guarantee.”
Paragraph (d)(8) requires plan administrators to advise participants that a variety of factors could cause the participant's actual monthly income, based on their current account balance, to be different than what is illustrated. Paragraph (d)(8)(i) requires “[a]n explanation that the actual monthly payments that may be purchased with the amount specified in paragraph (b)(2) of [the IFR] will depend on numerous factors and may vary substantially from the illustrations under this section.” This paragraph also provides model language that the plan administrator may use to satisfy the explanation requirements. Specifically, paragraph (d)(8)(ii) provides the following model language: “The estimated monthly payments in this statement are based on prevailing market conditions and other assumptions required under federal regulations. If you decide to purchase an annuity, the actual payments you receive will depend on a number of factors and may vary substantially from the estimated monthly payments in this statement. For example, your actual age at retirement, your actual account balance (reflecting future investment gains and losses, contributions, distributions, and fees), and the market conditions at the time of purchase will affect your actual payment amounts. The estimated monthly payments in this statement are the same whether you are male or female. This is required for annuities payable from an employer's plan. However, the same amount paid for an annuity available outside of an employer's plan may provide a larger monthly payment for males than for females since females are expected to live longer.”
Paragraph (d)(9) requires plan administrators to explain that monthly payment amounts will not be adjusted for inflation. Paragraph (d)(9)(i) requires “[a]n explanation that the monthly payment amounts required under paragraphs (b)(3) and (4) of [the IFR] are fixed amounts that would not increase for inflation.” This paragraph also provides model language that the plan administrator may use to satisfy the explanation requirements. Specifically, paragraph (d)(9)(ii) provides the following model language: “Unlike Social Security payments, the amounts shown in this statement do not increase each year with a cost-of-living adjustment. Therefore, as prices increase over time, the fixed monthly payment will buy fewer goods and services.”
Paragraph (d)(10) requires plan administrators to explain that the monthly income illustrations assume that participants are 100% vested in their accounts. Paragraph (d)(10)(i) requires “[a]n explanation that the monthly payment amounts required under paragraphs (b)(3) and (4) of [the IFR] are based on total benefits accrued, regardless of whether such benefits are nonforfeitable.” This paragraph also provides model language that the plan administrator may use to satisfy the explanation requirements. Specifically, paragraph (d)(10)(ii) provides the following model language: “The estimated monthly payment amounts in this statement assume that your account balance is 100% vested.”
Finally, paragraph (d)(11) requires plan administrators to explain that the income illustrations assume, for participants who have taken plan loans and are not in default on such loans, that the loan is fully repaid by the time the participant retires. Paragraph (d)(11)(i) requires “[a]n explanation that the account balance includes the outstanding balance of any participant loan, unless the participant is in default of repayment on such loan.” This paragraph also provides model language that the plan administrator may use to satisfy the explanation requirements. Specifically, paragraph (d)(11)(ii) provides the following model language: “If you have taken a loan from the plan and are not in default on the loan, the estimated monthly payments in this statement assume that the loan has been fully repaid.” Plan administrators are not required to include the explanation in paragraph (d)(11)(i) for a plan that does not have a participant loan program.
The Department is interested in comments on both the substance of what plan administrators must explain to participants and the model language developed by the Department to implement the explanation requirements. Is the model language in paragraph (d) “written in a manner calculated to be understood by the average plan participant,” as is required for information disclosed to participants? Are there additional or different formatting or presentation techniques relevant to this inquiry that the Department should have considered or included in the IFR? For example, does the Model Benefit Statement Supplement, attached as Appendix A to the IFR, work well for plan administrators as a unified insert into benefit statements? Alternatively, do commenters believe it is preferable to use the separate model language for each explanation requirement, in paragraph (d), which may provide additional flexibility to plan administrators as to how they incorporate the required information into existing pension benefit statements?
Section 105(a)(2)(D)(iii) of ERISA, states that “to the extent that an accrued benefit is or may be invested in a lifetime income stream described in clause (i)(III), the assumptions described under subclause (I) shall, to the extent appropriate, permit plan administrators of individual account plans to use the amounts payable under such lifetime income streams as a lifetime income stream equivalent.” Pursuant to this provision, the IFR contains special rules for plans that offer distribution annuities, deferred annuities, or both. The special rules are described below.
Many defined contribution plans provide for distribution annuities so that participants may elect to receive their retirement benefits in periodic payments over the course of their lives, instead of as a lump sum payment. Paragraph (e)(1) of the IFR provides a special rule for plan administrators of plans that offer such annuities through a contract with a licensed insurance company. The special rule, if applicable, allows plan administrators to base the two mandatory lifetime income illustrations on the terms of the insurance contract, instead of on the otherwise mandatory assumptions set forth in paragraph (c) of the IFR. The special rule, thus, provides for illustrations based on annuities that participants may actually elect, instead of hypothetical illustrations otherwise required by the IFR. The special rule is optional. Plan administrators may elect to provide illustrations under this special rule or use the standard assumptions in paragraph (c) of the IFR.
While paragraph (e)(1) permits plan administrators to substitute actual contract terms for assumptions in paragraph (c) of this IFR, it contains certain limitations. Illustrations under paragraph (e)(1) still must show two lifetime income streams—a single life annuity and qualified joint and survivor annuity. These illustrations also still must assume the first payment is made on the last day of the statement period, that the participant is age 67 (unless older) on such date, and has a spouse the same age. Beyond these limitations, however, the illustrations under this special rule may be based on the actual contract terms. For example, the illustrations would use the interest rate assumptions under the contract, rather than the 10-year CMT rate. In addition, illustrations also would use the unisex mortality experience as provided for under the contract (for example, the insurance company's tables), rather than mortality as reflected in the mortality tables under Code section 417(e)(3)(B). Illustrations also may reflect the survivor's benefit percentage specified in the contract, if less than 100%.
