[Federal Register Volume 88, Number 83 (Monday, May 1, 2023)]
[Proposed Rules]
[Pages 26658-27309]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-07389]
[[Page 26657]]
Vol. 88
Monday,
No. 83
May 1, 2023
Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 411, 412, 419, et al.
Medicare Program; Proposed Hospital Inpatient Prospective Payment
Systems for Acute Care Hospitals and the Long Term Care Hospital
Prospective Payment System and Policy Changes and Fiscal Year 2024
Rates; Quality Programs and Medicare Promoting Interoperability Program
Requirements for Eligible Hospitals and Critical Access Hospitals;
Rural Emergency Hospital and Physician-Owned Hospital Requirements; and
Provider and Supplier Disclosure of Ownership; Proposed Rule
Federal Register / Vol. 88, No. 83 / Monday, May 1, 2023 / Proposed
Rules
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 411, 412, 419, 488, 489, and 495
[CMS-1785-P]
RIN 0938-AV08
Medicare Program; Proposed Hospital Inpatient Prospective Payment
Systems for Acute Care Hospitals and the Long-Term Care Hospital
Prospective Payment System and Policy Changes and Fiscal Year 2024
Rates; Quality Programs and Medicare Promoting Interoperability Program
Requirements for Eligible Hospitals and Critical Access Hospitals;
Rural Emergency Hospital and Physician-Owned Hospital Requirements; and
Provider and Supplier Disclosure of Ownership
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).
ACTION: Proposed rule.
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SUMMARY: This proposed rule would: revise the Medicare hospital
inpatient prospective payment systems (IPPS) for operating and capital-
related costs of acute care hospitals; make changes relating to
Medicare graduate medical education (GME) for teaching hospitals;
update the payment policies and the annual payment rates for the
Medicare prospective payment system (PPS) for inpatient hospital
services provided by long-term care hospitals (LTCHs); and make other
policy-related changes.
DATES: To be assured consideration, comments must be received at one of
the addresses provided in the ADDRESSES section, no later than 5 p.m.
EDT on June 9, 2023.
ADDRESSES: In commenting, please refer to file code CMS-1785-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission. Comments, including mass comment
submissions, must be submitted in one of the following three ways
(please choose only one of the ways listed):
1. Electronically. You may (and we encourage you to) submit
electronic comments on this regulation to https://www.regulations.gov.
Follow the instructions under the ``submit a comment'' tab.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1785-P, P.O. Box 8013,
Baltimore, MD 21244-8013.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments via
express or overnight mail to the following address ONLY: Centers for
Medicare & Medicaid Services, Department of Health and Human Services,
Attention: CMS-1785-P, Mail Stop C4-26-05, 7500 Security Boulevard,
Baltimore, MD 21244-1850.
For information on viewing public comments, we refer readers to the
beginning of the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Donald Thompson, and Michele Hudson,
(410) 786-4487 or [email protected], Operating Prospective Payment, MS-
DRG Relative Weights, Wage Index, Hospital Geographic
Reclassifications, Graduate Medical Education, Capital Prospective
Payment, Excluded Hospitals, Medicare Disproportionate Share Hospital
(DSH) Payment Adjustment, Sole Community Hospitals (SCHs), Medicare-
Dependent Small Rural Hospital (MDH) Program, Low-Volume Hospital
Payment Adjustment, and Inpatient Critical Access Hospital (CAH)
Issues.
Emily Lipkin, and Jim Mildenberger, [email protected], Long-Term Care
Hospital Prospective Payment System and MS-LTC-DRG Relative Weights
Issues.
Adina Hersko, [email protected], New Technology Add-On Payments
and New COVID-19 Treatments Add-on Payments Issues.
Mady Hue, [email protected], and Andrea Hazeley,
[email protected], MS-DRG Classifications Issues.
Siddhartha Mazumdar, [email protected],gov, Rural
Community Hospital Demonstration Program Issues.
Jeris Smith, [email protected], Frontier Community Health
Integration Project (FCHIP) Demonstration Issues.
Lang Le, [email protected], Hospital Readmissions Reduction
Program--Administration Issues.
Ngozi Uzokwe, [email protected], Hospital Readmissions
Reduction Program--Measures Issues.
Jennifer Tate, [email protected], Hospital-Acquired
Condition Reduction Program--Administration Issues.
Ngozi Uzokwe, [email protected], Hospital-Acquired Condition
Reduction Program--Measures Issues.
Julia Venanzi, [email protected], Hospital Inpatient
Quality Reporting Program and Hospital Value-Based Purchasing Program--
Administration Issues.
Melissa Hager, [email protected] and Ngozi Uzokwe,
[email protected]--Hospital Inpatient Quality Reporting Program
and Hospital Value-Based Purchasing Program--Measures Issues Except
Hospital Consumer Assessment of Healthcare Providers and Systems
Issues.
Elizabeth Goldstein, [email protected], Hospital
Inpatient Quality Reporting and Hospital Value-Based Purchasing--
Hospital Consumer Assessment of Healthcare Providers and Systems
Measures Issues.
Ora Dawedeit, [email protected], PPS-Exempt Cancer Hospital
Quality Reporting--Administration Issues.
Leah Domino, [email protected], PPS-Exempt Cancer Hospital
Quality Reporting Program--Measure Issues.
Ariel Cress, [email protected], Lorraine Wickiser, Lorraine,
[email protected], Long-Term Care Hospital Quality Reporting
Program--Data Reporting Issues.
Jessica Warren, [email protected] and Elizabeth Holland,
[email protected], Medicare Promoting Interoperability
Program.
Jennifer Milby, [email protected] and Sara Brice-Payne,
[email protected], Special Requirements for Rural Emergency
Hospitals (REHs).
Lisa O. Wilson, [email protected], Physician-Owned Hospital
Issues.
Frank Whelan, [email protected], Disclosure of Ownership.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following
website as soon as possible after they have been received: https://www.regulations.gov/. Follow the search instructions on that website to
view public comments.
Tables Available on the CMS Website
The IPPS tables for this fiscal year (FY) 2024 proposed rule are
available on the CMS website at https://
[[Page 26659]]
www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/index.html. Click on the link on the left side of the
screen titled ``FY 2024 IPPS Proposed rule Home Page'' or ``Acute
Inpatient--Files for Download.'' The LTCH PPS tables for this FY 2024
proposed rule are available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/LongTermCareHospitalPPS/index.html under the list item for Regulation Number CMS-1785-P. For
further details on the contents of the tables referenced in this
proposed rule, we refer readers to section VI. of the Addendum to this
FY 2024 IPPS/LTCH PPS proposed rule.
Readers who experience any problems accessing any of the tables
that are posted on the CMS websites, as previously identified, should
contact Michael Treitel, [email protected].
Table of Contents
I. Executive Summary and Background
A. Executive Summary
B. Background Summary
C. Summary of Provisions of Recent Legislation That Would Be
Implemented in This Proposed Rule
D. Summary of the Provisions of This Proposed Rule
E. Use of the Best Available Data in the FY 2024 IPPS and LTCH
PPS Ratesetting
II. Proposed Changes to Medicare Severity Diagnosis-Related Group
(MS-DRG) Classifications and Relative Weights
A. Background
B. Adoption of the MS-DRGs and MS-DRG Reclassifications
C. Proposed Changes to Specific MS-DRG Classifications
D. Recalibration of the FY 2024 MS-DRG Relative Weights
E. Add-On Payments for New Services and Technologies for FY 2024
III. Proposed Changes to the Hospital Wage Index for Acute Care
Hospitals
A. Background
B. Worksheet S-3 Wage Data for the Proposed FY 2022 Wage Index
C. Verification of Worksheet S-3 Wage Data
D. Method for Computing the Proposed FY 2024 Unadjusted Wage
Index
E. Occupational Mix Adjustment to the FY 2024 Wage Index
F. Analysis and Implementation of the Proposed Occupational Mix
Adjustment and the Proposed FY 2024 Occupational Mix Adjusted Wage
Index
G. Application of the Rural Floor, Application of the State
Frontier Floor, and Continuation of the Low Wage Index Hospital
Policy, and Proposed Budget Neutrality Adjustment
H. Proposed FY 2024 Wage Index Tables
I. Proposed Revisions to the Wage Index Based on Hospital
Redesignations and Reclassifications
J. Proposed Out-Migration Adjustment Based on Commuting Patterns
of Hospital Employees
K. Reclassification From Urban to Rural Under Section
1886(d)(8)(E) of the Act Implemented at 42 CFR 412.103
L. Process for Requests for Wage Index Data Corrections
M. Proposed Labor-Related Share for the FY 2024 Wage Index
IV. Payment Adjustment for Medicare Disproportionate Share Hospitals
(DSHs) for FY 2024 (Sec. 412.106)
A. General Discussion
B. Eligibility for Empirically Justified Medicare DSH Payments
and Uncompensated Care Payments
C. Empirically Justified Medicare DSH Payments
D. Supplemental Payment for Indian Health Service (IHS) and
Tribal Hospitals and Puerto Rico Hospitals
E. Uncompensated Care Payments
V. Other Decisions and Changes to the IPPS for Operating System
A. Proposed Changes to MS-DRGs Subject to Postacute Care
Transfer Policy and MS-DRG Special Payments Policies (Sec. 412.4)
B. Proposed Changes in the Inpatient Hospital Update for FY 2024
(Sec. 412.64(d))
C. Sole Community Hospitals--Effective Date of Status in the
Case of a Merger (Sec. 412.92)
D. Rural Referral Centers (RRCs) Proposed Annual Updates (Sec.
412.96)
E. Proposed Payment Adjustment for Low-Volume Hospitals (Sec.
412.101)
F. Temporary Legislative Extension of Medicare-Dependent, Rural
Hospital Program
G. Proposed Payments for Indirect and Direct Graduate Medical
Education Costs (Sec. Sec. 412.105 and 413.75 Through 413.83)
H. Reasonable Cost Payment for Nursing and Allied Health
Education Programs (Sec. Sec. 413.85 and 413.87)
I. Proposed Payment Adjustment for Certain Clinical Trial and
Expanded Access Use Immunotherapy Cases (Sec. Sec. 412.85 and
412.312)
J. Hospital Readmissions Reduction Program (Sec. Sec. 412.150
through 412.154)
K. Hospital Value-Based Purchasing (VBP) Program: Proposed
Policy Changes (Sec. Sec. 412.160 Through 412.167)
L. Hospital-Acquired Condition (HAC) Reduction Program
M. Rural Community Hospital Demonstration Program
VI. Proposed Changes to the IPPS for Capital-Related Costs
A. Overview
B. Additional Provisions
C. Proposed Annual Update for FY 2024
D. Treatment of Rural Reclassifications for Capital DSH Payments
VII. Proposed Changes for Hospitals Excluded From the IPPS
A. Proposed Rate-of-Increase in Payments to Excluded Hospitals
for FY 2024
B. Critical Access Hospitals (CAHs)
VIII. Proposed Changes to the Long-Term Care Hospital Prospective
Payment System (LTCH PPS) for FY 2024
A. Background of the LTCH PPS
B. Medicare Severity Long-Term Care Diagnosis-Related Group (MS-
LTC-DRG) Classifications and Relative Weights for FY 2024
C. Changes to the LTCH PPS Payment Rates and Other Proposed
Changes to the LTCH PPS for FY 2024
IX. Proposed Quality Data Reporting Requirements for Specific
Providers and Suppliers
A. Overview
B. Crosscutting Quality Program Proposal to Adopt the Up-to-Date
COVID-19 Vaccination Among Healthcare Personnel Measure
C. Proposed Changes to the Hospital Inpatient Quality Reporting
(IQR) Program
D. Proposed Changes to the PPS-Exempt Cancer Hospital Quality
Reporting (PCHQR) Program
E. Proposed Changes to the Long-Term Care Hospital Quality
Reporting Program (LTCH QRP)
F. Proposed Changes to the Medicare Promoting Interoperability
Program
X. Other Provisions Included in This Proposed Rule
A. Rural Emergency Hospitals (REHs)
B. Physician Self-Referral and Physician-Owned Hospitals
C. Proposed Technical Corrections to 42 CFR 411.353 and 411.357
D. Safety Net RFI
E. Disclosures of Ownership and Additional Disclosable Parties
Information
XI. MedPAC Recommendations and Publicly Available Files
A. MedPAC Recommendations
B. Publicly Available Files
XII. Collection of Information Requirements
A. Statutory Requirements for Solicitation of Comments
B. Collection of Information Requirements
Addendum--Schedule of Standardized Amounts, Update Factors, and
Rate-of-Increase Percentages Effective With Cost Reporting Periods
Beginning on or After October 1, 2022 and Payment Rates for LTCHs
Effective for Discharges Occurring on or After October 1, 2022
I. Summary and Background
II. Proposed Changes to Prospective Payment Rates for Hospital
Inpatient Operating Costs for Acute Care Hospitals for FY 2024
A. Calculation of the Proposed Adjusted Standardized Amount
B. Adjustments for Area Wage Levels and Cost-of-Living
C. Calculation of the Proposed Prospective Payment Rates
III. Proposed Changes to Payment Rates for Acute Care Hospital
Inpatient Capital-Related Costs for FY 2024
A. Determination of the Proposed Federal Hospital Inpatient
Capital-Related Prospective Payment Rate Update for FY 2024
B. Calculation of the Inpatient Capital-Related Prospective
Payments for FY 2024
C. Capital Input Price Index
IV. Proposed Changes to Payment Rates for Excluded Hospitals: Rate-
of-Increase Percentages for FY 2024
V. Proposed Changes to the Payment Rates for the LTCH PPS for FY
2024
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A. Proposed LTCH PPS Standard Federal Payment Rate for FY 2024
B. Proposed Adjustment for Area Wage Levels Under the LTCH PPS
for FY 2024
C. Proposed Cost-of-Living Adjustment (COLA) for LTCHs Located
in Alaska and Hawaii
D. Proposed Adjustment for LTCH PPS High-Cost Outlier (HCO)
Cases
E. Proposed Update to the IPPS Comparable Amounts to Reflect the
Statutory Changes to the IPPS DSH Payment Adjustment Methodology
F. Computing the Proposed Adjusted LTCH PPS Federal Prospective
Payments for FY 2024
VI. Tables Referenced in This Proposed Rule Generally Available
Through the Internet on the CMS Website
Appendix A--Economic Analyses
I. Regulatory Impact Analysis
A. Statement of Need
B. Overall Impact
C. Objectives of the IPPS and the LTCH PPS
D. Limitations of Our Analysis
E. Hospitals Included in and Excluded From the IPPS
F. Quantitative Effects of the Policy Changes Under the IPPS for
Operating Costs
G. Effects of Other Policy Changes
H. Effects on Hospitals and Hospital Units Excluded From the
IPPS
I. Effects of Proposed Changes in the Capital IPPS
J. Effects of Proposed Payment Rate Changes and Policy Changes
Under the LTCH PPS
K. Effects of the Proposed Adoption of the Up-to-Date COVID-19
Vaccination Among Healthcare Personnel Measure Across Quality
Programs
L. Effects of Requirements for the Hospital Inpatient Quality
Reporting (IQR) Program
M. Effects of Requirements for the PPS-Exempt Cancer Hospital
Quality Reporting (PCHQR) Program
N. Effects of Proposed Requirements for the Long-Term Care
Hospital Quality Reporting Program (LTCH QRP)
O. Effects of Proposed Requirements Regarding the Promoting
Interoperability Program
P. Alternatives Considered
Q. Overall Conclusion
R. Regulatory Review Costs
II. Accounting Statements and Tables
A. Acute Care Hospitals
B. LTCHs
III. Regulatory Flexibility Act (RFA) Analysis
IV. Impact on Small Rural Hospitals
V. Unfunded Mandate Reform Act Analysis
VI. Executive Order 13132
VII. Executive Order 13175
VIII. Executive Order 12866
Appendix B: Recommendation of Update Factors for Operating Cost
Rates of Payment for Inpatient Hospital Services
I. Background
II. Inpatient Hospital Update for FY 2024
A. Proposed FY 2024 Inpatient Hospital Update
B. Proposed Update for SCHs for FY 2024
C. Proposed FY 2024 Puerto Rico Hospital Update
D. Proposed Update for Hospitals Excluded From the IPPS for FY
2024
E. Proposed Update for LTCHs for FY 2024
III. Secretary's Recommendations
IV. MedPAC Recommendation for Assessing Payment Adequacy and
Updating Payments in Traditional Medicare
V. Responses to Comments
I. Executive Summary and Background
A. Executive Summary
1. Purpose and Legal Authority
This FY 2024 IPPS/LTCH PPS proposed rule would make payment and
policy changes under the Medicare inpatient prospective payment system
(IPPS) for operating and capital-related costs of acute care hospitals
as well as for certain hospitals and hospital units excluded from the
IPPS. In addition, it would make payment and policy changes for
inpatient hospital services provided by long-term care hospitals
(LTCHs) under the long-term care hospital prospective payment system
(LTCH PPS). This proposed rule would also make policy changes to
programs associated with Medicare IPPS hospitals, IPPS-excluded
hospitals, and LTCHs. In this FY 2024 proposed rule, we are proposing
to continue policies to address wage index disparities impacting low
wage index hospitals. We are also proposing to make changes relating to
Medicare graduate medical education (GME) for teaching hospitals and
new technology add-on payments.