As with lifetime income illustrations based on the Department's required assumptions in paragraph (c) of the IFR, it is critical that illustrations provided pursuant to paragraph (e)(1) also are accompanied by clear and understandable explanations of the assumptions underlying the illustrations. For example, it is essential that participants understand the projected monthly payments are not guaranteed, and that there are a number of variables that impact the projected payments—variables that may change over time. Paragraph (e)(1)(iii) of the IFR contains the explanations that plan administrators must provide to participants, as well as model language that may be used to satisfy the explanation requirements. Consistent with paragraph (d) of the IFR, the explanations in paragraph (e)(1)(iii) are required, but the model language is optional, unless a plan fiduciary or other person wishes to benefit from the liability relief provided in paragraph (f) of the IFR, in which case the model language is mandatory. The model language may be incorporated separately, as presented in paragraph (e)(1)(iii), into existing pension benefit statements, or in the consolidated format set forth in the Model Benefit Statement Supplement that is attached as Appendix B to the IFR. Also consistent with paragraph (d) of the IFR, paragraph (e)(1)(iii) contains eleven paragraphs, each of which is structured so that it includes the explanation requirement in paragraph (
The explanations and model language in paragraph (e)(1)(iii) are modeled on those in paragraph (d) of the IFR, with modifications necessary to accommodate potential variations in assumptions as a result of applicable contract terms. For example, the Department revised the explanations in paragraph (e)(1)(iii) to reflect the fact that a particular contract may offer a qualified joint and survivor annuity with a different survivor benefit percentage, such as 50% or 75%, price annuities based on different interest rate or mortality assumptions than those required in paragraph (c)(3) of the IFR, or provide for inflation or other adjustments to monthly payments over time. The Department is interested in comments on the modified explanations and model language in paragraph (e)(1)(iii), the Model Benefit Statement Supplement attached as Appendix B, as well as input on formatting or presentation techniques as discussed above, with respect to the explanations in paragraph (d) of the IFR.
In addition, or as an alternative, to distribution annuities, some plans offer participants the ability to purchase deferred income annuities (DIAs) during the accumulation phase. DIAs allow participants to purchase, or to make ongoing contributions toward the current purchase of, a future stream of retirement income payments that is provided by an insurance company. Although the purchase occurs during the accumulation phase, the payments themselves are deferred to a selected retirement age (or even later in the case of certain DIAs, such as qualifying longevity annuity contracts (QLACs)). Within any particular plan offering a DIA, some participants may choose to purchase deferred income and others may not. Each purchase reflects the interest rate environment and the participant's age at the time of the purchase. Participants' ownership interests in DIAs often can be converted to a lump sum cash amount, but not always.
Paragraph (e)(2) of the IFR addresses how plan administrators must disclose on benefit statements the portion, if any, of a participant's accrued benefit that has been used to purchase a DIA. For any portion of a participant's accrued benefit that has been used to purchase a DIA, paragraph (e)(2)(i) of the IFR directs the plan administrator to ignore the otherwise applicable assumptions and disclosure requirements in paragraphs (c) and (d) of the IFR, and to instead disclose the amounts payable under the DIA in accordance with requirements in paragraph (e)(2)(ii) of the IFR. For any portion of the participant's accrued benefit that has
Paragraph (e)(2)(ii) of the IFR sets forth the information that must be disclosed with respect to the portion of the participant's accrued benefit that purchased the DIA. First, paragraph (e)(2)(ii)(A) requires disclosure of the date payments are scheduled to commence and the participant's age on such date. The Department understands that participants select the age at which payments will commence when they purchase a DIA. The plan administrator also must disclose, under paragraph (e)(2)(ii)(B), the frequency and amount of deferred income stream payments under the contract as of the commencement date, in current dollars; and, under paragraph (e)(2)(ii)(C), a description of any survivor benefit, period certain commitment, or similar feature. The final disclosure requirement, in paragraph (e)(2)(ii)(D), is a statement as to whether the deferred income stream payments are fixed or will adjust with inflation or in some other way during retirement, and a general explanation of how any such adjustment is determined.
To align with the special treatment provided for DIAs by paragraph (e)(2) of the IFR, paragraph (b)(2) of the IFR provides that the value of a DIA is excluded from the participant's account balance. This is to avoid confusion or double counting the value of the DIA. The Department solicits comments on this special rule.
The SECURE Act requires that the Department issue a model lifetime income disclosure, written in a manner so as to be understood by the average
The IFR satisfies this requirement in two ways. First, as described in detail above, paragraph (d) of the IFR contains eleven brief model language inserts. Plan administrators may use these inserts to satisfy the general content requirements in paragraph (d) of the final rule, as well as to qualify for the liability relief in paragraph (f) of the IFR. Plan administrators may integrate these inserts into their existing pension benefit statements in any manner or format determined to be appropriate by the plan administrators. This flexibility is limited only by the general requirement in paragraph (a) of the IFR that the integrated benefit statement must be written in a manner calculated to be understood by the average plan participant.
Second, in contrast to the eleven brief inserts in paragraph (d), the Department included, as an Appendix to the IFR, a full model disclosure that may be used to satisfy the requirements in paragraph (d) of the IFR. This full model disclosure includes all of the substance of the eleven inserts collectively, but is formatted as a single document to supplement or append to an existing benefit statement, rather than being integrated into the statement. Like the eleven brief inserts, this full model disclosure, entitled Model Benefit Statement Supplement, can be used by plan administrators to satisfy paragraph (d) of the IFR and to qualify for the liability limitation in paragraph (f).
The IFR takes a similar approach for plans that use the special rule in paragraph (e)(1) of the IFR. Paragraphs (e)(1)(iii)(A) through (K) set forth both the required contents and brief model language inserts that may be used to satisfy these requirements. Alternatively, Appendix B to the IFR contains a full model disclosure document that also may be used to satisfy the content requirements.