We are proposing to establish new requirements and revise existing
requirements for eligible hospitals and CAHs participating in the
Medicare Promoting Interoperability Program.
In the Hospital VBP Program, we are proposing to add one new
measure, substantively modify two existing measures, add technical
changes to the administration of the Hospital Consumer Assessment of
Healthcare Providers and Systems (HCAHPS) Survey, and change the
scoring policy to include a health equity scoring adjustment and modify
the Total Performance Score (TPS) maximum to be 110, resulting in
numeric score range of 0 to 110. We are also providing estimated and
newly established performance standards for the FY 2026 through FY 2029
program years for the Hospital VBP Program. In the HAC Reduction
Program, we are proposing to establish a validation reconsideration
process for data validation and to add an additional targeting
criterion for validation. We are not proposing any changes to the
Hospital Readmissions Reduction Program.
In the Hospital IQR Program, we are proposing to add three new
measures, to update three existing measures, and to remove three
measures. We are proposing changes to the validation process.
Additionally, we are seeking public comment on the potential future
adoption of two measures.
In the PPS-Exempt Cancer Hospital Quality Reporting Program (PCHQR)
we are proposing to add four new measures and to modify an existing
measure.
In the LTCH QRP we are proposing new measures, modifying an
existing measure, removing measures and proposing to increase the LTCH
QRP data completion thresholds for LTCH Continuity Assessment Record
and Evaluation (CARE) Data Set (LCDS) items. Additionally, we are we
are seeking information on principles for selecting and prioritizing
LTCH QRP quality measures and concepts under consideration for future
years and provide an update on CMS' continued efforts to close the
health equity gap.
Under various statutory authorities, we either discuss continued
program implementation or propose to make changes to the Medicare IPPS,
the LTCH PPS, other related payment methodologies and programs for FY
2024 and subsequent fiscal years, and other policies and provisions
included in this rule. 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 Balanced Budget Refinement
Act of 1999 (BBRA) (Public Law (Pub. L.) 106-113) and section 307(b)(1)
of the Benefits Improvement and Protection Act of 2000 (BIPA) (Pub. L.
106-554) (as codified under section 1886(m)(1) of the
[[Page 26661]]
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.
Section 1814(l)(4) of the Act requires downward
adjustments to the applicable percentage increase, beginning with FY
2015, for CAHs that do not successfully demonstrate meaningful use of
certified electronic health record technology (CEHRT) for an EHR
reporting payment for a payment adjustment year.
Section 1814(l)(3) of the Act offered incentive payments
under Medicare for critical access hospitals (CAHs) for certain payment
years, if they successfully adopted and demonstrated meaningful use of
CEHRT during an electronic health record (EHR) reporting period.
Section 1814(l)(4) of the Act authorized downward payment
adjustments under Medicare, beginning with FY 2015, for CAHs that do
not successfully demonstrate meaningful use of CEHRT for an EHR
reporting payment for a payment adjustment year.
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. Hospitals paid under the
IPPS with approved GME programs are paid for the indirect costs of
training residents in accordance with section 1886(d)(5)(B) 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(b)(3)(B)(ix) of the Act requires downward
adjustments to the applicable percentage increase, beginning with FY
2015 (and beginning with FY 2022 for subsection (d) Puerto Rico
hospitals), for eligible hospitals that do not successfully demonstrate
meaningful use of CEHRT for an EHR reporting period for a payment
adjustment year.
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(n) of the Act, which requires the Secretary
to offered incentive payments under Medicare for eligible hospitals for
certain payment years, if they successfully adopted and demonstrated
meaningful use of CEHRT during an electronic health record (EHR)
reporting period.
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 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 an additional 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)(5) of the Act, which requires the
Secretary to reduce by two percentage points the annual update to the
standard Federal rate for discharges for a long-term care hospital
(LTCH) during the rate year for LTCHs that do not submit data in the
form, manner, and at a time, specified by the Secretary.
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.
Section 1861(kkk) of the Act requires the Secretary to
establish the conditions REHs must meet in order to participate in the
Medicare program and which are considered necessary to ensure the
health and safety of patients receiving services at these entities.
Section 1877(i) of the Act, as added by section 6001(a)(3)
of the Patient Protection and Affordable Care Act of 2010 (Affordable
Care Act) (Pub. L. 111-148) and amended by section 1106 of the Health
Care and Education Reconciliation Act of 2010 (HCERA) (Pub. L. 111-
152), which requires the Secretary to establish and implement a process
under which a hospital that is an ``applicable hospital'' or a ``high
Medicaid facility'' may apply for an exception from the prohibition on
expansion of facility capacity.
2. Summary of the Major Provisions
The following is a summary of the major provisions in this proposed
rule. In general, these major provisions are being proposed as part of
the annual update to the payment policies and payment rates, consistent
with the applicable statutory provisions. A general summary of the
changes in this proposed rule is presented in section
[[Page 26662]]
I.D. of the preamble of this proposed rule.
a. Proposed Modification to the Rural Wage Index Calculation
Methodology
As discussed in section III.G.1 of this proposed rule, CMS has
taken the opportunity to revisit the case law, prior public comments,
and the relevant statutory language with regard to its policies
involving the treatment of hospitals that have reclassified as rural
under section 1886(d)(8)(E) of the Act, as implemented in the
regulations under 42 CFR 412.103. After doing so, CMS now agrees that
the best reading of section 1886(d)(8)(E) is that it instructs CMS to
treat Sec. 412.103 hospitals the same as geographically rural
hospitals. Therefore, we believe it is proper to include these
hospitals in all iterations of the rural wage index calculation
methodology included in section 1886(d) of the Act, including all hold
harmless calculations in that provision. Beginning with FY 2024, we are
proposing to include hospitals with Sec. 412.103 reclassification
along with geographically rural hospitals in all rural wage index
calculations, and to exclude ``dual reclass'' hospitals (hospitals with
simultaneous Sec. 412.103 and Medicare Geographic Classification
Review Board (MGCRB) reclassifications) implicated by the hold harmless
provision at section 1886(d)(8)(C)(ii) of the Act.
b. Proposed Continuation of the Low Wage Index Hospital Policy
To help mitigate growing wage index disparities between high wage
and low wage hospitals, in the FY 2020 IPPS/LTCH PPS rule (84 FR 42326
through 42332), we adopted a policy to increase 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 our intention 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. As
discussed in section III.G.4. of the preamble of this proposed rule, as
we only have 1 year of relevant data at this time that we could use to
evaluate any potential impacts of this policy, we believe it is
necessary to wait until we have useable data from additional fiscal
years before making any decision to modify or discontinue the policy.
Therefore, for FY 2024, we are proposing to continue the low wage index
hospital policy and the related budget neutrality adjustment.
c. DSH Payment Adjustment and Additional Payment for Uncompensated Care
Under section 1886(r) of the Act, which was added by section 3133
of the Affordable Care Act, starting in FY 2014, Medicare
disproportionate share hospitals (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 proposed rule, we are proposing to update our estimates of
the three factors used to determine uncompensated care payments for FY
2024. We are also proposing to continue to use uninsured estimates
produced by CMS' Office of the Actuary (OACT) as part of the
development of the National Health Expenditure Accounts (NHEA) in
conjunction with more recently available data in the calculation of
Factor 2. Consistent with the regulation at Sec.
412.106(g)(1)(iii)(C)(11), which was adopted in the FY 2023 IPPS/LTCH
PPS final rule, for FY 2024, we will use the 3 most recent years of
audited data on uncompensated care costs from Worksheet S-10 of the FY
2018, FY 2019, and FY 2020 cost reports to calculate Factor 3 in the
uncompensated care payment methodology for all eligible hospitals.
Beginning with FY 2023, we established a supplemental payment for
IHS and Tribal hospitals and hospitals located in Puerto Rico, to help
prevent undue long-term financial disruption to these hospitals due to
discontinuing use of the low-income insured days proxy in the
uncompensated care payment methodology for these providers.
d. Hospital Value-Based Purchasing (VBP) Program
Section 1886(o) of the Act requires the Secretary to establish a
Hospital VBP Program under which value-based incentive payments are
made in a fiscal year to hospitals based on their performance on
measures established for a performance period for such fiscal year. In
this proposed rule, we are proposing to adopt modified versions of: (1)
the Medicare Spending Per Beneficiary (MSPB) Hospital measure beginning
with the FY 2028 program year; and (2) the Hospital-level Risk-
Standardized Complication Rate (RSCR) Following Elective Primary Total
Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) measure
beginning with the FY 2030 program year. We are also proposing to adopt
the Severe Sepsis and Septic Shock: Management Bundle measure in the
Safety Domain beginning with the FY 2026 program year. We are also
proposing to make technical changes to the form and manner of the
administration of the HCAHPS Survey measure under the Hospital VBP
Program beginning with the FY 2027 program year in alignment with the
Hospital IQR Program. Additionally, we are proposing to adopt a health
equity scoring change for rewarding excellent care in underserved
populations beginning with the FY 2026 program year. We are also
proposing to modify the Total Performance Score (TPS) maximum to be
110, such that the TPS numeric score range would be 0 to 110 in order
to afford even top-performing hospitals the opportunity to receive the
additional health equity bonus points under the proposed health equity
scoring change. We are also requesting feedback on potential additional
future changes to the Hospital VBP Program scoring methodology that
would address health equity.
e. Proposed Modification of the COVID-19 Vaccination Coverage Among
Healthcare Personnel (HCP) Measure in the Hospital IQR Program, PCHQR
Program, and LTCH QRP
In this FY 2024 IPPS/LTCH PPS proposed rule, we are proposing to
modify the COVID-19 Vaccination Coverage among Health Care Personnel
(HCP) measure to replace the term ``complete vaccination course'' with
the term ``up to date'' with regard to recommended COVID-19 vaccines
beginning with the Quarter 4 (Q4) calendar year (CY) 2023 reporting
period/FY 2025 payment determination for the Hospital IQR Program, and
the FY 2025 program year for the LTCH QRP and the PCHQR Program.
f. Hospital Inpatient Quality Reporting (IQR) Program
Under section 1886(b)(3)(B)(viii) of the Act, subsection (d)
hospitals are required to report data on measures selected by the
Secretary for a fiscal year in order to receive the full annual
percentage increase.
In this FY 2024 IPPS/LTCH PPS proposed rule, we are proposing
several
[[Page 26663]]
changes to the Hospital IQR Program. We are proposing the adoption of
three new measures: (1) Hospital Harm--Pressure Injury electronic
clinical quality measure (eCQM) beginning with the CY 2025 reporting
period/FY 2027 payment determination; (2) Hospital Harm--Acute Kidney
Injury eCQM beginning with the CY 2025 reporting period/FY 2027 payment
determination; and (3) Excessive Radiation Dose or Inadequate Image
Quality for Diagnostic Computed Tomography (CT) in Adults (Hospital
Level--Inpatient) eCQM beginning with the CY 2025 reporting period/FY
2027 payment determination. We are proposing the modification of three
current measures: (1) Hybrid Hospital-Wide All-Cause Risk Standardized
Mortality (HWM) measure beginning with the FY 2027 payment
determination; (2) Hybrid Hospital-Wide All-Cause Readmission (HWR)
measure beginning with the FY 2027 payment determination; and (3)
COVID-19 Vaccination among Healthcare Personnel (HCP) measure beginning
with the Quarter 4 CY 2023 reporting period/FY 2025 payment
determination. We are proposing the removal of three current measures:
(1) Hospital-level Risk-standardized Complication Rate (RSCR) Following
Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee
Arthroplasty (TKA) measure beginning with the April 1, 2025-March 31,
2028 reporting period/FY 2030 payment determination; (2) Medicare
Spending Per Beneficiary (MSPB)--Hospital measure beginning with the CY
2026 reporting period/FY 2028 payment determination; and (3) Elective
Delivery Prior to 39 Completed Weeks Gestation: Percentage of Babies
Electively Delivered Prior to 39 Completed Weeks Gestation (PC-01)
measure beginning with the CY 2024 reporting period/FY 2026 payment
determination. We are proposing to codify our Measure Removal Factors.
We are requesting comment on the potential future inclusion of
geriatric measures and a potential future public-facing geriatric
hospital designation in the Hospital IQR Program.
We are proposing two changes to current policies related to data
submission, reporting, and validation: (1) Modification of the Hospital
Consumer Assessment of Healthcare Providers and Systems (HCAHPS) Survey
Measure beginning with the CY 2025 reporting period/FY 2027 payment
determination; and (2) Modification of the targeting criteria for
hospital validation for extraordinary circumstances exceptions (ECEs)
beginning with the FY 2027 payment determination.
g. PPS-Exempt Cancer Hospital Quality Reporting Program
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 2024 IPPS/LTCH PPS proposed rule, we are proposing to
adopt four new measures for the PCHQR Program: (i) three health equity-
focused measures: the Facility Commitment to Health Equity measure, the
Screening for Social Drivers of Health measure, and the Screen Positive
Rate for Social Drivers of Health measure; and (ii) a patient
preference-focused measure, the Documentation of Goals of Care
Discussions Among Cancer Patients measure. We are proposing to adopt a
modified version of the COVID-19 Vaccination Coverage among Health Care
Personnel (HCP) measure beginning with the FY 2025 program year. We are
also proposing to publicly report the Surgical Treatment Complications
for Localized Prostate Cancer (PCH-37) measure beginning with data from
the FY 2025 program year, and modified data submission and reporting
requirements for the HCAHPS survey measure beginning with the FY 2027
program year.
h. Long-Term Care Hospital Quality Reporting Program (LTCH QRP)
We are proposing several proposed changes to the LTCH QRP.
Specifically, we are: (1) proposing to adopt a modified version of the
COVID-19 Vaccination Coverage among Healthcare Personnel measure
beginning with the FY 2025 LTCH QRP; (2) proposing to adopt the
Discharge Function Score measure beginning with the FY 2025 LTCH QRP;
(3) proposing to remove the Percent of LTCH Patients with an Admission
and Discharge Functional Assessment and a Care Plan That Addresses
Function measure beginning with the FY 2025 LTCH QRP; (4) proposing to
remove the Application of Percent of LTCH Patients with an Admission
and Discharge Functional Assessment and a Care Plan That Addresses
Function measure beginning with the FY 2025 LTCH QRP; (5) proposing to
adopt the COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to
Date measure beginning with the FY 2026 LTCH QRP; (6) proposing to
increase the LTCH QRP data completion thresholds for the LTCH
Continuity Assessment Record and Evaluation (CARE) Data Set (LCDS)
beginning with the FY 2026 LTCH QRP; and (7) proposing to begin public
reporting of the Transfer of Health (TOH) Information to the Patient-
Post-Acute Care (PAC) and TOH Information to the Provider-PAC measures
beginning with the FY 2025 LTCH QRP.
i. Medicare Promoting Interoperability Program
In this proposed rule, we are proposing several changes to the
Medicare Promoting Interoperability Program. Specifically, we are
proposing to: (1) amend the definition of ``EHR reporting period for a
payment adjustment year'' at 42 CFR 495.4 for eligible hospitals and
CAHs participating in the Medicare Promoting Interoperability Program,
to define the electronic health record (EHR) reporting period in CY
2025 as a minimum of any continuous 180-day period within CY 2025; (2)
update the definition of ``EHR reporting period for a payment
adjustment year'' at Sec. 495.4 for eligible hospitals such that,
beginning in CY 2025, those hospitals that have not successfully
demonstrated meaningful use in a prior year will not be required to
attest to meaningful use by October 1st of the year prior to the
payment adjustment year; (3) modify our requirements for the Safety
Assurance Factors for EHR Resilience (SAFER) Guides measure beginning
with the EHR reporting period in CY 2024, to require eligible hospitals
and CAHs to attest ``yes'' to having conducted an annual self-
assessment of all nine SAFER Guides at any point during the calendar
year in which the EHR reporting period occurs; (4) modify the way we
refer to the calculation considerations related to unique patients or
actions for Medicare Promoting Interoperability Program objectives and
measures for which there is no numerator and denominator; and (5) adopt
three new eCQMs beginning with the CY 2025 reporting period for
eligible hospitals and CAHs to select as one of their three self-
selected eCQMs: the Hospital Harm--Pressure Injury eCQM, the Hospital
Harm--Acute Kidney Injury eCQM, and the Excessive Radiation Dose or
Inadequate Image Quality for Diagnostic Computed Tomography (CT) in
Adults (Hospital Level--Inpatient) eCQM.
j. Hospital Readmissions Reduction Program
We are not proposing any changes to the Hospital Readmissions
Reduction Program. We note that all previously
[[Page 26664]]
finalized policies under this program will continue to apply and refer
readers to the FY 2023 IPPS/LTCH PPS final rule (87 FR 49081 through
49094) for information on these policies.
k. Hospital-Acquired Condition Reduction Program
Section 1886(p) of the Act establishes the HAC Reduction Program
under which payments to applicable hospitals are adjusted to provide an
incentive to reduce hospital-acquired conditions. In this proposed
rule, we are proposing to establish a validation reconsideration
process for hospitals who fail data validation beginning with the FY
2025 program year, affecting calendar year 2022 discharges. We are also
proposing modification of the validation targeting criteria for
extraordinary circumstances exceptions (ECEs) beginning with the FY
2027 program year, affecting calendar year 2024 discharges. We are also
requesting feedback on potential future measures to adopt in the HAC
Reduction Program that would address patient safety and health equity.
l. Safety Net Hospitals--Request for Information
As discussed in section X.D. of the preamble of this proposed rule,
under the Biden-Harris Administration, CMS has made advancing health
equity the first pillar in its Strategic Plan. Among the goals of CMS's
health equity pillar is to evaluate policies to determine how CMS can
support safety-net providers, including acute care hospitals. Safety-
net hospitals play a crucial role in the advancement of health equity
by making essential services available to the uninsured, underinsured,
and other populations that face barriers to accessing healthcare.