The IFR does not, however, provide plan administrators with model disclosure language to use for benefit statements with respect to DIAs as provided for under paragraph (e)(2) of the IFR.
Paragraph (f) of the IFR provides that no plan fiduciary, plan sponsor, or other person shall have any liability under Title I of the ERISA solely by reason of providing the lifetime income stream equivalents described in paragraphs (b)(3) and (4) of the rule. To qualify for this limitation on liability, paragraph (f)(1) requires that such equivalents be derived in accordance with the assumptions in paragraph (c) or (e)(1)(i) of the IFR. In addition, paragraph (f)(2) requires that benefit statements include language substantially similar in all material respects to either the model language in paragraphs (d)(1)(ii) through (d)(11)(ii) of the IFR, or the Model Benefit Statement Supplement in Appendix A of the IFR. Alternatively, if a plan administrator elects to use certain contract assumptions instead of the assumptions in paragraph (c) of the IFR, benefit statements must include language substantially similar in all material respects to either the model language in paragraphs (e)(1)(iii)(A)(
Liability relief under the IFR is available so long as plan administrators use the Department's model language or language that is “substantially similar in all material respects” to the Department's model language. Word-for-word adoption of the model language is not required, and plan administrators can make minor, non-substantive changes to the IFR's model language or format in their plans' benefit statements without losing relief from liability. Any such changes may not, individually or in combination, affect the substance, clarity, or meaning of the model language; otherwise relief from liability will not be available under paragraph (f) of the IFR. For example, plan administrators may not deviate from any of the IFR's required assumptions (
Paragraph (f) addresses longstanding concerns of employers, plan sponsors, plan administrators and other plan fiduciaries, and plan service providers, that lifetime income illustrations could expose them to unwanted litigation from participants, for example because of unmet expectations. If participants, during their working years, mistakenly believe that the lifetime income illustrations on their pension benefit statements are promises or guarantees of a specific income stream, they might sue if their actual account balances at retirement do not generate an income stream equal to or greater than the stream depicted in past benefit statement illustrations. Another concern of these parties is that illustrations could be viewed as a type of investment advice, for example, suggesting that participants choose investment options that contain or are offered through an annuity contract. Paragraph (f) of the IFR resolves these concerns by providing that no plan fiduciary, plan sponsor, or other person shall have any liability under Title I of the ERISA solely by reason of providing the lifetime income stream equivalents described in paragraphs (b)(3) and (4) of the rule.
Paragraph (f), however, is not available to plan administrators or other parties who must disclose information about deferred income streams under paragraph (e)(2) of the IFR. As a technical matter, the disclosure of this information does not qualify for relief, because the information is neither derived in accordance with the Department's prescribed assumptions in paragraph (c) of the IFR, nor disclosed using model language provided by the Department—each of which is a condition in section 203 of the SECURE Act for liability relief. As discussed above, in section B(4) of the preamble,
Paragraph (f) also does not apply to any additional illustrations as permitted in paragraph (g) of the IFR. Paragraph (g) clarifies that plan administrators are not prohibited from including lifetime income stream illustrations on or as part of benefit statements in addition to the illustrations mandated by the rule. Commenters on the ANPRM and the 2010 RFI made it very clear that many plans already provide illustrations and have done so for decades, including through the use of continuous access websites and other similar technologies. Many of these illustrations are interactive, stochastic, and tailored to the individual plan and plan participant. According to the commenters, these highly adaptive, highly personal, sophisticated illustrations are, in many respects, superior for financial and retirement planning purposes to a one-size-fits-all, deterministic model like that in the IFR. The Department does not want to undermine these best practices or inhibit innovation in this area. The Department encourages the continuation of these practices. At the same time, the Department is unable to extend the relief in paragraph (f) of the IFR to all of these practices. Comments, however, are solicited on whether the Department, either separately or in conjunction with the adoption of a final rule, should issue guidance clarifying the circumstances under which the provision of additional illustrations described in this paragraph may constitute the rendering of “investment advice” or may, instead, constitute the rendering of “investment education” under ERISA. Such guidance could assist plan sponsors, service providers, participants, and beneficiaries in ensuring that activities designed to educate and assist participants and beneficiaries in making informed decisions do not cause persons engaged in such activities to become fiduciaries with respect to a plan by virtue of providing “investment advice” to plan participants and beneficiaries for a fee or other compensation.
The Department is publishing this IFR in response to Congress's explicit direction in the SECURE Act, to publish an interim final rule within one year, as discussed above in the
Paragraph (i) provides the effective date and applicable date for this IFR. ERISA section 105(a)(2)(D)(v), in relevant part, states that the requirements of section 105(a)(2)(B)(iii) for individual account plans to provide the lifetime income disclosure “shall apply to pension benefit statements furnished more than 12 months after the latest of the issuance by the Secretary of” the interim final rules, the model disclosure, or the assumptions
The SECURE Act aims to increase access to workplace retirement plans and generally to expand opportunities to save for retirement. As discussed above in the
The Department has examined the effects of the IFR as required by Executive Order 12866,
Under Executive Order (E.O.) 12866, the Office of Management and Budget (OMB)'s Office of Information and Regulatory Affairs (OIRA) determines whether a regulatory action is significant and, therefore, subject to the requirements of the E.O. and OMB review. Section 3(f) of E.O. 12866 defines a “significant regulatory action” as an action that is likely to result in a rule that (1) has an annual effect on the economy of $100 million or more, or adversely affects in a material way a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local or tribal governments or communities (also referred to as economically significant); (2) creates serious inconsistency or otherwise interferes with an action taken or planned by another agency; (3) materially alters the budgetary impacts of entitlement grants, user fees, or loan programs, or the rights and obligations of recipients thereof; or (4) raises novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the E.O. The Office of Information and Regulatory Affairs has determined that this IFR is economically significant under section 3(f)(1) of E.O. 12866. Pursuant to the Congressional Review Act (5 U.S.C. 801
E.O. 13563 directs agencies to propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs; the regulation is tailored to impose the least burden on society, consistent with achieving the regulatory objectives; and in choosing among alternative regulatory approaches, the agency has selected those approaches that maximize net benefits. E.O. 13563 recognizes that some benefits are difficult to quantify, and provides that, when appropriate and permitted by law, agencies may consider and discuss qualitatively values that are difficult or impossible to quantify, including equity, human dignity, fairness, and distributive impacts.