Because they serve many low-income and uninsured patients, safety-net
hospitals may experience greater financial challenges compared to other
hospitals, and these challenges have been exacerbated by the impacts of
the COVID-19 pandemic. As MedPAC noted in its June 2022 Report to
Congress, the limited resources of many safety-net hospitals may make
it difficult for them to compete with other hospitals for labor and
technology, and in some cases may even lead to hospital closure.
We are interested in public feedback on the challenges faced by
safety-net hospitals, and potential approaches to help safety-net
hospitals meet those challenges. In section X.C. of the preamble of
this proposed rule, we discuss the Safety-Net Index (SNI), which was
developed by MedPAC as a potential measure of the degree to which a
hospital functions as a safety-net hospital. In addition, we discuss a
potential alternative to the SNI, in which safety-net hospitals would
be identified using area-level indices. We seek public feedback and
comment on whether either of these two approaches would serve as an
appropriate basis for identifying safety-net hospitals for Medicare
purposes.
m. Proposed Changes to the Severity Level Designation for Z Codes
Describing Homelessness
As discussed in section II.C. of the preamble of this proposed
rule, we are proposing to change the severity level designation for
social determinants of health (SDOH) diagnosis codes describing
homelessness from non-complication or comorbidity (NonCC) to
complication or comorbidity (CC) for FY 2024. Consistent with our
annual updates to account for changes in resource consumption,
treatment patterns, and the clinical characteristics of patients, CMS
is recognizing homelessness as an indicator of increased resource
utilization in the acute inpatient hospital setting.
Consistent with the Administration's goal of advancing health
equity for all, including members of historically underserved and
under-resourced communities, as described in the President's January
20, 2021 Executive Order 13985 on ``Advancing Racial Equity and Support
for Underserved Communities Through the Federal Government,'' \1\ we
also continue to be interested in receiving feedback on how we might
otherwise foster the documentation and reporting of the diagnosis codes
describing social and economic circumstances to more accurately reflect
each health care encounter and improve the reliability and validity of
the coded data including in support of efforts to advance health
equity.
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\1\ Available at 86 FR 7009 (January 25, 2021) (https://www.federalregister.gov/documents/2021/01/25/2021-01753/advancing-racial-equity-and-support-for-underserved-communities-through-the-federal-government).
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3. Summary of Costs and Benefits
The following table provides a summary of the costs, savings, and
benefits associated with the major provisions described in section
I.A.3. of the preamble of this proposed rule.
BILLING CODE 4120-01-P
[[Page 26665]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.000
[[Page 26666]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.001
BILLING CODE 4120-01-C
[[Page 26667]]
B. Background Summary
1. Acute Care Hospital Inpatient Prospective Payment System (IPPS)
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 an additional
Medicare payment beginning on October 1, 2013, that considers the
amount of uncompensated care furnished by the hospital relative to all
other qualifying hospitals.
If the hospital is training residents in an approved residency
program(s), it receives a percentage add-on payment for each case paid
under the IPPS, known as the indirect medical education (IME)
adjustment. This percentage varies, depending on the ratio of residents
to beds.
Additional payments may be made for cases that involve new
technologies or medical services that have been approved for special
add-on payments. 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 and, beginning in FY 2023 for IHS and Tribal hospitals and
hospitals located in Puerto Rico, the new supplemental payment.
Although payments to most hospitals under the IPPS are made on the
basis of the standardized amounts, some categories of hospitals are
paid in whole or in part based on their hospital-specific rate, which
is determined from their costs in a base year. For example, sole
community hospitals (SCHs) receive the higher of a hospital-specific
rate based on their costs in a base year (the highest of FY 1982, FY
1987, FY 1996, or FY 2006) or the IPPS Federal rate based on the
standardized amount. SCHs are the sole source of care in their areas.
Specifically, section 1886(d)(5)(D)(iii) of the Act defines an SCH as a
hospital that is located more than 35 road miles from another hospital
or that, by reason of factors such as an isolated location, weather
conditions, travel conditions, or absence of other like hospitals (as
determined by the Secretary), is the sole source of hospital inpatient
services reasonably available to Medicare beneficiaries. In addition,
certain rural hospitals previously designated by the Secretary as
essential access community hospitals are considered SCHs.
Under current law, the Medicare-dependent, small rural hospital
(MDH) program is effective through FY 2024. For discharges occurring on
or after October 1, 2007, but before October 1, 2024, an MDH receives
the higher of the Federal rate or the Federal rate plus 75 percent of
the amount by which the Federal rate is exceeded by the highest of its
FY 1982, FY 1987, or FY 2002 hospital-specific rate. MDHs are a major
source of care for Medicare beneficiaries in their areas. Section
1886(d)(5)(G)(iv) of the Act defines an MDH as a hospital that is
located in a rural area (or, as amended by the Bipartisan Budget Act of
2018, a hospital located in a State with no rural area that meets
certain statutory criteria), has not more than 100 beds, is not an SCH,
and has a high percentage of Medicare discharges (not less than 60
percent of its inpatient days or discharges in its cost reporting year
beginning in FY 1987 or in two of its three most recently settled
Medicare cost reporting years).
Section 1886(g) of the Act requires the Secretary to pay for the
capital-related costs of inpatient hospital services in accordance with
a prospective payment system established by the Secretary. The basic
methodology for determining capital prospective payments is set forth
in our regulations at 42 CFR 412.308 and 412.312. Under the capital
IPPS, payments are adjusted by the same DRG for the case as they are
under the operating IPPS. Capital IPPS payments are also adjusted for
IME and DSH, similar to the adjustments made under the operating IPPS.
In addition, hospitals may receive outlier payments for those cases
that have unusually high costs.
The existing regulations governing payments to hospitals under the
IPPS are located in 42 CFR part 412, subparts A through M.
2. Hospitals and Hospital Units Excluded From the IPPS
Under section 1886(d)(1)(B) of the Act, as amended, certain
hospitals and hospital units are excluded from the IPPS. These
hospitals and units are: Inpatient rehabilitation facility (IRF)
hospitals and units; long-term care hospitals (LTCHs); psychiatric
hospitals and units; children's hospitals; cancer hospitals; extended
neoplastic disease care hospitals, and hospitals located outside the 50
States, the District of Columbia, and Puerto Rico (that is, hospitals
located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands,
and American Samoa). Religious nonmedical health care institutions
(RNHCIs) are also excluded from the IPPS. Various sections of the
Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33), the Medicare,
Medicaid and SCHIP [State Children's Health Insurance Program] Balanced
Budget Refinement Act of 1999 (BBRA, Pub. L. 106-113), and the
Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act
of 2000 (BIPA, Pub. L. 106-554) provide for the implementation of PPSs
for IRF hospitals and units, LTCHs, and
[[Page 26668]]
psychiatric hospitals and units (referred to as inpatient psychiatric
facilities (IPFs)). (We note that the annual updates to the LTCH PPS
are included along with the IPPS annual update in this document.
Updates to the IRF PPS and IPF PPS are issued as separate documents.)
Children's hospitals, cancer hospitals, hospitals located outside the
50 States, the District of Columbia, and Puerto Rico (that is,
hospitals located in the U.S. Virgin Islands, Guam, the Northern
Mariana Islands, and American Samoa), and RNHCIs continue to be paid
solely under a reasonable cost-based system, subject to a rate-of-
increase ceiling on inpatient operating costs. Similarly, extended
neoplastic disease care hospitals are paid on a reasonable cost basis,
subject to a rate-of-increase ceiling on inpatient operating costs.
The existing regulations governing payments to excluded hospitals
and hospital units are located in 42 CFR parts 412 and 413.
3. Long-Term Care Hospital Prospective Payment System (LTCH PPS)
The Medicare prospective payment system (PPS) for LTCHs applies to
hospitals described in section 1886(d)(1)(B)(iv) of the Act, effective
for cost reporting periods beginning on or after October 1, 2002. The
LTCH PPS was established under the authority of sections 123 of the
BBRA and section 307(b) of the BIPA (as codified under section
1886(m)(1) of the Act). 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.
4. Critical Access Hospitals (CAHs)
Under sections 1814(l), 1820, and 1834(g) of the Act, payments made
to critical access hospitals (CAHs) (that is, rural hospitals or
facilities that meet certain statutory requirements) for inpatient and
outpatient services are generally based on 101 percent of reasonable
cost. Reasonable cost is determined under the provisions of section
1861(v) of the Act and existing regulations under 42 CFR part 413.
5. Payments for Graduate Medical Education (GME)
Under section 1886(a)(4) of the Act, costs of approved educational
activities are excluded from the operating costs of inpatient hospital
services. Hospitals with approved graduate medical education (GME)
programs are paid for the direct costs of GME in accordance with
section 1886(h) of the Act. The amount of payment for direct GME costs
for a cost reporting period is based on the hospital's number of
residents in that period and the hospital's costs per resident in a
base year. The existing regulations governing payments to the various
types of hospitals are located in 42 CFR part 413. Section
1886(d)(5)(B) of the Act provides that prospective payment hospitals
that have residents in an approved GME program receive an additional
payment for each Medicare discharge to reflect the higher patient care
costs of teaching hospitals relative to non-teaching hospitals. The
additional payment is based on the indirect medical education (IME)
adjustment factor, which is calculated using a hospital's ratio of
residents to beds and a multiplier, which is set by Congress. 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. The regulations regarding the indirect medical
education (IME) adjustment are located at 42 CFR 412.105.
C. Summary of Provisions of Recent Legislation That Would Be
Implemented in This Proposed Rule
1. The Consolidated Appropriations Act, 2023 (CAA 2023; Pub. L. 117-
328)
Section 4101 of the CAA 2023 extended through FY 2024 the modified
definition of a low-volume hospital and the methodology for calculating
the payment adjustment for low-volume hospitals in effect for FYs 2019
through 2022. Specifically, under section 1886(d)(12)(C)(i) of the Act,
as amended, for FYs 2019 through 2024, 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. Under section 1886(d)(12)(D) of the
Act, as amended, for discharges occurring in FYs 2019 through 2024, the
Secretary determines 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.
Section 4102 of the CAA 2023 amended sections 1886(d)(5)(G)(i) and
1886(d)(5)(G)(ii)(II) of the Act to provide for an extension of the MDH
program through FY 2024.
Section 4143 of the CAA 2023 amended section 1886(l)(2)(B) of the
Act to specify that for portions of cost reporting periods occurring in
each of calendar years (CYs) 2010 through 2019, the $60 million payment
limit specified in that subparagraph is not to apply to the total
amount of additional payments for nursing and allied health education
to be distributed to hospitals that, as of December 29, 2022, were
operating a school of nursing, a school of allied health, or a school
of nursing and allied health. In addition, section 4143 of the CAA 2023
provides that in addition to not applying the $60 million limit for
each of years 2010 through 2019, the Secretary shall not reduce direct
GME payments by such additional payment amounts for such nursing and
allied health education for portions of cost reporting periods
occurring in the year.
D. Summary of the Provisions of This Proposed Rule
In this proposed rule, we set forth proposed payment and policy
changes to the Medicare IPPS for FY 2024 operating costs and capital-
related costs of acute care hospitals and certain hospitals and
hospital units that are excluded from IPPS. In addition, we set forth
proposed changes to the payment rates, factors, and other payment and
policy-related changes to programs associated with payment rate
policies under the LTCH PPS for FY 2024.
The following is a general summary of the changes that we are
proposing to make in this proposed rule.
1. Proposed Changes to MS-DRG Classifications and Recalibrations of
Relative Weights
In section II. of the preamble of this proposed rule, we include
the following:
Proposed changes to MS-DRG classifications based on our
yearly review for FY 2024.
Proposed recalibration of the MS-DRG relative weights.
A discussion of the proposed FY 2024 status of new
technologies approved for add-on payments for FY 2023, a presentation
of our evaluation and analysis of the FY 2024 applicants for add-on
payments for high-cost new medical services and technologies (including
public input, as directed by
[[Page 26669]]
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 2024 new technology applicants under the
alternative pathways for certain medical devices and certain
antimicrobial products.
Proposed modifications to the new technology add-on
payment application eligibility requirements for technologies that are
not already Food and Drug Administration (FDA) market authorized to
require such applicants to have a complete and active FDA market
authorization request at the time of new technology add-on payment
application submission, to provide documentation of FDA acceptance or
filing, and to move the FDA marketing authorization deadline from July
1 to May 1, beginning with applications for FY 2025 (as discussed in
section II.E.8. of the preamble of this proposed rule).
2. Proposed Changes to the Hospital Wage Index for Acute Care Hospitals
In section III. of the preamble of this proposed rule, we propose
revisions to the wage index for acute care hospitals and the annual
update of the wage data. Specific issues addressed include, but are not
limited to, the following:
The proposed FY 2024 wage index update using wage data
from cost reporting periods beginning in FY 2019.
Calculation, analysis, and implementation of the proposed
occupational mix adjustment to the wage index for acute care hospitals
for FY 2024 based on the 2019 Occupational Mix Survey.
Proposed application of the rural, imputed and frontier
State floors, 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 adjustment to the wage index for acute care
hospitals for FY 2023 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 2024 wage
index.
3. Payment Adjustment for Medicare Disproportionate Share Hospitals
(DSHs) for FY 2024
In section IV. of the preamble of this proposed rule, we discuss
the following:
Proposed calculation of Factor 1 and Factor 2 of the
uncompensated care payment methodology.
Proposed methodological approach for determining the
additional payments for uncompensated care for FY 2024, which is the
same overall approach as was for FY 2023.
4. Other Decisions and Proposed Changes to the IPPS for Operating Costs
In section V. of the preamble of this 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 inpatient hospital update for FY 2024.
Proposed change related to the effective date of sole
community hospital (SCH) classification in cases that involve a merger.
Proposed updated national and regional case-mix values and
discharges for purposes of determining RRC status.
Proposed payment adjustment for low-volume hospitals for
FY 2024.
Discussion of statutory extension of the MDH program
through FY 2024.
Proposed requirements for payment adjustments to hospitals
under the HAC Reduction Program for FY 2024.
Proposed changes to the regulations for GME payments when
training occurs in REHs.
Discussion of and proposed changes relating to the
implementation of the Rural Community Hospital Demonstration Program in
FY 2024.
Proposed nursing and allied health education program
Medicare Advantage (MA) add-on rates and direct GME MA percent
reductions for CY 2022.
Proposal to implement section 4143 of the CAA 2023 which
waives the $60 million limit on annual nursing and allied health
education program MA payments.
Proposed update to the payment adjustment for certain
clinical trial and expanded access use immunotherapy cases.
4. Proposed FY 2024 Policy Governing the IPPS for Capital-Related Costs
In section VI. of the preamble to this proposed rule, we discuss
the proposed payment policy requirements for capital-related costs and
capital payments to hospitals for FY 2024. In addition, we discuss a
proposed change to how hospitals with a rural reclassification are
treated for capital DSH payments.
5. Proposed Changes to the Payment Rates for Certain Excluded
Hospitals: Rate-of-Increase Percentages
In section VII. of the preamble of this proposed rule, we discuss
the following:
Proposed changes to payments to certain excluded hospitals
for FY 2024.
Proposed continued implementation of the Frontier
Community Health Integration Project (FCHIP) Demonstration.
6. Proposed Changes to the LTCH PPS
In section VIII. of the preamble of this proposed rule, we set
forth proposed changes to the LTCH PPS Federal payment rates, factors,
and other payment rate policies under the LTCH PPS for FY 2024.
7. Proposed Changes Relating to Quality Data Reporting for Specific
Providers and Suppliers
In section IX. of the preamble of this proposed rule, we address
the following:
Proposal to adopt a modified version of the COVID-19
Vaccination Among Healthcare Personnel Measure in the Hospital IQR
Program, PCHQR Program, and LTCH QRP
Proposed requirements for the Hospital Inpatient Quality
Reporting (IQR) Program.
Proposed changes to the requirements for the quality
reporting program for PPS exempt cancer hospitals (PCHQR Program).
Proposed changes to the requirements for the Long-Term
Care Hospital Quality Reporting Program (LTCH QRP), and a request for
information on principles for selecting and prioritizing LTCH QRP
quality measures and concepts under consideration for future years. We
also provide an update on health equity.
Proposed changes to requirements pertaining to eligible
hospitals and CAHs participating in the Medicare Promoting
Interoperability Program.
8. Other Proposals and Comment Solicitations Included in the Proposed
Rule
Section X. of the preamble to this proposed rule includes the
following:
Proposals to establish requirements for additional
information that an eligible facility would be required to submit when
applying for enrollment as an REH.
Proposed changes pertaining to the process for hospitals
requesting an exception from the prohibition against facility expansion
and program integrity restrictions on approved facility expansion.