As discussed above, section 203 of the SECURE Act amends section 105(a) of ERISA to require, in relevant part, that pension plan administrators provide, at least annually, benefit statements illustrating participant's accrued benefit as two lifetime income stream equivalents. The IFR implements this section of the SECURE Act by establishing content, assumptions, and model language for the illustrations.
Workers today are required to take a more active role in managing their retirement assets, both while employed and during their retirement years. This increased responsibility is primarily a result of the general shift from defined benefit pension plans to defined contribution plans.
Employers and unions sponsoring private defined benefit plans make contributions to fund promised benefits, and manage plan assets as ERISA fiduciaries. In addition, defined benefit plans are generally required to make annuities available at retirement, which provides protection against longevity risk (outliving one's retirement assets). In contrast to defined benefit plan participants, defined contribution plan participants bear significantly more investment risk. Employers make no promises with respect to the adequacy of a participant's final account balance nor the income stream that the balance will generate. Generally, defined contribution plans are not required to make annuities available to participants at retirement, and typically participants must determine the amounts and timing of withdrawals of their account balances from such plans. Consequently, defined contribution plan participants must ensure that their savings are adequate to protect them against longevity risk.
Evidence suggests that defined contribution plan participants have found it difficult to plan for retirement and manage their retirement assets.
The replacement rate, the ratio of post-retirement income to pre-retirement income, is one indicator of retirement income adequacy. A replacement rate of 75 percent is often cited as an illustrative target. Recent studies indicate that a significant portion of the participant population is not meeting this target, and younger participants (those more likely to participate in a defined contribution plan) are having more trouble meeting it than their older counterparts (those more likely to participate in a defined benefit plan).
The Center for Retirement Research at Boston College estimates that between 42 and 60 percent of households are at risk of having inadequate retirement savings.
Planning for retirement requires investors to determine how much to contribute to their plans, which generally entails a basic command of financial and investment concepts, such as portfolio allocation and risk tolerance. These concepts are complex and many participants do not have the financial expertise necessary to make effective investment decisions and successfully plan for retirement. A recent survey of Americans between the ages of 60 and 75 found that only 26 percent of those surveyed were able to pass a retirement literacy test, and only 41 percent correctly answered questions specifically related to maintaining one's lifestyle in retirement.
Most plan participants think about their retirement income goals in terms of the monthly income they would need to maintain their current standard of living in retirement rather than as a lump sum.
The SECURE Act directs the Department to take regulatory action to provide defined contribution plan participants and beneficiaries with a tool that will help them better understand their retirement savings as a vehicle for income replacement during retirement: Lifetime income illustrations. Many commenters on the ANPRM suggested that such a tool could motivate workers who are saving too little to increase their contributions.
The IFR will affect all ERISA-covered defined contribution plans, although the impact on such plans already providing lifetime income illustrations in pension statements will be smaller than the impact on those that do not. Although plans providing the disclosure currently have systems and disclosures in place to produce these illustrations, they nonetheless will need to implement changes to ensure that the language and assumptions used for the illustrations comply with the requirements of the IFR. The Department solicits comments about the impact that plans currently providing lifetime income illustrations may experience in conforming to the conditions set forth in this IFR.
Based on Form 5500 data, there were 662,829 defined contribution plans and 76.8 million participants with account balances in defined contribution plans in 2017, all of whom will be affected by the IFR. Using these Form 5500 data and a survey conducted by the Plan Sponsor Council of America (PSCA),
The Department believes that the PSCA survey results concerning the percentage of plans providing projected monthly income are an acceptable proxy for the percentage of plans already providing lifetime income illustrations in pension benefit statements. The PSCA survey asked plan sponsors to select approaches used to achieve defined contribution plan education,
The IFR also will affect plans offering in-plan annuity products. According to two surveys of plan sponsors, nine to 12 percent of plans currently offer annuity options.
As discussed earlier in this preamble, there are different types of in-plan annuities. Some plans offer participants the ability to purchase DIAs. It is difficult to know how many plans provide a DIA purchase option. However, DIAs represent only a small part ($1.7 billion) of the total $179 billion annuity market in 2017.
The Department believes that the benefits of this IFR justify its costs, both of which are discussed below. The Department invites comments on these benefit and cost estimates, and is especially interested in obtaining additional data on the impacts that result from providing lifetime income illustrations in pension benefit statements.
The Department anticipates that the IFR will provide two primary benefits to participants: (1) Strengthening retirement security by encouraging those currently contributing too little to increase their plan contributions, and (2) saving some participants' time in understanding how prepared (or unprepared) they are for retirement by making lifetime income information readily available. Under certain circumstances, however, the Department expects the IFR will lead a minority of participants who might have over saved to reduce their contributions.
Research supports the hypothesis that providing participants with customized information on their lifetime income stream can influence contribution behavior.
The Federal Thrift Savings Plan began providing a lifetime income illustration as part of participants' benefit statements in 2010. In a 2013 Thrift Savings Plan Participant Satisfaction Survey, 29 percent of active participants reported taking action based on the monthly income estimate: 12 percent increased their contributions, 10 percent revised their investment allocations, and 7 percent delayed their planned retirement dates.
A recent study in Chile suggested that defined contribution plan participants were 1.4 percentage points more likely to increase voluntary contributions after projections of retirement income were included in participants' annual statements.