Solicitation of comments on potential approaches to
address the challenges faced by safety-net hospitals, including an
appropriate mechanism for identifying safety-net hospitals for Medicare
policy purposes.
Proposals to apply certain definitions included in the
Disclosures
[[Page 26670]]
of Ownership and Additional Disclosable Parties Information for Skilled
Nursing Facilities proposed rule published in the February 15, 2023
Federal Register (88 FR 9820) to all provider types that complete the
Form CMS-855-A enrollment application.
9. Other Provisions of the Proposed Rule
Section XI.A. of the preamble of this proposed rule includes our
discussion of the MedPAC Recommendations.
Section XI.B. of the preamble to this proposed rule includes a
descriptive listing of the public use files associated with this
proposed rule.
Section XII. of the preamble to this proposed rule includes the
collection of information requirements for entities based on our
proposals.
Section XIII. of the preamble to this proposed rule includes
information regarding our responses to public comments.
10. Determining Prospective Payment Operating and Capital Rates and
Rate-of-Increase Limits for Acute Care Hospitals
In sections II. and III. of the Addendum to this proposed rule, we
set forth proposed changes to the amounts and factors for determining
the proposed FY 2024 prospective payment rates for operating costs and
capital-related costs for acute care hospitals. We are proposing to
establish the threshold amounts for outlier cases. In addition, in
section IV. of the Addendum to this proposed rule, we address the
proposed update factors for determining the rate-of-increase limits for
cost reporting periods beginning in FY 2024 for certain hospitals
excluded from the IPPS.
11. Determining Prospective Payment Rates for LTCHs
In section V. of the Addendum to this proposed rule, we set forth
proposed changes to the amounts and factors for determining the
proposed FY 2024 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
2024. We are proposing to establish the adjustments for the wage index,
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.
12. Impact Analysis
In Appendix A of this proposed rule, we set forth an analysis of
the impact the proposed changes would have on affected acute care
hospitals, CAHs, LTCHs and other entities.
13. Recommendation of Update Factors for Operating Cost Rates of
Payment for Hospital Inpatient Services
In Appendix B of this proposed rule, as required by sections
1886(e)(4) and (e)(5) of the Act, we provide our recommendations of the
appropriate percentage changes for FY 2024 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.
14. Discussion of Medicare Payment Advisory Commission Recommendations
Under section 1805(b) of the Act, MedPAC is required to submit a
report to Congress, no later than March 15 of each year, in which
MedPAC reviews and makes recommendations on Medicare payment policies.
MedPAC's March 2023 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 address these recommendations in Appendix B of this proposed rule.
For further information relating specifically to the MedPAC March 2023
report or to obtain a copy of the report, contact MedPAC at (202) 220-
3700 or visit MedPAC's website at https://www.medpac.gov.
E. Use of the Best Available Data for the FY 2024 IPPS and LTCH PPS
Ratesetting
We primarily use two data sources in the IPPS and LTCH PPS
ratesetting: claims data and cost report data. The claims data source
is the Medicare Provider Analysis and Review (MedPAR) file, which
includes fully coded diagnostic and procedure data for all Medicare
inpatient hospital bills for discharges in a fiscal year. The cost
report data source is the Medicare hospital cost report data files from
the most recent quarterly Healthcare Cost Report Information System
(HCRIS) release. Our goal is always to use the best available data
overall for ratesetting. Ordinarily, the best available MedPAR data is
the most recent MedPAR file that contains claims from discharges for
the fiscal year that is 2 years prior to the fiscal year that is the
subject of the rulemaking. Ordinarily, the best available cost report
data is based on the cost reports beginning 3 fiscal years prior to the
fiscal year that is the subject of the rulemaking. However, due to the
impact of the COVID-19 public health emergency (PHE) on our ordinary
ratesetting data, we finalized modifications to our usual ratesetting
procedures in the FY 2022 and FY 2023 IPPS/LTCH PPS final rules.
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 44789 through
44793), we discussed that the FY 2020 MedPAR claims file and the FY
2019 HCRIS dataset (the most recently available data at the time of
rulemaking) both contained data that was significantly impacted by the
COVID-19 PHE, primarily in that the utilization of services at IPPS
hospitals and LTCHs was generally markedly different for certain types
of services in FY 2020 than would have been expected in the absence of
the PHE. We stated that the most recent vaccination and hospitalization
data from the Centers for Disease Control and Prevention (CDC)
available at the time of development of that rule supported our belief
at the time that the risk of COVID-19 in FY 2022 would be significantly
lower than the risk of COVID-19 in FY 2020 and there would be fewer
COVID-19 hospitalizations for Medicare beneficiaries in FY 2022 than
there were in FY 2020. Therefore, we finalized our proposal to use FY
2019 data for the FY 2022 ratesetting for circumstances where the FY
2020 data was significantly impacted by the COVID-19 PHE, based on the
belief that FY 2019 data from before the COVID-19 PHE would be a better
overall approximation of the FY 2022 inpatient experience at both IPPS
hospitals and LTCHs.
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 48795 through
48798), we discussed that the FY 2021 MedPAR claims file and the FY
2020 HCRIS dataset (the most recently available data at the time of
rulemaking) both contain data that was significantly impacted by the
COVID-19 PHE, primarily in that the utilization of services at IPPS
hospitals and LTCHs was again generally markedly different for certain
types of services in FY 2021 than would have been expected in the
absence of the virus that causes COVID-19. Based on review of the most
recent hospitalization data and information available from the CDC at
the time of development of that rule, we stated our belief that it was
reasonable to assume
[[Page 26671]]
that some Medicare beneficiaries would continue to be hospitalized with
COVID-19 at IPPS hospitals and LTCHs in FY 2023. However, we also
stated our belief that it would be reasonable to assume based on the
information available at the time that there would be fewer COVID-19
hospitalizations in FY 2023 than in FY 2021. Accordingly, because we
anticipated Medicare inpatient hospitalizations for COVID-19 would
continue in FY 2023 but at a lower level, we finalized our proposal to
use FY 2021 data for purposes of the FY 2023 IPPS and LTCH PPS
ratesetting but with several modifications to our usual ratesetting
methodologies to account for the anticipated decline in COVID-19
hospitalizations of Medicare beneficiaries at IPPS hospitals and LTCHs
as compared to FY 2021.
For this FY 2024 IPPS/LTCH PPS rulemaking, we have analyzed the FY
2022 MedPAR claims file and the FY 2021 HCRIS dataset, which are the
most recently available data for FY 2024 ratesetting. We observed that
certain shifts in inpatient utilization and costs that occurred in FY
2020 continued to persist in FY 2022. Specifically, the share of
admissions at IPPS hospitals and LTCHs for MS-DRGs and MS-LTC-DRGs that
are associated with the treatment of COVID-19 continued to remain at
levels higher than those observed in the pre-pandemic data.
For example, in FY 2019, the share of IPPS cases grouped to MS-DRG
177 (Respiratory Infections and Inflammations with major complication
or comorbidity (MCC)) was approximately 1 percent, while in FY 2022 the
share of IPPS cases grouped to MS-DRG 177 was approximately 4 percent.
Similarly, in FY 2019, the share of LTCH PPS standard Federal payment
rate cases grouped to MS-LTC-DRG 207 (Respiratory System Diagnosis with
Ventilator Support >96 Hours) was approximately 18 percent, while in FY
2022 the share of LTCH PPS standard Federal payment rate cases grouped
to MS-LTC-DRG 207 was approximately 22 percent.
We have continued to monitor the latest COVID-19 related data and
information released by the CDC. The CDC graph below illustrates new
inpatient hospital admissions of patients with confirmed COVID-19 from
August 1, 2020 through January 20, 2023. (https://www.cdc.gov/coronavirus/2019-ncov/covid-data/covidview/01202023/images/hospitalizations.PNG?_=24630, accessed January 20, 2023)
[GRAPHIC] [TIFF OMITTED] TP01MY23.002
As seen in the graph, in the United States, patients continue to be
hospitalized with the virus that causes COVID-19. The CDC has stated
that new variants will continue to emerge. Viruses constantly change
through mutation and sometimes these mutations result in a new variant
of the virus. Some variants spread more easily and quickly than other
variants, which may lead to more cases of COVID-19. Even if a variant
causes less severe disease in general, an increase in the overall
number of cases could cause an increase in hospitalizations.\2\ Based
on the information available at this time, we believe there will
continue to be COVID-19 cases treated at IPPS hospitals and LTCHs in FY
2024, such that it is appropriate to use the FY 2022 data, as the most
recent available data, for purposes of the FY 2024 IPPS and LTCH PPS
ratesetting. However, based on the information available at this time,
we do not believe there is a reasonable basis for us to assume that
there will be a meaningful difference in the number of COVID-19 cases
treated at IPPS hospitals and LTCHs in FY 2024 relative to FY 2022,
such that modifications to our usual ratesetting methodologies would be
warranted.
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\2\ https://www.cdc.gov/coronavirus/2019-ncov/variants/index.html, accessed January 20, 2023.
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As such, we believe that FY 2022 data, as the most recent available
data, is the best available data for approximating the inpatient
experience at IPPS hospitals and LTCHs in FY 2024. Therefore, we are
proposing to use the FY 2022 MedPAR claims file and the FY 2021 HCRIS
dataset (which contains data from many cost reports ending in FY 2022
based on each hospital's cost reporting period) for purposes of the FY
2024 IPPS and LTCH PPS ratesetting. For the reasons discussed, we are
not proposing any modifications to our usual ratesetting methodologies
to account for the impact of COVID-19 on the ratesetting data.
II. Proposed Changes to Medicare Severity Diagnosis-Related Group (MS-
DRG) Classifications and Relative Weights
A. Background
Section 1886(d) of the Act specifies that the Secretary shall
establish a classification system (referred to as diagnosis-related
groups (DRGs)) for inpatient discharges and adjust payments under the
IPPS based on appropriate weighting factors assigned to each DRG.
Therefore, under the IPPS, Medicare pays for inpatient hospital
services on a rate per discharge basis
[[Page 26672]]
that varies according to the DRG to which a beneficiary's stay is
assigned. The formula used to calculate payment for a specific case
multiplies an individual hospital's payment rate per case by the weight
of the DRG to which the case is assigned. Each DRG weight represents
the average resources required to care for cases in that particular
DRG, relative to the average resources used to treat cases in all DRGs.
Section 1886(d)(4)(C) of the Act requires that the Secretary adjust
the DRG classifications and relative weights at least annually to
account for changes in resource consumption. These adjustments are made
to reflect changes in treatment patterns, technology, and any other
factors that may change the relative use of hospital resources.
B. Adoption of the MS-DRGs and MS-DRG Reclassifications
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/rate year (RY) 2010 LTCH PPS final rule
(74 FR 43764 through 43766) and the FYs 2011 through 2023 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; 84 FR
42058 through 42165; 85 FR 58445 through 58596; 86 FR 44795 through
44961; and 87 FR 48800 through 48891, respectively).
For discussion regarding our previously finalized policies
(including our historical adjustments to the payment rates) relating to
the effect of changes in documentation and coding that do not reflect
real changes in case mix, we refer readers to the FY 2023 IPPS/LTCH PPS
final rule (87 FR 48799 through 48800).
C. Proposed Changes to Specific MS-DRG Classifications
1. Discussion of Changes to Coding System and Basis for Proposed FY
2024 MS-DRG Updates
a. Conversion of MS-DRGs to the International Classification of
Diseases, 10th Revision (ICD-10)
As of October 1, 2015, providers use the International
Classification of Diseases, 10th Revision (ICD-10) coding system to
report diagnoses and procedures for Medicare hospital inpatient
services under the MS-DRG system instead of the ICD-9-CM coding system,
which was used through September 30, 2015. The ICD-10 coding system
includes the International Classification of Diseases, 10th Revision,
Clinical Modification (ICD-10-CM) for diagnosis coding and the
International Classification of Diseases, 10th Revision, Procedure
Coding System (ICD-10-PCS) for inpatient hospital procedure coding, as
well as the ICD-10-CM and ICD-10-PCS Official Guidelines for Coding and
Reporting. For a detailed discussion of the conversion of the MS-DRGs
to ICD-10, we refer readers to the FY 2017 IPPS/LTCH PPS final rule (81
FR 56787 through 56789).
b. Basis for Proposed FY 2024 MS-DRG Updates
As discussed in the FY 2023 IPPS/LTCH PPS proposed rule (87 FR
28127) and final rule (87 FR 48800 through 48801), beginning with FY
2024 MS-DRG classification change requests, we changed the deadline to
request changes to the MS-DRGs to October 20 of each year to allow for
additional time for the review and consideration of any proposed
updates. We also described the new process for submitting requested
changes to the MS-DRGs via a new electronic application intake system,
Medicare Electronic Application Request Information System\TM\
(MEARIS\TM\), accessed at https://mearis.cms.gov. We stated that
beginning with FY 2024 MS-DRG classification change requests, CMS will
only accept requests submitted via MEARIS\TM\ and will no longer
consider requests sent via email. Additionally, we noted that within
MEARIS\TM\, we have built in several resources to support users,
including a ``Resources'' section available at https://mearis.cms.gov/public/resources with technical support available under ``Useful
Links'' at the bottom of the MEARIS\TM\ site. Questions regarding the
MEARIS\TM\ system can be submitted to CMS using the form available
under ``Contact'', also at the bottom of the MEARIS\TM\ site.
We note that the burden associated with this information collection
requirement is the time and effort required to collect and submit the
data in the request for MS-DRG classification changes to CMS. The
aforementioned burden is subject to the Paperwork Reduction Act (PRA)
of 1995 and approved under Office of Management and Budget (OMB)
control number 0938-1431 and has an expiration date of 09/30/2025.
As noted previously, interested parties had to submit MS-DRG
classification change requests for FY 2024 by October 20, 2022. As we
have discussed in prior rulemaking, 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. Interested parties should submit any comments and
suggestions for FY 2025 by October 20, 2023 via MEARIS\TM\ at: https://mearis.cms.gov/public/home.
As we did for the FY 2023 IPPS/LTCH PPS proposed rule, for this FY
2024 IPPS/LTCH PPS proposed rule we are providing a test version of the
ICD-10 MS-DRG GROUPER Software, Version 41, so that the public can
better analyze and understand the impact of the proposals included in
this proposed rule. We note that this test software reflects the
proposed GROUPER logic for FY 2024. Therefore, it includes the new
diagnosis and procedure codes that are effective for FY 2024 as
reflected in Table 6A.--New Diagnosis Codes--FY 2024 and Table 6B.--New
Procedure Codes--FY 2024 associated with this proposed rule and does
not include the diagnosis codes that are invalid beginning in FY 2024
as reflected in Table 6C.--Invalid Diagnosis Codes--FY 2024 associated
with this proposed rule. We note that at the time of the development of
this proposed rule there were no procedure codes designated as invalid
for FY 2024, and therefore, there is no Table 6D--Invalid Procedure
Codes--FY 2024 associated with this proposed rule. These tables are not
published in the Addendum to this proposed rule, but are available on
the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html as described in section
VI. of the Addendum to this proposed rule. Because the diagnosis codes
no longer valid for FY 2024 are not reflected in the test software, we
are making available a supplemental file in Table 6P.1a that includes
the mapped Version 41 FY 2024 ICD-10-CM codes and the deleted Version
40.1 FY 2023 ICD-10-CM codes that should be used for testing purposes
with users' available claims data. Therefore, users will have access to
the
[[Page 26673]]
test software allowing them to build case examples that reflect the
proposals included in this proposed rule. In addition, users will be
able to view the draft version of the ICD-10 MS-DRG Definitions Manual,
Version 41.
The test version of the ICD-10 MS-DRG GROUPER Software, Version 41,
the draft version of the ICD-10 MS-DRG Definitions Manual, Version 41,
and the supplemental mapping files in Table 6P.1a of the FY 2023 and FY
2024 ICD-10-CM diagnosis codes are available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.
Following are the changes that we are proposing to the MS-DRGs for
FY 2024. We are inviting public comments on each of the MS-DRG
classification proposed changes, as well as our proposals to maintain
certain existing MS-DRG classifications discussed in this proposed
rule. In some cases, we are proposing changes to the MS-DRG
classifications based on our analysis of claims data and clinical
appropriateness. In other cases, we are proposing to maintain the
existing MS-DRG classifications based on our analysis of claims data
and clinical appropriateness. For this FY 2024 IPPS/LTCH PPS proposed
rule, our initial MS-DRG analysis was based on ICD-10 claims data from
the September 2022 update of the FY 2022 MedPAR file, which contains
hospital bills received from October 1, 2021, through September 30,
2022. In our discussion of the proposed MS-DRG reclassification
changes, we refer to these claims data as the ``September 2022 update
of the FY 2022 MedPAR file.'' Separately, where otherwise indicated,
additional analysis was based on ICD-10 claims data from the December
2022 update of the FY 2022 MedPAR file, which contains hospital bills
received by CMS through December 31, 2022, for discharges occurring
from October 1, 2021 through September 30, 2022. In our discussion of
the proposed MS-DRG reclassification changes, we refer to these claims
data as the ``December 2022 update of the FY 2022 MedPAR file.''