The Department anticipates that if all defined contribution plan benefit statements were to contain lifetime income illustrations, many participants and beneficiaries would be better positioned to assess their retirement readiness and to prepare for retirement.
Adding lifetime income illustrations to defined contribution plan retirement account statements is supported by virtually all plan sponsors (96 percent).
This IFR greatly standardizes lifetime income illustrations across defined contribution plans, which will save time by minimizing confusion for participants. A standardized illustration would make it easy for workers to add together their estimated Social Security and ERISA benefits, minimizing some of the complexity of retirement planning.
The Department estimates one-time and ongoing costs using data from the aforementioned PSCA survey. Regarding one-time costs, the Department assumes that plans not currently providing lifetime income illustrations will incur development costs of setting up a system for producing lifetime income illustrations. Plans that currently provide such illustrations will not incur development costs but likely will incur some transitional costs to comply with the Department's assumptions and model language and to integrate the new illustrations into existing paper and online benefit statement formats. Using available data, it is difficult to predict how small recordkeepers and plan sponsors will respond to the rule in terms of development costs. Developing an information technology system that generates lifetime income illustrations requires a large up-front investment. Therefore, it is likely that many recordkeepers will choose instead to purchase products or license systems from recordkeepers that have already developed them. According to the Form 5500 data, in the 2017 plan year, there were 1,725 recordkeepers servicing defined contribution plans. The 445 largest recordkeepers (hereafter large recordkeepers) serviced plans holding approximately 99 percent of total plan assets, while the remaining 1,280 (small recordkeepers) serviced plans holding a mere 1 percent.
The development cost estimates assume no small recordkeepers would develop their own systems because it will likely be more cost effective for small recordkeepers to purchase software or license a system than to develop their own.
To gather information needed to convert participants' account balances to annuities based on the DOL-specified assumptions at the statement date, plan sponsors are likely to rely on their recordkeeper to provide the information. Some recordkeepers may have an actuary on staff who can calculate the appropriate information as of the benefit statement date. Other recordkeepers may need to obtain the appropriate information from an external actuary or other source.
The Department uses recordkeepers as a unit of analysis in estimating development costs. In commenting on the ANPRM, one commenter suggested that it would cost approximately $715,000 to develop a system to produce lifetime income illustrations and web-based tools.
According to the 2017 Private Pension Plan Bulletin, there are approximately 76.8 million participants with defined contribution plan account balances. For plans currently providing lifetime income illustrations, the Department assumes the IFR results in half of the increased call costs per participant with account balances in the first year (
Actuaries or someone with similar abilities will be required to gather the information needed to convert individual account balances to annuities based on the applicable assumptions as of the statement date. Although some recordkeepers may have actuaries in-house, the Department assumes that
The Department estimates costs associated with gathering information to convert account balances to annuities based on the Department-specified assumptions will decrease in the second year, and remain flat over the third through tenth years. This is because the Department assumes actuaries will generally maintain conversion spreadsheets, and need only to update the interest rate monthly and mortality rate annually. Therefore, the Department estimates the second year costs will be $0.8 million, and will remain at that level in subsequent years.
The Department invites comments about how much it would cost for a recordkeeper to operate and maintain a system that produces lifetime income illustrations and whether the unit-cost assumptions made to estimate ongoing costs as well as development costs are reasonable.
Although the literature is limited, the Department has carefully assessed the benefits and quantified the costs associated with providing lifetime income illustrations. However, these estimates contain uncertainty based on several factors that are discussed below.
First, the lifetime income illustrations under the IFR differ from the illustrations used in the study cited. The illustrations in that study were presented in a separate, colorful brochure containing supplemental information on how participants can make changes to their contributions. Moreover, those lifetime income illustrations were framed as providing additional savings at retirement and increased annual income during retirement. This influential value of presentation or framing effects has been well documented in retirement savings literature.
Second, increases in contributions may not be beneficial for some participants.
Alternatively, small recordkeepers may purchase software or licenses with added features for lifetime income illustrations, if they find it less costly than developing their own systems. The Department invites comments about costs of purchasing licenses or software that illustrate lifetime income streams.
The Department considered alternative assumptions for plan administrators to rely on when converting a participant's account balance into a lifetime income stream. This section provides the Department's economic reasoning in weighing these alternative assumptions and augments the discussion on alternatives considered in section B(2)(a) of this preamble. The Department invites comments regarding these requirement assumptions.
Paragraph (c)(1) of the IFR establishes an assumed annuity commencement date and age that plan administrators must use to prepare the required illustrations. The Department considered a number of alternatives to age 67. For example, the Department considered a plan's “normal retirement age,” as defined in ERISA section 3(34). One of reasons the Department decided against using the plan's “normal retirement age” is because some commenters on the ANPRM suggested that many recordkeepers do not maintain this information. If the Department requires plan administrators to use the plan's “normal retirement age,” recordkeepers would need to collect this information from each plan and customize their systems accordingly, which probably would result in a higher burden on recordkeepers and plans. This potential burden increase likely would outweigh any potential benefits, because participants are more likely to choose when to retire based on their individual circumstances than based on a plan's “normal retirement age.” Selecting a different, but uniform, commencement age (
The Department also considered requiring lifetime income illustrations with multiple commencement ages (
The IFR requires plan administrators to assume, for purposes of calculating the lifetime income stream from a qualified joint and 100% survivor annuity, that the participant has a spouse who is the same age as the participant (regardless of whether the
The IFR contains the interest rate assumption that plan administrators must use to prepare the two illustrations required by the IFR. Specifically, plan administrators must assume a rate of interest equal to the 10-year constant maturity Treasury (CMT) securities yield rate for the first business day of the last month of the period to which the benefit statement relates. The Department considered using the Code section 417(e)(3)(C) rates. However, the Department has reservations about using the Code section 417(e)(3)(C) rates partially because, according to commenters, those rates may not be suitable for preparing lifetime income illustrations.
The Department recognizes that there is no single interest rate assumption that would be perfect for all participants. Those who will retire tomorrow and plan to purchase lifetime income will encounter pricing that reflects current interest rates. It is clear that for these participants, using an interest rate assumption based on current rates, such as the 10-year CMT, is appropriate. However, participants who are a substantial number of years away from retirement will encounter annuity pricing that reflects future interest rates that currently are unknown. One way to project these future interest rates may be to use a long-term average of historical interest rates, with the belief that interest rates tend to regress to the mean. A third group of participants, those who will retire in a short number of years, are unique still from the other two groups. An example of an appropriate projection of interest rates at the time of retirement for these participants may be some combination of current and historical interest rates. Given that no single interest rate assumption would be perfect for all participants, the Department rejected the latter two approaches for the sake of regulatory uniformity and simplicity, and to reduce burdens on plan administrators.
The IFR requires that plan administrators convert participants' account balances assuming gender neutral mortality as reflected in the applicable mortality table under Code section 417(e)(3)(B), which is a unisex table. The Department also considered gender-specific mortality, which could produce more accurate (and, therefore, more useful) illustrations. Since the female mortality tables show a longer life expectancy and the male mortality tables show a shorter life expectancy, in each case compared to a unisex table, the dollar amount of a male participant's monthly payment would be higher, and a female participant's monthly payment would be lower, in an illustration using gender-based tables. However, the Department decided against gender-based tables, because plan administrators, recordkeepers, and third-party administrators do not always have records of participants' gender, according to commenters. Thus, requiring gender-specific assumption in the IFR would likely increase burden as plans would need to consistently collect such information. In addition, the use of gender-specific mortality for illustrations would not align with pricing for plans that contain in-plan annuities.
The IFR does not include an assumed adjustment to the required lifetime monthly payment illustrations for post-retirement inflation. Consequently, the IFR requires a fixed-nominal, annuitized income stream. The Department understands that, even with a low inflation rate, the purchasing power of a fixed-nominal income stream can be reduced significantly over the lifespan of the typical retiree. For the reasons explained earlier in section B(2)(d) of this preamble, the Department considered, but declined to adopt, alternatives involving an inflation adjustment, but the IFR does require an explanation that monthly payments in the illustrations are fixed and do not increase for inflation. One concern of commenters was a potential negative impact on plan participants caused by a relatively lower monthly payment amount that occurs if reduced to reflect the cost of an inflation-adjusted annuity. Another potential concern is the complexity of the methodology and explanatory language that would be required for inflation-indexed annuity income streams, which increase with age, and may raise additional questions from participants. Commenters, nevertheless, are invited to address whether, in lieu of a fixed nominal annuitized income stream, the final rule should require an illustration of monthly payments that increase with inflation.
The Department adopts an immediate annuity approach in the IFR. Under an immediate annuity approach, a participant's account balance is converted to single life and QJSA payments as if the account balance were used to buy these two forms of lifetime income with payments commencing on the last day of the statement period, and assumes that the participant is age 67 on that date (regardless of a participant's actual age, unless older than age 67). Thus, for a participant aged 40, for example, the illustrations under the IFR effectively assume a static account balance for the period between ages 40 and 67. This type of illustration serves as an immediate benchmark for participants, because it shows the size of monthly payments to expect if there were no further savings, gains or losses between the statement date and retirement. Also, a participant could create his or her own projection of a different account balance, by dividing the projected estimated account balance by the current account balance, and then multiply the result by the monthly payment amount on the statement. The result would be the estimated monthly amount of an annuity that could be purchased with the projected estimated account balance (assuming annuity market conditions at retirement are the same as the current market).
The Department could have instead chosen a deferred annuity approach for the illustrations. A deferred annuity approach generally would result in larger monthly payments, because such annuities would contain a growth feature for the deferral period,
As part of its continuing effort to reduce paperwork and respondent burden, the Department conducts a preclearance consultation program to allow the general public and Federal agencies to comment on proposed and continuing collections of information in accordance with the Paperwork Reduction Act of 1995 (PRA).
Currently, the Department is soliciting comments concerning the information collection request (ICR) included in the Pension Benefit Statement information collection. To obtain a copy of the ICR, contact the PRA addressee shown below or go to
The Department has submitted a copy of the rule to the Office of Management and Budget (OMB) in accordance with 44 U.S.C. 3507(d) for review of its information collections. The Department and OMB are particularly interested in comments that:
• Evaluate whether the collection of information is necessary for the functions of the agency, including whether the information will have practical utility;
• Evaluate the accuracy of the agency's estimate of the burden of the collection of information, including the validity of the methodology and assumptions used;
• Enhance the quality, utility, and clarity of the information to be collected; and
• Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology (
Comments should be sent to the Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10235, New Executive Office Building, Washington, DC 20503 and marked “Attention: Desk Officer for the Employee Benefits Security Administration.” Comments can also be submitted by Fax: 202–395–5806 (this is not a toll-free number), or by email:
The SECURE Act amends section 105(a) of ERISA to require the provision of two sets of lifetime income stream illustrations as part of at least one pension benefit statement furnished to participants during a 12-month period. These two lifetime income stream illustrations include a single life annuity illustration and a qualified joint and survivor lifetime income steam illustration. The IFR provides direction on assumptions plan administrators use when converting total accrued benefits into lifetime income stream illustrations. The IFR also provides model language to use when producing these illustrations.