Specifically, as discussed further in this section, we used the
additional claims data available in the December 2022 update of the FY
2022 MedPAR file to assess the application of the NonCC subgroup
criteria to existing MS-DRGs with a three-way severity level split, as
well as to simulate restructuring of any proposed MS-DRGs, to assess
the case counts and other criteria for determining whether a proposed
new base MS-DRG would satisfy the criteria to create subgroups.
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 clinical factors 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 the FY 2021 IPPS/LTCH PPS final rule (85 FR 58448), we finalized
our proposal to expand our existing criteria to create a new
complication or comorbidity (CC) or major complication or comorbidity
(MCC) subgroup within a base MS-DRG. Specifically, we finalized the
expansion of the criteria to include the NonCC subgroup for a three-way
severity level split. We stated we believed that applying these
criteria to the NonCC subgroup would better reflect resource
stratification as well as promote stability in the relative weights by
avoiding low volume counts for the NonCC level MS-DRGs. We noted that
in our analysis of MS-DRG classification requests for FY 2021 that were
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. We also noted
that the application of the 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. We stated that any proposed modifications to the
MS-DRGs would be addressed in future rulemaking consistent with our
annual process and reflected in 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.
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 44798), we finalized
a delay in applying this technical criterion to existing MS-DRGs until
FY 2023 or future rulemaking, in light of the PHE. Interested parties
recommended that a complete analysis of the MS-DRG changes to be
proposed for future rulemaking in connection with the expanded three-
way severity split criteria be conducted and made available to enable
the public an opportunity to review and consider the redistribution of
cases, the impact to the relative weights, payment rates, and hospital
case mix to allow meaningful comment prior to implementation.
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 48803), we also
finalized a delay in application of the NonCC subgroup criteria to
existing MS-DRGs with a three-way severity level split in light of the
ongoing PHE and until such time additional analyses can be performed to
assess impacts, as discussed in response to public comments in the FY
2022 and FY 2023 IPPS/LTCH PPS final rules.
In our analysis of the MS-DRG classification requests for FY 2024
that we received by October 20, 2022, 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.
BILLING CODE 4120-01-P
[[Page 26674]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.003
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 typically evaluate the
most recent year of MedPAR claims data available. For example, we
stated earlier that for this FY 2024 IPPS/LTCH PPS proposed rule, our
initial MS-DRG analysis was generally based on ICD-10 claims data from
the September 2022 update of the FY 2022 MedPAR file, with the
additional claims data available in the December 2022 update of the FY
2022 MedPAR file used to assess the case counts and other criteria for
determining whether a proposed new base MS-DRG would satisfy the
criteria to create subgroups. 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 typically analyze the most recent two
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 is satisfied for a three-way split. In applying the criteria
for a three-way split, a base MS-DRG is initially subdivided into the
three subgroups: MCC, CC, and NonCC. Each subgroup is then analyzed in
relation to the other two subgroups using the volume (Criteria 1 and
2), average cost (Criteria 3 and 4), and reduction in variance
(Criteria 5). If the criteria fail, the next step is to determine if
the criteria are satisfied for a two-way split. In applying the
criteria for a two-way split, a base MS-DRG is initially subdivided
into two subgroups: ``with MCC'' and ``without MCC'' (1_23) or ``with
CC/MCC'' and ``without CC/MCC'' (12_3). Each subgroup is then analyzed
in relation to the other using the volume (Criteria 1 and 2), average
cost (Criteria 3 and 4), and reduction in variance (Criteria 5). 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 previously noted, to validate whether the established severity
levels within a base MS-DRG are supported, we typically analyze the
most recent two years of MedPAR claims data. For this FY 2024 IPPS/LTCH
PPS proposed rule, using the December 2022 update of the FY 2022 MedPAR
file and the March 2022 update of the FY 2021 MedPAR file, we also
analyzed how applying the
[[Page 26675]]
NonCC subgroup criteria to all MS-DRGs currently split into three
severity levels would potentially affect the MS-DRG structure in
connection with the proposed FY 2024 MS-DRG classification changes.
While, as previously noted, our MS-DRG analysis for this FY 2024 IPPS/
LTCH PPS proposed rule was otherwise based on ICD-10 claims data from
the September 2022 update of the FY 2022 MedPAR file, we utilized the
additional claims data available from the December 2022 update of the
FY 2022 MedPAR file for purposes of assessing the application of the
NonCC subgroup criteria to these existing MS-DRGs as well as to
determine whether a proposed new base MS-DRG satisfies the criteria to
create subgroups. Findings from our analysis indicated that
approximately 45 base MS-DRGs would be subject to change based on the
three-way severity level split criterion finalized in FY 2021.
Specifically, we found that applying the NonCC subgroup criteria to all
MS-DRGs currently split into three severity levels would result in the
potential deletion of 135 MS-DRGs (45 MS-DRGs x 3 severity levels =
135) and the potential creation of 86 new MS-DRGs. We refer the reader
to Table 6P.10--Potential MS-DRG Changes with Application of the NonCC
Subgroup Criteria and Detailed Data Analysis- FY 2024 associated with
this proposed rule and available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS
for detailed information, including the criteria to create subgroups in
Table 6P.10a (as also set forth in the preceding table) and the list of
the 135 MS-DRGs that would potentially be subject to deletion and the
list of the 86 MS-DRGs that would potentially be created in Table
6P.10b. We note that we also identified an additional 12 obstetric MS-
DRGs (4 base MS-DRGs x 3 severity levels=12) that would be subject to
change based on the application of the three-way severity level split
criterion, as reflected in our data analysis in Table 6P.10c associated
with this proposed rule. However, in response to prior public comments
expressing concern about the historical low volume of the obstetric
related MS-DRGs being subject to application of the NonCC subgroup
criteria and consistent with our discussion in prior rulemaking
regarding this population in our Medicare claims data and the
development of these MS-DRGs (83 FR 41210), we believe it may be
appropriate to exclude these MS-DRGs from application of the NonCC
subgroup criteria. The list of 12 obstetric MS-DRGs is shown in the
following table.
[GRAPHIC] [TIFF OMITTED] TP01MY23.004
BILLING CODE 4120-01-C
We also refer the reader to Table 6P.10d for the data analysis of
all 49 base MS-DRGs that would be subject to change based on the
application of the three-way severity level split criterion and to
Table 6P.10e for the corresponding data dictionary that describes the
meaning of the data elements and assists with interpretation of the
data related to our analysis with application of the NonCC subgroup
criteria. We note, in our analysis of the claims data and as reflected
in Table 6P.10d, we identified four base MS-DRGs currently subdivided
with a three-way severity level split (4 base MS-DRGs x 3 severity
levels = 12 MS-DRGs) that result in the potential creation of a single,
base MS-DRG when grouped under the proposed V41 GROUPER software with
application of the NonCC subgroup criteria. As shown in Table 6P.10d,
the four current base MS-DRGs (excluding the 4 obstetric related base
DRGs) are base MS-DRGs 283, 296, 411 and 799. In addition to not
satisfying the criterion that there be at least 500 cases in the NonCC
subgroup for a three-way severity level split, these four base MS-DRGs
also failed one or more of the other criteria to create subgroups. For
example, our review of base MS-DRGs 283 and 296 showed they failed the
criterion that there be at least 5% or more of the patient cases in the
NonCC subgroup. For base MS-DRG 411, we found the criterion that there
be at least 500 cases in each subgroup for a three-way severity level
split, as well as in each subgroup for both of the two-way severity
level splits, was not met. Lastly, for base MS-DRG 799, we found less
than 500 cases in at least two of three subgroups for a three-way
severity level split, as well as for at least one of the two subgroups
for a two-way severity level split, and the R2 value was less than 3.0
for the two-way severity level split.
We also refer the reader to Table 6P.10f for the alternate cost
weight analysis with application of the NonCC subgroup criteria that
includes transfer-adjusted cases from the December 2022 update of the
FY 2022 MedPAR file under the proposed V41 ICD-10 MS-
[[Page 26676]]
DRG GROUPER Software, the MS-DRG relative weights calculated under the
proposed V41 ICD-10 MS-DRG GROUPER Software, the alternate MS-DRG
relative weights calculated with application of the NonCC subgroup
criteria using an alternate version of the ICD-10 MS-DRG GROUPER
Software, Version 41.A (discussed in more detail in this section of
this proposed rule), and the change in MS-DRG relative weights between
those calculated under the proposed V41 GROUPER Software and those
calculated under the alternate V41.A GROUPER Software. We note that to
facilitate the structural comparison between the proposed V41 GROUPER
and the alternate V41.A GROUPER, the relative weights calculated using
the proposed V41 GROUPER Software (column F) do not reflect application
of the 10-percent cap. We further note that changes in the status for
transfer adjusted cases are reflected for the relative weights
calculated using the proposed V41 GROUPER Software only and are not
reflected for the alternate MS-DRG weights with application of the
NonCC subgroup criteria. We note, as shown in Table 6P.10f, that we
found five MS-DRGs for which there appears to be a greater than
negative 10% change between the relative weight calculated under the
proposed V41 GROUPER Software and the calculated alternate relative
weight under the V41.A GROUPER Software with application of the NonCC
subgroup criteria. As shown in Table 6P.10f, the five MS-DRGs are
existing MS-DRG 021 (potential new MS-DRG 105), existing MS-DRG 411
(potential new MS-DRG 426), existing MS-DRG 573 (potential new MS-DRG
529), existing MS-DRG 574 (potential new MS-DRG 530), and existing MS-
DRG 799 (potential new MS-DRG 649). Of the five existing MS-DRGs, two
of the MS-DRGs are those for which a new single, base MS-DRG would
potentially be created from the current three-way split, as previously
described: MS-DRG 411 (potential new MS-DRG 426) and MS-DRG 799
(potential new MS-DRG 649). The findings are consistent with what we
would expect given the low volume of cases in the NonCC subgroups
compared to the volume of cases in the CC subgroups for these MS-DRGs.
As noted in prior rulemaking, any potential MS-DRG updates to be
considered for a future proposal in connection with application of the
NonCC subgroup criteria would also involve a redistribution of cases,
which would impact the relative weights, and, thus, the payment rates
proposed for particular types of cases. As such, and in response to
prior public comments requesting that further analysis of the
application of the NonCC subgroup criteria be made available, in
addition to Table 6P.10f, we are making available additional files
reflecting application of the NonCC subgroup criteria in connection
with the proposed FY 2024 MS-DRG changes, using the December 2022
update of the FY 2022 MedPAR file. These additional files include an
alternate Table 5--Alternate List of Medicare Severity Diagnosis
Related Groups (MS-DRGs), Relative Weighting Factors, and Geometric and
Arithmetic Mean Length of Stay, an alternate Length of Stay (LOS)
Statistics file, an alternate Case Mix Index (CMI) file, and an
alternate After Outliers Removed and Before Outliers Removed (AOR_BOR)
file. The files are available in association with this proposed rule on
the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS.
For this FY 2024 IPPS/LTCH PPS proposed rule we are also providing
an alternate test version of the ICD-10 MS-DRG GROUPER Software,
Version 41.A, so that the public can better analyze and understand the
impact on the proposals included in this proposed rule if the NonCC
subgroup criteria were to be applied to existing MS-DRGs with a three-
way severity level split. We note that this alternate test software
reflects the proposed GROUPER logic for FY 2024 as modified by the
application of the NonCC subgroup criteria. Therefore, it includes the
new diagnosis and procedure codes that are effective for FY 2024 as
reflected in Table 6A.--New Diagnosis Codes--FY 2024 and Table 6B.--New
Procedure Codes--FY 2024 associated with this proposed rule and does
not include the diagnosis codes that are invalid beginning in FY 2024
as reflected in Table 6C.--Invalid Diagnosis Codes--FY 2024 associated
with this proposed rule. As previously noted, at the time of the
development of this proposed rule there were no procedure codes
designated as invalid for FY 2024, and therefore, there is no Table 6D-
Invalid Procedure Codes--FY 2024 associated with this proposed rule.
These tables are not published in the Addendum to this proposed rule,
but are available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html as
described in section VI. of the Addendum to this proposed rule. Because
the diagnosis codes no longer valid for FY 2024 are not reflected in
the alternate test software, we are making available a supplemental
file in Table 6P.1a that includes the mapped Version 41 FY 2024 ICD-10-
CM codes and the deleted Version 40.1 FY 2023 ICD-10-CM codes that
should be used for testing purposes with users' available claims data.
Therefore, users will have access to the alternate test software
allowing them to build case examples that reflect the proposals
included in this proposed rule with application of the NonCC subgroup
criteria. Because the potential MS-DRG changes with application of the
NonCC subgroup criteria are available in Table 6P.10b associated with
this proposed rule, an alternate version of the ICD-10 MS-DRG
Definitions Manual was not developed.
The alternate test version of the ICD-10 MS-DRG GROUPER Software,
Version 41.A, and the supplemental mapping files in Table 6P.1a of the
FY 2023 and FY 2024 ICD-10-CM diagnosis codes are available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.
After delaying the application of the NonCC subgroup criteria for
two years, and in response to prior public comments, we are making
available these additional analyses reflecting application of the
criteria in connection with the proposed FY 2024 MS-DRG changes for
public review and comment, to inform application of the NonCC subgroup
criteria for FY 2025 rulemaking.
We are proposing to continue to delay application of the NonCC
subgroup criteria to existing MS-DRGs with a three-way severity level
split for FY 2024. We are interested in hearing feedback regarding the
experience of large urban hospitals, rural hospitals, and other
hospital types and will take commenters' feedback into consideration
for our development of the FY 2025 proposed rule.
2. Major Diagnostic Category (MDC) 01: (Diseases and Disorders of the
Nervous System): Epilepsy With Neurostimulator
The Responsive Neurostimulator (RNS[reg]) System is a cranially
implanted neurostimulator and is a treatment option for persons
diagnosed with medically intractable epilepsy, a brain disorder
characterized by persistent seizure activity which despite maximal
medical treatment, remains sufficiently debilitating. Cases involving
the use of the RNS[reg] System are identified by the reporting of an
ICD-10-PCS code combination capturing a neurostimulator generator
inserted into the skull with the insertion of a
[[Page 26677]]
neurostimulator lead into the brain and the cases are assigned to MS-
DRG 023 (Craniotomy with Major Device Implant or Acute Complex CNS
Principal Diagnosis with MCC or Chemotherapy Implant or Epilepsy with
Neurostimulator) when reported with a principal diagnosis of epilepsy.
We refer the reader to the ICD-10 MS-DRG Definitions Manual Version
40.1, which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software, for complete documentation of the GROUPER
logic for MS-DRG 023.
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[reg]
neurostimulator) to MS-DRG 023 even if there is no MCC reported:
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); and
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 proposed 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.
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58459 through
58462), we discussed 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 to MS-DRG 021 (Intracranial Vascular Procedures with Principal
Diagnosis Hemorrhage with CC) or to reassign these cases to another MS-
DRG for more appropriate payment. We stated that while the results of
our claims analysis indicated 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[reg] neurostimulator), and a principal diagnosis of
epilepsy are higher compared to the average costs for all cases in
their assigned MS-DRG, we could not ascertain from the claims data the
resource use specifically attributable to the procedure during a
hospital stay. We stated that we believed 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[reg] neurostimulator), and a
principal diagnosis of epilepsy was needed prior to proposing any
further reassignment of these cases to ensure clinical coherence
between these cases and the other cases with which they may potentially
be grouped and therefore did not propose to reassign 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[reg] neurostimulator) from MS-DRG 023 to MS-DRG 021. We
also did not propose to reassign Responsive Neurostimulator (RNS[reg])
System cases to another MS-DRG. We stated we expected that, in future
years, we would have additional data that could be used to evaluate the
potential reassignment 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[reg]
neurostimulator), and a principal diagnosis of epilepsy.
For this FY 2024 IPPS/LTCH PPS proposed rule, we received a similar
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 to MS-DRG 021 or
reassign all cases currently assigned to MS-DRG 023 that involve a
craniectomy or a craniotomy with the insertion of device implant and
create a new MS-DRG for these cases. The requestor acknowledged both
the refinements made to MS-DRG 023 effective for FY 2018 and the
discussion in FY 2021 rulemaking, but stated that cases describing the
insertion of a neurostimulator generator into the skull in combination
with the insertion of a neurostimulator lead into the brain (including
cases involving the use of the RNS[reg] neurostimulator) are negatively
impacted from a payment perspective in their current MS-DRG assignment
due to the large number of cases, with a wide range of principal
diagnoses, procedures, and procedure approaches, also assigned to MS-
DRG 023 and MS-DRG 024 (Craniotomy with Major Device Implant or Acute
Complex CNS Principal Diagnosis without MCC) and therefore continue to
be underpaid. The requestor performed its own analysis of Medicare
claims data and stated that it found that the average costs of cases
describing the insertion of the RNS[reg] neurostimulator were
significantly higher than the average costs of all cases in their
current assignment to MS-DRG 023, and as a result, cases describing the
insertion of the RNS[reg] neurostimulator are not being adequately
reimbursed.
The requestor suggested the following two options for MS-DRG
assignment updates: (1) reassign cases describing the insertion of a
neurostimulator generator into the skull in combination with the
insertion of a neurostimulator lead into the brain (including cases
involving the use of the RNS[reg] neurostimulator) from MS-DRG 023 to
MS-DRG 021 with a change in title to ``Intracranial Vascular Procedures
with PDX Hemorrhage with CC or Craniectomy with Neurostimulator;'' or
(2) extract all cases from MS-DRG 023 involving a craniectomy/
craniotomy with device implant and create a new MS-DRG for these cases.