ERISA section 105 requires pension benefit statements to be sent at least once each quarter, in the case of a defined contribution plan that permits participants to direct their investments; at least once each year, in the case of a defined contribution plan that does not permit participants to direct their investments; and at least once every three years or upon request in the case of defined benefit plans. ERISA section 105(a)(3)(A) permits plan administrators of defined benefit plans to fulfill the requirements of Section 105(a)(1)(B) by providing defined benefit plan participants with a notice of statement availability on an annual basis. The Department currently does not have an OMB approved information collection for the pension benefit statement requirement. Therefore, this PRA analysis establishes a baseline hour and cost burden for participant benefit statements that are issued by all plans covered by ERISA section 105. It then adds the hour and cost burden associated with the IFR, which adds content requirements to the pension benefit statements provided to defined contribution plan participants by requiring a lifetime income illustration to be included with the statement at least annually.
According to 2017 Form 5500 data, defined contribution plans that allow participants to direct investments cover 94.6 million participants. These plans must provide
In total, the Department estimates that producing pension benefit statements and providing lifetime income illustrations for participants with account balances in defined contribution plans will cost altogether approximately $632 million in the first year, $435.5 million in the second year, and $431.4 million in the third year.
A summary of paperwork burden estimates follows:
The Regulatory Flexibility Act (5 U.S.C. 601
This IFR is exempt from the RFA, because the Department was not required to publish a notice of proposed rulemaking. Therefore, the RFA does not apply and the Department is not required to either certify that the IFR would not have a significant economic impact on a substantial number of small entities or conduct a regulatory flexibility analysis. Nevertheless, the Department carefully considered the likely impact of the IFR rule on small entities in connection with its assessment of the IFR's cost and benefits under Executive Order 12866. Consistent with the policy of the RFA, the Department encourages the public to submit comments regarding the IFR's impact on small entities.
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) requires each federal agency to prepare a written statement assessing the effects of any federal mandate in a proposed agency rule, or a finalization of such a proposal, that may result in an expenditure of $100 million or more (adjusted annually for inflation with the base year 1995) in any one year by State, local, and tribal governments, in the aggregate, or by the private sector.
Executive Order 13132 outlines fundamental principles of federalism, and requires the adherence to specific criteria by federal agencies in the process of their formulation and implementation of policies that have “substantial direct effects” on the States, the relationship between the national government and States, or on the distribution of power and responsibilities among the various levels of government.
In the Department's view, these regulations will not have federalism implications because they will not have
The Department welcomes input from affected States regarding this assessment.
Annuity, Defined contribution plans, Disclosure, Employee benefit plans, Employee Retirement Income Security Act, Fiduciaries, Lifetime income, Pensions, Pension benefit statements, Plan administrators, Recordkeepers, Third party administrators.
For the reasons set forth in the preamble, the Department of Labor is amending 29 CFR part 2520 as follows:
29 U.S.C. 1021–1025, 1027, 1029–31, 1059, 1134 and 1135; and Secretary of Labor's Order 1–2011, 77 FR 1088 (Jan. 9, 2012). Sec. 2520.101–2 also issued under 29 U.S.C. 1132, 1181–1183, 1181 note, 1185, 1185a–b, 1191, and 1191a–c. Secs. 2520.102–3, 2520.104b–1 and 2520.104b–3 also issued under 29 U.S.C. 1003, 1181–1183, 1181 note, 1185, 1185a–b, 1191, and 1191a–c. Secs. 2520.104b–1 and 2520.107 also issued under 26 U.S.C. 401 note, 111 Stat. 788. Sec. 2520.101–5 also issued under sec. 501 of Pub. L. 109–280, 120 Stat. 780, and sec. 105(a), Pub. L. 110–458, 122 Stat. 5092.
(a)
(b)
(1) The beginning and ending dates of the statement period;
(2) The value of the account balance as of the last day of the statement period, excluding the value of any deferred income annuity described in paragraph (e)(2) of this section;
(3) The amount specified in paragraph (b)(2) of this section expressed as an equivalent lifetime income stream payable in equal monthly payments for the life of the participant (single life annuity), determined in accordance with paragraph (c) or (e)(1) of this section; and
(4) The amount specified in paragraph (b)(2) of this section expressed as an equivalent lifetime income stream payable in equal monthly payments for the joint lives of the participant and spouse (qualified joint and survivor annuity), determined in accordance with paragraph (c) or (e)(1) of this section.
(c)
(1)
(ii) The participant is age 67 on the commencement date, unless the participant is older than age 67, in which case the participant's actual age must be used for the conversions under this section.
(2)
(i) The participant has a spouse that is the same age as the participant; and
(ii) The survivor annuity percentage is equal to 100% of the monthly payment that is payable during the joint lives of the participant and spouse.
(3)
(ii) Mortality as reflected in the applicable mortality table under section 417(e)(3)(B) of the Internal Revenue Code in effect for the calendar year which contains the last day of the statement period.
(4)
(d)
(1)(i) An explanation of the commencement date and age assumptions in paragraph (c)(1) of this section.
(ii) For purposes of paragraph (d)(1)(i) of this section, the plan administrator may use the following model language: “The estimated monthly payments in this statement assume that payments begin [
(2)(i) An explanation of a single life annuity.
(ii) For purposes of paragraph (d)(2)(i) of this section, the plan administrator may use the following model language: “A single life annuity is an arrangement that pays you a fixed amount of money each month for the rest of your life. Following your death, no further payments would be made to your spouse or heirs.”
(3)(i) An explanation of a qualified joint and 100% survivor annuity, the availability of other survivor percentage annuities, and the impact of choosing a lower survivor percentage.
(ii) For purposes of paragraph (d)(3)(i) of this section, the plan administrator may use the following model language: “A qualified joint and 100% survivor annuity is an arrangement that pays you and your spouse a fixed monthly payment for the rest of your joint lives. In addition, after your death, this type of annuity would continue to provide the same fixed monthly payment to your surviving spouse for their life. An annuity with a lower survivor percentage may be available, and reducing the survivor percentage (below 100%) would increase monthly payments during your lifetime, but would decrease what your surviving spouse would receive after your death.”
(4)(i) An explanation of the marital status assumptions in paragraph (c)(2) of this section.
(ii) For purposes of paragraph (d)(4)(i) of this section, the plan administrator may use the following model language: “The estimated monthly payments for a qualified joint and 100% survivor annuity in this statement assume that you are married with a spouse who is the same age as you (even if you do not currently have a spouse, or if you have a spouse who is a different age). If your spouse is younger, monthly payments would be lower than shown since they would be expected to be paid over more years. If your spouse is older, monthly payments would be higher than shown since they would be expected to be paid over fewer years.”
(5)(i) An explanation of the interest rate assumptions in paragraph (c)(3) of this section.
(ii) For purposes of paragraph (d)(5)(i) of this section, the plan administrator may use the following model language: “The estimated monthly payments in this statement are based on an interest rate of [
(6)(i) An explanation of the mortality assumptions in paragraph (c)(3) of this section.
(ii) For purposes of paragraph (d)(6)(i) of this section, the plan administrator may use the following model language: “The estimated monthly payments in this statement are based on how long you and a spouse who is assumed to be your age are expected to live. For this purpose, federal regulations require that your life expectancy be estimated using gender neutral mortality assumptions established by the Internal Revenue Service.”
(7)(i) An explanation that the monthly payment amounts required under paragraphs (b)(3) and (4) of this section are illustrations only.
(ii) For purposes of paragraph (d)(7)(i) of this section, the plan administrator may use the following model language: “The estimated monthly payments in this statement are for illustrative purposes only; they are not a guarantee.”
(8)(i) An explanation that the actual monthly payments that may be purchased with the amount specified in paragraph (b)(2) of this section will depend on numerous factors and may vary substantially from the illustrations under this section.
(ii) For purposes of paragraph (d)(8)(i) of this section, the plan administrator may use the following model language: “The estimated monthly payments in this statement are based on prevailing market conditions and other assumptions required under federal regulations. If you decide to purchase an annuity, the actual payments you receive will depend on a number of factors and may vary substantially from the estimated monthly payments in this statement. For example, your actual age at retirement, your actual account balance (reflecting future investment gains and losses, contributions, distributions, and fees), and the market conditions at the time of purchase will affect your actual payment amounts. The estimated monthly payments in this statement are the same whether you are male or female. This is required for annuities payable from an employer's plan. However, the same amount paid for an annuity available outside of an employer's plan may provide a larger monthly payment for males than for females since females are expected to live longer.”
(9)(i) An explanation that the monthly payment amounts required under paragraphs (b)(3) and (4) of this section are fixed amounts that would not increase for inflation.
(ii) For purposes of paragraph (d)(9)(i) of this section, the plan administrator may use the following model language: “Unlike Social Security payments, the estimated monthly payments in this statement do not increase each year with a cost-of-living adjustment. Therefore, as prices increase over time, the fixed monthly payments will buy fewer goods and services.”
(10)(i) An explanation that the monthly payment amounts required under paragraphs (b)(3) and (4) of this section are based on total benefits accrued, regardless of whether such benefits are nonforfeitable.
(ii) For purposes of paragraph (d)(10)(i) of this section, the plan administrator may use the following model language: “The estimated monthly payment amounts in this statement assume that your account balance is 100% vested.”
(11)(i) An explanation that the account balance includes the outstanding balance of any participant loan, unless the participant is in default of repayment on such loan.
(ii) For purposes of paragraph (d)(11)(i) of this section, the plan administrator may use the following model language: “If you have taken a loan from the plan and are not in default on the loan, the estimated monthly payments in this statement assume that the loan has been fully repaid.”
(e)
(ii) Plan administrators that elect to use the contract terms, as permitted in paragraph (e)(1)(i) of this section, must, in lieu of the explanations required in paragraph (d) of this section, provide the explanations set forth in paragraph (e)(1)(iii) of this section. To obtain the limitation on liability provided in paragraph (f) of this section, such plan administrators also must use either the model language for each such explanation in paragraph (e)(1)(iii) of this section or the Model Benefit Statement Supplement set forth in Appendix B to this subpart.
(iii) The benefit statement must include the following:
(A)(
(
(B)(
(
(C)(
(
(D)(
(
(E)(
(
(F)(
(
(G)(
(
(H)(
(
(I)(
(
(J)(
(
(K)(
(
(2)
(ii) With respect to the portion of a participant's accrued benefit described in paragraph (e)(2)(i) of this section, the following information must be disclosed about such lifetime income payments:
(A) The date payments are scheduled to commence and the age of the participant on such date;
(B) The frequency and the amount of such payments payable as of the commencement date in paragraph (e)(2)(ii)(A) of this section, as determined under the terms of the contract, expressed in current dollars;
(C) A description of any survivor benefit, period certain commitment, or similar feature; and
(D) A statement whether such payments are fixed, adjust with inflation during retirement, or adjust in some other way, and a general explanation of how any such adjustment is determined.
(iii) The portion of the participant's accrued benefit that was not used to purchase a deferred lifetime income stream described in paragraph (e)(2)(i) of this section, however, must be
(f)
(1) Such equivalents are derived in accordance with the assumptions in paragraph (c) or (e)(1)(i) of this section; and
(2) The benefit statement includes language substantially similar in all material respects to:
(i) Either the model language in paragraphs (d)(1)(ii) through (d)(11)(ii) of this section or the Model Benefit Statement Supplement set forth in Appendix A to this subpart; or,
(ii) If applicable, either the model language in paragraphs (e)(1)(iii)(A)(
(g)
(h)
(i)
(b) This proclamation shall be implemented consistent with applicable law and subject to the availability of appropriations.
(c) This proclamation is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
(b) The “most-favored-nation price” shall mean the lowest price, after adjusting for volume and differences in national gross domestic product, for a pharmaceutical product that the drug manufacturer sells in a member country of the Organization for Economic Cooperation and Development that has a comparable per-capita gross domestic product.
(b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.
(c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.