The requestor acknowledged that the relatively low volume of cases
that only involve the insertion of a neurostimulator generator into the
skull in combination with the insertion of a neurostimulator lead into
the brain in the claims data is likely not sufficient to warrant the
creation of a new MS-DRG. The requestor further stated given the
limited options within the existing MS-DRG structure that fit from both
a cost and clinical cohesiveness perspective, they believe that MS-DRG
021 is the most logical fit in terms of average costs and clinical
coherence for reassignment of RNS[reg] System cases even though,
according to the requestor, the insertion of a neurostimulator
generator into the skull in combination with the insertion of a
neurostimulator lead into the brain is technically more complex and
involves a higher level of training, extreme precision and
sophisticated technology than performing a craniectomy for hemorrhage.
As another option, the requestor identified procedures involving a
craniectomy or craniotomy by searching for ICD-10-PCS codes that
describe the
[[Page 26678]]
root operations ``Destruction'', ``Division'', ``Drainage'',
``Excision'', Extirpation'', or ``Insertion'' performed related to the
brain or specific brain anatomy (for example, cerebral ventricle,
cerebellum) with an ``Open Approach'' in the claims data. The requestor
also said they identified claims involving a device implant by
searching for ICD-10-PCS codes that describe the root operation
``Insertion'' and stated that they found that the claims they
identified had average costs comparable to the average costs of
RNS[reg] cases and therefore creating a new MS-DRG for all cases
involving a craniectomy/craniotomy with device implant was a reasonable
alternative option.
To begin our analysis, we identified the ICD-10-CM diagnosis codes
that describe a diagnosis of epilepsy. We refer the reader to Table
6P.2a associated with this proposed rule (and available at: https://
www.cms.gov/medicare/medicare-fee-for-service-payment/
acuteinpatientpps) for the list of the ICD-10-CM codes that we
identified.
We then examined the claims data from the September 2022 update of
the FY 2022 MedPAR file for all cases in MS-DRG 023 and compared the
results to 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[reg] neurostimulator)
that had a principal diagnosis of epilepsy in MS-DRG 023. The following
table shows our findings:
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP01MY23.005
As shown in the table, for MS-DRG 023, we identified a total of
11,602 cases, with an average length of stay of 10.4 days and average
costs of $47,321. Of those 11,602 cases in MS-DRG 023, there were 57
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[reg] neurostimulator) that had a
principal diagnosis of epilepsy. We note that the 57 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[reg] neurostimulator) and a principal diagnosis of
epilepsy have an average length of stay of 3.1 days and average costs
of $58,676, as compared to the average length of stay of 10.4 days and
average costs of $47,321 for all cases in MS-DRG 023. While these
neurostimulator cases have average costs that are $11,355 higher than
the average costs of all cases in MS-DRG 023, there were only a total
of 57 cases. We reviewed these data, and agreed with the requestor that
the number of cases continues to be too small to warrant the creation
of a new MS-DRG for these cases, for the reasons discussed in the FY
2018 IPPS/LTCH PPS final rule (82 FR 38015 through 38019) and the FY
2021 IPPS/LTCH PPS final rule (85 FR 58459 through 58462).
We 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[reg] neurostimulator) to MS-DRGs 020, 021, and 022
(Intracranial Vascular Procedures with PDX Hemorrhage with MCC, with
CC, and without CC/MCC, respectively). While the request was to
reassign these cases to MS-DRG 021, MS-DRG 021 is specifically
differentiated according to the presence of a secondary diagnosis with
a severity level designation of a complication or comorbidity (CC).
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[reg] neurostimulator) do not always
involve the presence of a secondary diagnosis with a severity level
designation of a complication or comorbidity (CC), and therefore we
reviewed data for all three MS-DRGs. The following table shows our
findings:
[GRAPHIC] [TIFF OMITTED] TP01MY23.006
As shown in the table, for MS-DRG 020, there were a total of 2,016
cases with an average length of stay of 13.9 days and average costs of
$72,776. For MS-DRG 021, there were a total of 548 cases with an
average length of stay of 9.1 days and average costs of $53,973. For
MS-DRG 022, there were a total of 270 cases with an average length of
stay of 3.9 days and average costs of $31,248.
Because all 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[reg]
neurostimulator) with a principal diagnosis of epilepsy are assigned
MS-DRG 023 even if there is no MCC reported and there is a three-way
split within MS-DRGs 020, 021, and 022, we also analyzed the cases
reporting a neurostimulator generator inserted into the skull with the
insertion of a neurostimulator lead into the brain
[[Page 26679]]
(including cases involving the use of the RNS[reg] neurostimulator)
with a principal diagnosis of epilepsy for the presence or absence of a
secondary diagnosis designated as a complication or comorbidity (CC) or
a major complication or comorbidity (MCC). The following table shows
our findings:
[GRAPHIC] [TIFF OMITTED] TP01MY23.007
This data analysis shows that, similar to our findings as
summarized in the FY 2018 and FY 2021 IPPS/LTCH PPS final rules, on
average, 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[reg]
neurostimulator) and a principal diagnosis of epilepsy have average
costs that are relatively more similar to the average costs of cases in
MS-DRG 021 ($58,676 compared to $53,973), while the average length of
stay is shorter (3.1 days compared to 9.1 days). However, when
distributed based on the presence or absence of a secondary diagnosis
designated as a complication or comorbidity (CC) or a major
complication or comorbidity (MCC), the 57 cases in MS-DRG 023 reporting
a principal diagnosis of epilepsy with a neurostimulator generator
inserted into the skull and insertion of a neurostimulator lead into
brain have higher average costs and shorter lengths of stay than the
cases in the FY 2022 MedPAR file for MS-DRGs 021 and 022 while having
lower average costs and shorter lengths of stay than the cases in MS-
DRG 020. We reviewed the clinical issues and the claims data, and
continue to not support reassigning the 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[reg] neurostimulator) and a principal diagnosis of
epilepsy from MS-DRG 023 to MS-DRGs 020, 021 or 022. As also discussed
in the FY 2018 and FY 2021 IPPS/LTCH PPS final rules, the cases in MS-
DRGs 020, 021 and 022 have a principal diagnosis of a hemorrhage. The
RNS[reg] neurostimulator generators are not used to treat patients with
diagnosis of a hemorrhage. We continue to believe that it is
inappropriate to reassign cases representing a principal diagnosis of
epilepsy to a MS-DRG that contains cases that represent the treatment
of intracranial hemorrhage, as discussed in the FY 2018 IPPS/LTCH PPS
final rule (82 FR 38015 through 38019) and the FY 2021 IPPS/LTCH PPS
final rule (85 FR 58459 through 58462). The differences in average
length of stay and average costs based on the more recent data continue
to support this recommendation.
We note, as discussed in section II.C.1.b of this proposed rule,
using the December 2022 update of the FY 2022 MedPAR file, we analyzed
how applying the NonCC subgroup criteria to all MS-DRGs currently split
into three severity levels would affect the MS-DRG structure beginning
in FY 2024. Findings from our analysis indicated that MS-DRGs 020, 021,
and 022 as well as approximately 44 other base MS-DRGs would
potentially be subject to change based on the three-way severity level
split criterion finalized in FY 2021. We refer the reader to Table
6P.10b associated with this proposed rule (which is available on the
CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS) for the list of the 135 MS-DRGs that would
be subject to deletion and the list of the 86 new MS-DRGs that would
potentially be created if the NonCC subgroup criteria were applied.
We then explored alternative options, as was requested. We do not
agree that searching for ICD-10-PCS codes that describe the root
operations ``Destruction'', ``Division'', ``Drainage'', ``Excision'',
Extirpation'', or ``Insertion'' performed related to the brain or
specific brain anatomy as suggested by the requestor is a reasonable
approach to find cases comparable to cases involving the use of the
RNS[reg] System as these root operations all describe procedures
performed for distinct and differing objectives. Instead, to review for
similar utilization of resources, we further analyzed the data to
identify those cases currently reporting a procedure code combination
representing neurostimulator generator and lead code combinations that
are captured under the list referred to as ``Major Device Implant'' in
the GROUPER logic for MS-DRGs 023 and 024 since the ICD-10-PCS code
combinations that capture the use of the RNS[reg] neurostimulator
generator and leads that would determine an assignment of a case to MS-
DRGs 023 are also found on the ``Major Device Implant'' list. The
neurostimulator generators on this list are inserted into the skull, as
well as into the subcutaneous areas of the chest, back, or abdomen. The
leads are all inserted into
[[Page 26680]]
the brain. The following table shows our findings:
[GRAPHIC] [TIFF OMITTED] TP01MY23.008
We note that the 90 Major Device Implant list cases involving a
neurostimulator generator (including cases involving the use of the
RNS[reg] neurostimulator and a principal diagnosis of epilepsy) have an
average length of stay of 7.3 days and average costs of $59,733 as
compared to all 11,602 cases in MS-DRG 023, which have an average
length of stay of 10.4 days and average costs of $47,321. In MS-DRG
024, we note that the 395 Major Device Implant list cases involving a
neurostimulator generator have an average length of stay of 1.6 days
and average costs of $36,147 as compared to all 4,378 cases in MS-DRG
024, which have an average length of stay of 5.2 days and average costs
of $32,613. While these neurostimulator cases have average costs that
are higher than the average costs of all cases in their respective MS-
DRGs, it is difficult to detect patterns of complexity and resource
intensity. Moreover, we are unable to identify another MS-DRG in MDC 01
that would be a more appropriate MS-DRG assignment for these cases
based on the indication for and complexity of the procedure.
We note while our data findings demonstrate the average costs are
higher for the 57 cases with a principal diagnosis of epilepsy with
neurostimulator generator inserted into the skull and insertion of a
neurostimulator lead into brain when compared to all cases in MS-DRG
023, these cases represent a small percentage of the total number of
cases reported in this MS-DRG. While we appreciate the requestors'
concerns regarding the differential in average costs for cases
describing the insertion of a neurostimulator generator into the skull
in combination with the insertion of a neurostimulator lead into the
brain when compared to all cases in their
[[Page 26681]]
assigned MS-DRG, we believe additional time is needed to evaluate these
cases as part of our ongoing examination of the case logic for MS-DRGs
023 through 027. As discussed in the FY 2023 IPPS/LTCH PPS final rule
(87 FR 48808 through 48820), in connection with our analysis of cases
reporting LITT procedures performed on the brain or brain stem in MDC
01, we have started to examine the logic for case assignment to MS-DRGs
023 through 027 to determine where further refinements could
potentially be made to better account for differences in the technical
complexity and resource utilization among the procedures that are
currently assigned to those MS-DRGs. Specifically, we are in the
process of evaluating procedures that are performed using an open
craniotomy (where it is necessary to surgically remove a portion of the
skull) versus a percutaneous burr hole (where a hole approximately the
size of a pencil is drilled) to obtain access to the brain in the
performance of a procedure. We are also reviewing the indications for
these procedures, for example, malignant neoplasms versus epilepsy to
consider if there may be merit in considering restructuring the current
MS-DRGs to better recognize the clinical distinctions of these patient
populations in the MS-DRGs.
As part of this evaluation, we have begun to analyze the ICD-10
coded claims data from the September 2022 update of the FY 2022 MedPAR
file to determine if the patients' diagnoses, the objective of the
procedure performed, the specific anatomical site where the procedure
is performed or the surgical approach used (for example, open,
percutaneous, percutaneous endoscopic, among others) demonstrates a
greater severity of illness and/or increased treatment difficulty as we
consider restructuring MS-DRGs 023 through 027, including how to better
align the clinical indications with the performance of specific
intracranial procedures. We refer the reader to Tables 6P.2b through
6P.2f associated with this proposed rule (which is available on the CMS
website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS) for data analysis findings of cases assigned
to MS-DRGs 023 through 027 as we continue to look for patterns of
complexity and resource intensity.
In summary, 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[reg] neurostimulator) and a principal diagnosis of
epilepsy is needed in connection with our analysis of the claims data
for MS-DRGs 023 through 027 prior to proposing any further reassignment
of these cases, to ensure clinical coherence between these cases and
the other cases with which they may potentially be grouped. Therefore,
we are not proposing to reassign 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[reg] neurostimulator) from MS-DRG 023 to MS-DRG 021. We are
also not proposing to create a new MS-DRG for cases involving a
craniectomy/craniotomy with device implant at this time.
As we continue this analysis of the claims data with respect to MS-
DRGs 023 through 027, we continue to seek public comments and feedback
on other factors that should be considered in the potential
restructuring of these MS-DRGs. As previously described, we are
examining procedures by their approach (open versus percutaneous),
clinical indications, and procedures that involve the insertion or
implantation of a device. We recognize the logic for MS-DRGs 023
through 027 has grown more complex over the years and believe there is
opportunity for further refinement. We refer the reader to the ICD-10
MS-DRG Definitions Manual, version 40.1, which is available on the CMS
website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software, for
complete documentation of the GROUPER logic for MS-DRGs 023 through
027. Feedback and other suggestions may be submitted by October 20,
2023, and directed to the new electronic intake system, Medicare
Electronic Application Request Information SystemTM
(MEARISTM), discussed in section II.C.1.b of the preamble of
this proposed rule, at: https://mearis.cms.gov/public/home.
3. MDC 02 (Diseases and Disorders of the Eye): Retinal Artery Occlusion
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 48830 through
48835), we discussed a request we received to reassign cases reporting
diagnosis codes describing central retinal artery occlusion, and the
closely allied condition, branch retinal artery occlusion, from MS-DRG
123 (Neurological Eye Disorders) in MDC 02 (Diseases and Disorders of
the Eye) to MS-DRGs 061, 062, and 063 (Ischemic Stroke Precerebral
Occlusion or Transient Ischemia with Thrombolytic Agent with MCC, with
CC, and without CC/MCC, respectively) in MDC 01 (Diseases and Disorders
of the Nervous System).
Retinal artery occlusion refers to blockage of the retinal artery
that carries oxygen to the nerve cells in the retina at the back of the
eye, often by an embolus or thrombus. A blockage in the main artery in
the retina is called central retinal artery occlusion (CRAO). A
blockage in a smaller artery is called branch retinal artery occlusion
(BRAO).
Based on the various data analyses we performed to explore the
possible reassignment of cases with a principal diagnosis of CRAO or
BRAO with a procedure code describing the administration of a
thrombolytic agent or a procedure code describing hyperbaric oxygen
therapy, and the clinical analysis discussed, for FY 2023 we did not
propose any MS-DRG changes for cases with a principal diagnosis of CRAO
or BRAO with a procedure code describing the administration of a
thrombolytic agent or a procedure code describing hyperbaric oxygen
therapy.
For this FY 2024 IPPS/LTCH PPS proposed rule, we received a request
to again review the MS-DRG assignment of cases involving CRAO.
According to the requestor, CRAO is a form of acute ischemic stroke
which occurs when a vessel supplying blood to the brain is obstructed
and there is growing recognition of this diagnosis as a vascular
neurological problem. The requestor stated new evidence outlines
treatment of patients with CRAO with acute stroke protocols,
specifically with intravenous thrombolysis (IV tPA) or hyperbaric
oxygen therapy (HBOT), to improve outcomes. The requestor performed an
internal analysis of their claims data and found that the average costs
of cases reporting a procedure code describing the administration of a
thrombolytic agent with a principal diagnosis of CRAO were 2.5 times
higher than the average costs of cases with a principal diagnosis of
CRAO that did not report the administration of a thrombolytic agent.
The requestor further stated the increased utilization of resources of
these cases was isolated to be almost entirely due to the cost of the
tPA itself based on this review of their internal cost level data.
Consequently, the requestor stated the continued assignment of these
conditions to MS-DRG 123 does not properly recognize disease complexity
and understates the resource utilization associated with administering
critical (potentially vision-saving) treatments for these cases.
[[Page 26682]]
The requestor suggested that the following three MS-DRGs be created
to reflect current standard of care for these patients:
Suggested New MS-DRG XXX--Neurological Eye Disorders with
Thrombolytic Agent with MCC;
Suggested New MS-DRG XXX--Neurological Eye Disorders with
Thrombolytic Agent with CC; and
Suggested New MS-DRG XXX--Neurological Eye Disorders with
Thrombolytic Agent without CC/MCC.
In reviewing this issue, it is unclear why the requestor did not
include branch retinal artery occlusion (BRAO) in their request for FY
2024 rulemaking. As discussed in the FY 2023 IPPS/LTCH PPS final rule,
BRAO is a closely allied condition. Therefore, we identified the ICD-
10-CM codes found in the following table that describe CRAO and BRAO.
[GRAPHIC] [TIFF OMITTED] TP01MY23.009
Thrombolytic therapy is identified with the following ICD-10-PCS
procedure codes.
[GRAPHIC] [TIFF OMITTED] TP01MY23.010
Our analysis of this grouping issue again confirmed that, when a
procedure code describing the administration of a thrombolytic agent is
reported with principal diagnosis code describing CRAO or BRAO, these
cases group to medical MS-DRG 123. We refer the reader to the ICD-10
MS-DRG Definitions Manual Version 40.1, which is available on the CMS
website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software, for
complete documentation of the GROUPER logic for MS-DRGs 123.
To begin our analysis, we examined claims data from the September
2022 update of the FY 2022 MedPAR file for MS-DRG 123 to (1) identify
cases reporting a principal diagnosis code describing CRAO or BRAO
without a procedure code describing the administration of a
thrombolytic agent and (2) identify cases reporting diagnosis codes
describing CRAO or BRAO with a procedure code describing the
administration of a thrombolytic agent. Our findings are shown in the
following table:
[[Page 26683]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.011
As shown in the table, we identified a total of 2,771 cases within
MS-DRG 123 with an average length of stay of 2.5 days and average costs
of $6,720. Of these 2,771 cases, there are 839 cases that reported a
principal diagnosis code describing CRAO or BRAO without a procedure
code describing the administration of a thrombolytic agent with an
average length of stay of 2.2 days and average costs of $5,842. There
are 38 cases that reported a principal diagnosis code describing CRAO
or BRAO with a procedure code describing the administration of a
thrombolytic agent with an average length of stay of 3.3 days and
average costs of $13,302.
The data analysis shows that the 839 cases in MS-DRG 123 reporting
a principal diagnosis code describing CRAO or BRAO without a procedure
code describing the administration of a thrombolytic agent have lower
average costs as compared to all cases in MS-DRG 123 ($5,842 compared
to $6,720), and a shorter average length of stay (2.2 days compared to
2.5 days). For the 38 cases in MS-DRG 123 reporting a principal
diagnosis code describing CRAO or BRAO with a procedure code describing
the administration of a thrombolytic agent, however, the average length
of stay is longer (3.3 days compared to 2.5 days) and the average costs
are higher ($13,302 compared to $6,720) than the average length of stay
and average costs compared to all cases in that MS-DRG.
We reviewed these data, and do not believe that the small subset of
cases reporting a principal diagnosis code describing CRAO or BRAO with
a procedure code describing the administration of a thrombolytic agent
warrants the creation of new MS-DRGs at this time. As stated in prior
rulemaking, the MS-DRGs are a classification system intended to group
together diagnoses and procedures with similar clinical characteristics
and utilization of resources. We generally seek to identify
sufficiently large sets of claims data with a resource/cost similarity
and clinical similarity in developing diagnostic-related groups rather
than smaller subsets. Moreover, in response to the specific request to
create new MS-DRGs subdivided into severity levels for the cases
reporting a principal diagnosis code describing CRAO with a procedure
code describing the administration of a thrombolytic agent, we only
identified a total of 38 cases, so the criterion that there are at
least 500 or more cases in each subgroup cannot be met. Therefore, for
FY 2024, we are not proposing to create new MS-DRGs subdivided into
severity levels for cases reporting a principal diagnosis code
describing CRAO with a procedure code describing the administration of
a thrombolytic agent.
We recognize however, that the average costs of the small number of
cases reporting a principal diagnosis code describing CRAO or BRAO with
a procedure code describing the administration of a thrombolytic agent
are greater when compared to the average costs of all cases in MS-DRG
123. To explore other mechanisms to address this request, we then
reexamined the MS-DRGs within MDC 02 to consider the possibility of
reassigning the cases with a principal diagnosis of CRAO or BRAO that
receive the administration of a thrombolytic agent to other MS-DRGs
within MDC 02. After further consideration, in reviewing the claims
data from the September 2022 update of the FY 2022 MedPAR file and
examining the clinical considerations, we believe that the cases
reporting a principal diagnosis code describing CRAO or BRAO could more
suitably group to MS-DRGs 124 and 125 (Other Disorders of the Eye with
MCC, and without MCC, respectively), which contain diagnoses other than
neurological conditions that affect the eye, noting the vascular
involvement inherent to a diagnosis of CRAO or BRAO. We refer the
reader to the ICD-10 MS-DRG Definitions Manual Version 40.1, which is
available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software, for complete documentation of the GROUPER logic for MS-DRGs
124 and 125.
To determine how the resources for this subset of cases compared to
cases in MS-DRGs 124 and 125 as a whole, we examined the average costs
and length of stay for cases in MS-DRGs 124 and 125. Our findings are
shown in this table.
[[Page 26684]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.012
For this subset of cases, the average costs of the 38 cases
reporting a principal diagnosis code describing CRAO or BRAO with a
procedure code describing the administration of a thrombolytic agent
are slightly higher ($13,302 compared to $11,922) and the average
length of stay is shorter (3.3 days compared to 5.4 days) than for all
cases in MS-DRGs 124. The 839 cases reporting a principal diagnosis
code describing CRAO or BRAO without a procedure code describing the
administration of a thrombolytic agent have lower average costs ($5,842
compared to $7,425) and a shorter average length of stay (2.2 compared
to 3.3 days) than for cases in MS-DRG 125.
Our analysis demonstrates that while the volume of cases is small,
the average costs for the cases reporting a principal diagnosis code
describing CRAO or BRAO with a procedure code describing the
administration of a thrombolytic agent currently grouping to MS-DRG 123
are more aligned with the average costs for the cases currently
grouping to MS-DRG 124. We reviewed these data and support the addition
of the eight diagnosis codes listed previously to the GROUPER logic
list for MS-DRGs 124 and 125. While the cases reporting a principal
diagnosis code describing CRAO or BRAO without a procedure code
describing the administration of a thrombolytic agent have lower costs
and a shorter average length of stay than for cases in MS-DRG 125, we
believe reassigning these diagnosis codes to MS-DRGs 124 and 125 will
better account for the subset of patients who are treated with a
thrombolytic agent, and will more appropriately reflect the resources
involved in evaluating and treating these patients. We also support the
assignment of the cases reporting procedure codes describing the
administration of a thrombolytic agent to the higher (MCC) severity
level MS-DRG 124 as an enhancement to better reflect the clinical
severity and resource use involved in these cases.
Therefore, we are proposing to reassign ICD-10-CM diagnosis codes
H34.10, H34.11, H34.12, H34.13, H34.231, H34.232, H34.233, and H34.239
from MDC 02 MS-DRG 123 to MS-DRGs 124 and 125, effective October 1,
2023 for FY 2024. We are also proposing to add the procedure codes
describing the administration of a thrombolytic agent listed previously
to MS-DRG 124. We note that the procedure codes describing the
administration of a thrombolytic agent are not designated as operating
room procedures for purposes of MS-DRG assignment (``non-O.R.
procedures''), therefore, as part of the logic for MS-DRG 124, we are
also proposing to designate these codes as non-O.R. procedures
affecting the MS-DRG. Lastly, for consistency, we are also proposing to
change the titles of MS-DRGs 124 and 125 from ``Other Disorders of the
Eye, with and without MCC, respectively'' to ``Other Disorders of the
Eye with MCC or Thrombolytic Agent, and without MCC, respectively'' to
better reflect the assigned procedures.
4. MDC 04 (Diseases and Disorders of the Respiratory System)
a. Ultrasound Accelerated Thrombolysis for Pulmonary Embolism
We received a request to reassign cases reporting ultrasound
accelerated thrombolysis (USAT) with the administration of
thrombolytic(s) for the treatment of pulmonary embolism (PE) from MS-
DRGs 166, 167, and 168 (Other Respiratory System O.R. Procedures 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).
A pulmonary embolism is an obstruction of pulmonary vasculature
most commonly caused by a venous thrombus, and less commonly by fat or
tumor tissue or air bubbles or both. Risk factors for a pulmonary
embolism include prolonged immobilization from any cause, obesity,
cancer, fractured hip or leg, use of certain medications such as oral
contraceptives, presence of certain medical conditions such as heart
failure, sickle cell anemia, or certain congenital heart defects.
Common symptoms of pulmonary embolism include shortness of breath with
or without chest pain, tachycardia, hemoptysis, low grade fever,
pleural effusion, and depending on the etiology of the embolus, might
include lower extremity pain or swelling, syncope, jugular venous
distention. Alternatively, a pulmonary embolus could be asymptomatic.
Thrombolysis is a type of treatment where the infusion of
thrombolytics (fibrinolytic or ``clot-busting'' drugs) is used to
dissolve blood clots that form in the arteries or veins with the goal
of improving blood flow and preventing long-term damage to tissues and
organs. When a clot forms in the arteries of the lungs it is known as a
pulmonary embolism. In addition, clots in the veins of the legs causing
deep venous thrombosis (DVT) may also result in pulmonary embolism if a
piece of the clot breaks off and travels to an artery in the lungs.
Conventional catheter-directed thrombolysis (CDT) procedures generally
rely on a multi-sidehole catheter placed adjacent to the thrombus
through which thrombolytics are delivered directly to the thrombus,
however, the EKOSTM EkoSonic[reg] Endovascular System
(EKOSTM System) employs ultrasound to assist in
thrombolysis. The ultrasound does not itself dissolve the thrombus, but
pulses of ultrasonic energy temporarily make the fibrin in the thrombus
more porous and increase fluid flow within the thrombus. High
frequency, low-intensity ultrasonic waves create a pressure gradient
that drives the thrombolytic into the thrombus and keeps it in close
proximity to the binding sites. USAT is also referred to as ultrasound-
assisted thrombolysis or ultrasound-enhanced thrombolysis.
According to the requestor (the manufacturer of the
EKOSTM device), USAT with the administration of
thrombolytic(s) for the treatment of PE performed using the
EKOSTM device utilizes more resources in comparison to other
procedures that are currently assigned to MS-DRGs 166, 167, and 168 and
is not clinically coherent with the other procedures assigned to those
MS-DRGs. The requestor stated that the cases reporting USAT with the
administration of thrombolytic(s) for PE are more comparable with and
more clinically aligned with the procedures assigned to MS-DRGs 163,
164, and 165. The requestor stated they performed an analysis of cases
reporting USAT for PE with the following ICD-10-PCS procedure codes.
[[Page 26685]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.013
We note that the requestor did not include a list of diagnosis
codes describing PE or a list of procedure codes describing the
administration of thrombolytic(s) in connection with its analysis.
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58561 through
58579), we summarized and responded to public comments expressing
concern with the proposed MS-DRG assignments for the newly created
procedure codes describing USAT of several anatomic sites that were
effective with discharges on and after October 1, 2020 (FY 2021).
Similar to the current request for FY 2024, for FY 2021, the commenters
recommended that USAT procedures performed with the EKOSTM
device for the treatment of pulmonary embolism be assigned to MS-DRGs
163, 164, and 165 instead of MS-DRGs 166, 167, and 168. We refer the
reader to the FY 2021 IPPS/LTCH PPS final rule (85 FR 58561 through
58579), available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS, for the detailed
discussion.
We analyzed claims data from the September 2022 update of the FY
2022 MedPAR file for MS-DRGs 166, 167, and 168 for all cases reporting
a principal diagnosis of PE and USAT procedure with and without the
administration of thrombolytic(s). We identified claims reporting an
USAT procedure, the administration of thrombolytic(s), and a diagnosis
of PE with the listed codes shown in the following tables.
[GRAPHIC] [TIFF OMITTED] TP01MY23.014
[[Page 26686]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.015
[GRAPHIC] [TIFF OMITTED] TP01MY23.016
We note that the listed procedure codes describing USAT identified
for our claims analysis differ from the procedure codes identified by
the requestor for its analysis. Clinically, we did not agree that
thrombolysis of non-pulmonary anatomic sites (for example, subclavian
artery, axillary artery, etc.) would be performed for the treatment of
a PE. We also note that the procedure codes describing thrombolysis of
non-pulmonary anatomic sites provided by the requestor are assigned to
MDC 05 (Diseases and Disorders of the Circulatory System) and not to
MDC 4 (Diseases and Disorders of the Respiratory System) where MS-DRGs
163, 164, 165, 166, 167, and 168 are assigned. The findings from our
analysis are shown in the following table.
[[Page 26687]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.017
As shown in the table, we identified a total of 8,318 cases in MS-
DRG 166 with an average length of stay of 11 days and average costs of
$31,910. Of the 8,318 cases, we found 826 cases reporting a principal
diagnosis of PE and USAT with thrombolytic(s) with an average length of
stay of 5.4 days and average costs of $28,912 and 161 cases reporting a
principal diagnosis of PE and USAT without thrombolytic(s) with an
average length of stay of 5.4 days and average costs of $27,897. The
data demonstrates that the cases reporting a principal diagnosis of PE
and USAT with or without thrombolytic(s) have a shorter average length
of stay compared to the average length of stay of all the cases in MS-
DRG 166 (5.4 days and 5.4 days, respectively versus 11 days).
Similarly, the average costs for the cases reporting a principal
diagnosis of PE and USAT with or without thrombolytic(s) are lower than
the average costs of all the cases in MS-DRG 166 ($28,912 and $27,897,
respectively versus $31,910). The data indicate that the cases
reporting a principal diagnosis of PE and USAT with or without
thrombolytic(s) appear to be grouped and paid appropriately, despite
the fact the logic for case assignment to MS-DRG 166 requires the
reporting of at least one or more secondary MCC diagnoses, and it would
not be unreasonable to expect these cases to be more expensive in
comparison to all the cases in MS-DRG 166. As the average costs for
these cases are lower than the average costs of all the cases in MS-DRG
166, the data appear to reflect that the reporting of at least one or
more secondary MCC diagnoses and use of the EKOSTM device
technology did not impact consumption of resources for these cases in
MS-DRG 166.
For MS-DRG 167, we identified a total of 4,306 cases with an
average length of stay of 4.7 days and average costs of $16,290. Of the
4,306 cases, we found 316 cases reporting a principal diagnosis of PE
and USAT with thrombolytic(s) with an average length of stay of 3.9
days and average costs of $23,240 and 52 cases reporting a principal
diagnosis of PE and USAT without thrombolytic(s) with an average length
of stay of 3.7 days and average costs of $23,608. The data demonstrates
that the cases reporting a principal diagnosis of PE and USAT with or
without thrombolytic(s) have a shorter average length of stay compared
to the average length of stay of all the cases in MS-DRG 167 (3.9 days
and 3.7 days, respectively versus 4.7 days). Conversely, the average
costs for the cases reporting a principal diagnosis of PE and USAT with
or without thrombolytic(s) are higher than the average costs of all the
cases in MS-DRG 167 ($23,240 and $23,608, respectively versus $16,290)
with a corresponding difference in average costs of $6,950 and $7,318,
respectively. The data indicate the cases reporting a principal
diagnosis of PE and USAT with or without thrombolytic(s) appear to
consume more resources in comparison to the other cases in MS-DRG 167,
although it is unclear if the higher resource consumption is a direct
result of the EKOSTM device technology utilized in the
performance of the thrombolysis procedure, or the fact that these cases
also include the reporting of at least one or more secondary CC
diagnoses, or a combination of both factors.
For MS-DRG 168, we identified a total of 1,441 cases with an
average length of stay of 2.3 days and average costs of $12,379. Of the
1,441 cases, we found 65 cases reporting a principal diagnosis of PE
and USAT with
[[Page 26688]]
thrombolytic(s) with an average length of stay of 2.8 days and average
costs of $20,156 and 15 cases reporting a principal diagnosis of PE and
USAT without thrombolytic(s) with an average length of stay of 2.7 days
and average costs of $20,112. The data demonstrates that the cases
reporting a principal diagnosis of PE and USAT with or without
thrombolytic(s) have a longer average length of stay compared to the
average length of stay of all the cases in MS-DRG 168 (2.8 days and 2.7
days, respectively versus 2.3 days). Additionally, the average costs
for the cases reporting a principal diagnosis of PE and USAT with or
without thrombolytic(s) are higher than the average costs of all the
cases in MS-DRG 168 ($20,156 and $20,112, respectively versus $12,379)
with a corresponding difference in average costs of $7,777 and $7,733,
respectively. Similar to our findings for MS-DRG 167, the data for MS-
DRG 168 indicate the cases reporting a principal diagnosis of PE and
USAT with or without thrombolytic(s) appear to consume more resources
in comparison to the other cases in MS-DRG 168. However, it is unclear
if the higher resource consumption is a direct result of the
EKOSTM device technology utilized in the performance of the
thrombolysis procedure alone, or if there are other contributing
factors, since cases grouping to MS-DRG 168 do not include the
reporting of at least one or more secondary CC or MCC diagnoses.
Based on our review of the data for MS-DRGs 166, 167, and 168 and
our initial analysis for cases reporting a principal diagnosis of PE
and USAT procedure with and without the administration of
thrombolytic(s), the findings also suggest that the administration of
thrombolytic(s) is not a significant factor in the consumption of
resources for these cases in MS-DRGs 166, 167, and 168 where USAT is
performed in the treatment of a PE. For example, in MS-DRG 166, there
are 826 cases reporting a principal diagnosis of PE and USAT procedure
with the administration of thrombolytic(s) and 161 cases reporting a
principal diagnosis of PE and USAT procedure without the administration
of thrombolytic(s), however, both subsets of cases have an equivalent
average length of stay of 5.4 days and a difference in average costs of
$1,015 ($28,912-$27,897 = $1,015). For MS-DRG 167, there are 316 cases
reporting a principal diagnosis of PE and USAT procedure with the
administration of thrombolytic(s) and 52 cases reporting a principal
diagnosis of PE and USAT procedure without the administration of
thrombolytic(s), however, both subsets of cases have a similar average
length of stay (3.9 days and 3.7 days, respectively) with a difference
in average costs of $368 ($23,608-$23,240 = $368). For MS-DRG 168,
there are 65 cases reporting a principal diagnosis of PE and USAT
procedure with the administration of thrombolytic(s) and 15 cases
reporting a principal diagnosis of PE and USAT procedure without the
administration of thrombolytic(s), however, both subsets of cases have
a similar average length of stay (2.8 days and 2.7 days, respectively)
with a difference in average costs of $44 ($20,156-$20,112 = $44) .
Because the administration of thrombolytic(s) would be expected to
increase resource consumption, the small difference in average costs
between these two sets of cases could also suggest that the
administration of thrombolytic(s) was not consistently reported.
While the request we received was to reassign cases reporting
ultrasound accelerated thrombolysis (USAT) with the administration of
thrombolytic(s) for the treatment of pulmonary embolism (PE) from MS-
DRGs 166, 167, and 168 to MS-DRGs 163, 164, and 165, based on our
findings that suggest the administration of thrombolytic(s) is not a
significant factor in the consumption of resources for those cases or
that a code describing the administration of thrombolytic(s) may not
have been consistently reported on a subset of claims that also
reported a code identifying USAT was performed, we then analyzed claims
data from the September 2022 update of the FY 2022 MedPAR file for all
cases in MS-DRGs 163, 164, and 165 and compared it to the cases
reporting a principal diagnosis of PE and USAT procedure with or
without thrombolytic(s) in MS-DRGs 166, 167, and 168. The findings from
our analysis are shown in the following tables.
[GRAPHIC] [TIFF OMITTED] TP01MY23.018
[GRAPHIC] [TIFF OMITTED] TP01MY23.019
[[Page 26689]]
The average costs of the 987 cases reporting a principal diagnosis
of PE and USAT with or without thrombolytic(s) in MS-DRG 166 are
$10,380 less than the average costs of all cases in MS-DRG 163
($39,126-$28,746 = $10,380) and have an average length of stay that is
approximately half the average length of stay of all cases in MS-DRG
163 (5.4 days versus 10.3 days). As stated previously, our analysis of
these cases demonstrate they appear to be grouped and paid
appropriately in MS-DRG 166. The 368 cases reporting a principal
diagnosis of PE and USAT with or without thrombolytic(s) in MS-DRG 167
have a shorter average length of stay (3.9 days versus 4.7 days) in
comparison to all the cases in MS-DRG 164, however, the average costs
of the 368 cases reporting a principal diagnosis of PE and USAT with or
without thrombolytic(s) in MS-DRG 167 are more comparable to the
average costs of all the cases in MS-DRG 164 ($23,292 versus $22,040).
Finally, the 80 cases reporting a principal diagnosis of PE and USAT
with or without thrombolytic(s) in MS-DRG 168 have an average length of
stay that is more comparable to all the cases in the MS-DRG 165 (2.8
days versus 2.7 days), however, the average costs for the 80 cases
continue to be higher in comparison to all the cases in MS-DRG 165
($20,148 versus $16,404).
Upon analysis of the claims data and our review of the request, we
do not agree with reassigning cases reporting an USAT procedure with
the administration of thrombolytic(s) and a principal diagnosis of PE
from MS-DRGs 166, 167, and 168 to MS-DRGs 163, 164, and 165. As
previously noted, the data do not support that cases reporting USAT
(with or without thrombolytic(s)) for PE utilize similar resources when
compared to other procedures currently assigned to MS-DRGs 163 and 165.
Costs were only comparable with procedures currently assigned to MS-DRG
164. Further, we do not agree that cases reporting USAT (with or
without thrombolytic(s)) are more comparable with and more clinically
aligned with the procedures assigned to MS-DRGs 163, 164, and 165. The
vast majority of procedures in these MS-DRGs describe procedures
performed on the trachea, bronchus or lungs with either an open
approach or a percutaneous endoscopic approach in contrast to the USAT
endovascular (percutaneous) procedure performed on the pulmonary trunk,
arteries or veins. In addition, the majority of procedures in MS-DRGs
163, 164, and 165 are performed on patients who are not clinically
similar to patients who undergo USAT for PE since they describe
procedures such as destruction (ablation) or excision performed for
patients with conditions other than a PE, such as malignant neoplasm,
pneumonia, or pulmonary fibrosis. Lastly, a number of procedures in
these MS-DRGs also involve the use of a permanently implanted device
while the procedures utilizing USAT do not. Therefore, we do not
consider USAT procedures to be major chest procedures, nor do we
believe the cases reporting USAT with (or without thrombolytic(s)) for
PE utilize similar resources when compared to other procedures
currently assigned to MS-DRGs 163, 164, and 165.
As stated previously, the findings from our analysis suggest that
the administration of thrombolytic(s) is not a significant factor in
the consumption of resources for cases in MS-DRGs 166, 167, and 168
reporting an USAT procedure performed for the treatment of a PE or that
a code describing the administration of thrombolytic(s) may not have
been consistently reported on a subset of claims that also reported a
code t identifying USAT was performed, or a combination of both
factors. Based on these findings related to the administration of
thrombolytic(s), we believed it would also be beneficial to examine
cases reporting standard CDT procedures with or without thrombolytic(s)
for the treatment of PE in MS-DRGs 166, 167, and 168, and compare the
findings to the cases reporting USAT with or without thrombolytic(s)
for the treatment of PE.
Therefore, we conducted additional analyses to determine if there
were significant differences in resource utilization for cases
reporting standard CDT with or without thrombolytic(s) versus USAT
procedures with or without thrombolytic(s) in the treatment of PE,
since claims data to compare the two modalities is now available and
studies have reported similar clinical outcomes in reducing PE
regardless of which thrombolysis modality is utilized.3 4
---------------------------------------------------------------------------
\3\ Rothschild DP, Goldstein JA, Ciacci J, Bowers TR.
Ultrasound-accelerated thrombolysis (USAT) versus standard catheter-
directed thrombolysis (CDT) for treatment of pulmonary embolism: A
retrospective analysis. Vasc Med. 2019 Jun;24(3):234-240.
\4\ Sista A, et al. Is it Time to Sunset Ultrasound-Assisted
Catheter-Directed Thrombolysis for Submassive PE? J Am Coll Cardiol
Intv. 2021 Jun, 14 (12) 1374-1375.
---------------------------------------------------------------------------
We analyzed claims data from the September 2022 update of the FY
2022 MedPAR file for all cases in MS-DRGs 166, 167, and 168 and cases
reporting a standard CDT procedure with or without the administration
of thrombolytic(s) and a principal diagnosis of PE. We utilized the
previously listed procedure codes for the administration of
thrombolytic(s) and the previously listed diagnosis codes for a
principal diagnosis of PE. We identified cases describing standard CDT
procedures performed in the treatment of PE with the following
procedure codes.
[GRAPHIC] [TIFF OMITTED] TP01MY23.020
The findings from our analysis are shown in the following table. We
note that there were no cases found to report a principal diagnosis of
PE and standard CDT with or without thrombolytic(s) in MS-DRGs 168.
[[Page 26690]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.021
The data shows that the 7 cases reporting a principal diagnosis of
PE and standard CDT with or without thrombolytic(s) in MS-DRG 166 have
a shorter average length of stay compared to all cases in MS-DRG 166
(3.3 days versus 11 days) and lower average costs ($18,472 versus
$31,910). For MS-DRG 167, the data shows that the 6 cases reporting a
principal diagnosis of PE and CDT with or without thrombolytic(s) have
a shorter average length of stay compared to all cases in MS-DRG 167
(3.5 days versus 4.7 days), however the average costs are higher
($30,928 versus $16,290).
In summary, based on our review and the claims data analysis for
cases in MS-DRGs 163, 164, and 165, and for MS-DRGs 166, 167, and 168
and cases reporting standard CDT or USAT with or without
thrombolytic(s) and a principal diagnosis of PE, we believe that while
this subset of cases for patients undergoing a thrombolysis (CDT or
USAT) procedure for PE does not clinically align with patients
undergoing surgery for malignancy or treatment for infection and does
not involve the same level of complexity, monitoring or support as
cases grouping to MS-DRGs 163, 164 and 165, the differences in resource
consumption warrant proposed reassignment of these cases. Specifically,
we believe the clinical and data analyses support creating a new base
MS-DRG to distinguish cases reporting a principal diagnosis of PE and
USAT or standard CDT procedure with or without thrombolytic(s) from
other cases currently grouping to MS-DRGs 166, 167, and 168. We believe
a new MS-DRG would reflect more appropriate payment for USAT and
standard CDT procedures in the treatment of PE.
To compare and analyze the impact of our suggested modifications,
we ran a simulation using the most recent claims data from the December
2022 update of the FY 2022 MedPAR file. The following table illustrates
our findings for all 1,534 cases reporting procedure codes describing
an USAT or CDT procedure with a principal diagnosis of PE.
[GRAPHIC] [TIFF OMITTED] TP01MY23.022
Consistent with our established process as discussed in section
II.C.1.b. of the preamble of this proposed rule, once the decision has
been made to propose to make further modifications to the MS-DRGs, such
as creating a new base MS-DRG, all five criteria to create subgroups
must be met for the base MS-DRG to be split (or subdivided) by a CC
subgroup. Therefore, we applied the criteria to create subgroups in a
base MS-DRG. We note 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 500 cases in both the CC and the NonCC (without CC/MCC)
subgroup and it also failed to meet the criterion that there be a 20%
difference in average costs between the CC and NonCC subgroup.
[GRAPHIC] [TIFF OMITTED] TP01MY23.023
As discussed in section II.C.1.b. of the preamble of this proposed
rule, if the criteria for a three-way split fail, the next step is to
determine if the criteria are satisfied for a two-way split. We
therefore applied the criteria for a two-way split for the ``with MCC
and without MCC'' subgroups. We note that, as shown in the table that
follows, a two-way split of this base MS-DRG failed to meet the
criterion that there be at least 500 cases in the without MCC
(CC+NonCC) subgroup. The following table illustrates our findings.
[[Page 26691]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.024
We then applied the criteria for a two-way split for the ``with CC/
MCC and without CC/MCC'' subgroups. As with the analysis of the three-
way severity split as described previously, and as shown in the table
that follows, a two-way split of this base MS-DRG failed to meet the
criterion that there be at least 500 cases in the without CC/MCC
(NonCC) subgroup.
[GRAPHIC] [TIFF OMITTED] TP01MY23.025
We note that because the criteria for both of the two-way splits
failed, a split (or CC subgroup) is not warranted for the proposed new
base MS-DRG. As a result, for FY 2024, we are proposing to create new
base MS-DRG 173 (Ultrasound Accelerated and Other Thrombolysis with
Principal Diagnosis Pulmonary Embolism). The following table reflects a
simulation of the proposed new base MS-DRG.
[GRAPHIC] [TIFF OMITTED] TP01MY23.026
BILLING CODE 4120-01-C
We believe the resulting proposed MS-DRG better recognizes the
consumption of resources and maintains clinical coherence for both USAT
and CDT procedures performed for the treatment of PE.
We are proposing to define the logic for the proposed new MS-DRG
using the previously listed diagnosis codes for PE and the previously
listed procedure codes for USAT and CDT, as identified and discussed in
our analysis of the claims data in this section of this proposed rule.
b. Respiratory Infections and Inflammations Logic
The logic for case assignment to MS-DRGs 177, 178, and 179
(Respiratory Infections and Inflammations with MCC, with CC, and
without CC/MCC, respectively) as displayed in the ICD-10 MS-DRG V40.1
Definitions Manual (which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software) is comprised of
two logic lists. The first logic list is entitled ``Principal Diagnosis
with Secondary Diagnosis'' and is defined by a list of five ICD-10-CM
diagnosis codes describing influenza due to other or unidentified
influenza virus with pneumonia in combination with a separate list of
ten diagnosis codes describing the specific pneumonia infection. When
any one of the five listed diagnosis codes from the ``Principal
Diagnosis'' logic list is reported as a principal diagnosis in
combination with any one of the ten listed diagnosis code from the
``with Secondary Diagnosis'' logic list as a secondary diagnosis, the
case results in assignment to MS-DRG 177, 178, or 179 depending on the
presence of any additional MCC or CC secondary diagnoses. All 15 of the
diagnosis codes included on the first logic list ``Principal Diagnosis
with Secondary Diagnosis'' are designated as MCCs.
The second logic list is entitled ``or Principal Diagnosis'' and is
defined by a list of 57 diagnosis codes describing various pulmonary
infections. When any one of the 57 diagnosis codes from this list is
reported as a principal diagnosis, the case results in assignment to
MS-DRG 177, 178, or 179 depending on the presence of any additional MCC
or CC secondary diagnoses.
Currently, when a diagnosis code from the second logic list ``or
Principal Diagnosis'' is reported as the principal diagnosis and a
diagnosis code from the first logic list ``Principal Diagnosis with
Secondary Diagnosis'' is reported as a secondary diagnosis, the case is
grouping to MS-DRG 177 (Respiratory Infections and Inflammations with
MCC). Consistent with how other similar logic lists function in the
ICD-10 Grouper software for case assignment to the ``with MCC'' MS-DRG,
the logic for case assignment to MS-DRG 177 is intended to require any
other diagnosis designated as an MCC and reported as a secondary
diagnosis for appropriate assignment, and not the diagnoses currently
listed in the logic for the definition of the MS-DRG.
Therefore, for FY 2024, we are proposing to correct the logic for
case assignment to MS-DRG 177 by excluding the 15 diagnosis codes from
the first logic list ``Principal Diagnosis with Secondary Diagnosis''
from acting as an MCC when any one of the listed codes is reported as a
secondary diagnosis with a diagnosis code from the second logic list
``or Principal Diagnosis'' reported as the principal diagnosis.
5. MDC 05 (Diseases and Disorders of the Circulatory System)
a. Surgical Ablation
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 44836 through
44848), we discussed a two-part request we received to review the MS-
DRG assignments for cases involving the surgical ablation procedure for
atrial fibrillation. The first part of the request
[[Page 26692]]
was to create a new classification of surgical ablation MS-DRGs to
better accommodate the costs of open concomitant surgical ablations.
The second part of the request was to reassign cases describing
standalone percutaneous endoscopic surgical ablation. In the part of
the request relating to the costs of open concomitant surgical
ablations, the requestor identified the following potential procedure
combinations that would comprise an ``open concomitant surgical
ablation'' procedure.
Open CABG + open surgical ablation
Open MVR + open surgical ablation
Open AVR + open surgical ablation
Open MVR + open AVR + open surgical ablation
Open MVR + open CABG + open surgical ablation
Open MVR + open AVR + open CABG + open surgical ablation
Open AVR + open CABG + open surgical ablation
As discussed in the FY 2022 IPPS/LTCH PPS final rule, we examined
claims data from the March 2020 update of the FY 2019 MedPAR file and
the September 2020 update of the FY 2020 MedPAR file for cases
reporting procedure code combinations describing open concomitant
surgical ablations. We refer the reader to Table 6P.1o associated with
the FY 2022 final rule (which is available on the CMS website at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS) for data analysis findings of cases reporting
procedure code combinations describing open concomitant surgical
ablations. We stated our analysis showed while the average lengths of
stay and average costs of cases reporting procedure code combinations
describing open concomitant surgical ablations are higher than all
cases in their respective MS-DRG, we found variation in the volume,
length of stay, and average costs of the cases. We also stated findings
from our analysis indicated that MS-DRGs 216, 217, 218 (Cardiac Valve
and Other Major Cardiothoracic Procedures with Cardiac Catheterization
with MCC, with CC, and without CC/MCC, respectively) as well as
approximately 31 other MS-DRGs would be subject to change based on the
three-way severity level split criterion finalized in FY 2021.
In the FY 2022 final rule, we finalized our proposal to revise the
surgical hierarchy for the MS-DRGs in MDC 05 (Diseases and Disorders of
the Circulatory System) to sequence MS-DRGs 231-236 (Coronary Bypass,
with or without PTCA, with or without Cardiac Catheterization or Open
Ablation, with and without MCC, respectively) above MS-DRGs 228 and 229
(Other Cardiothoracic Procedures with and without MCC, respectively),
effective October 1, 2021. In addition, we also finalized the
assignment of cases with a procedure code describing coronary bypass
and a procedure code describing open ablation to MS-DRGs 233 and 234
and changed the titles of these MS-DRGs to ``Coronary Bypass with
Cardiac Catheterization or Open Ablation with and without MCC,
respectively'' to reflect this reassignment for FY 2022.
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 48845 through
48849), we discussed a request we received to again review the MS-DRG
assignment of cases involving open concomitant surgical ablation
procedures. The requestor stated they continue to believe that the
average hospital costs for surgical ablation for atrial fibrillation
demonstrates a cost disparity compared to all procedures within their
respective MS-DRGs. The requestor suggested that when open surgical
ablation is performed with MVR, or AVR or MVR/AVR + CABG that these
procedures are either (1) assigned to a different family of MS-DRGs or
(2) assigned to MS-DRGs 216 and 217 (Cardiac Valve and Other Major
Cardiothoracic Procedures with Cardiac Catheterization with MCC and
with CC, respectively) similar to what CMS did with CABG and open
ablation procedures in the FY 2022 rulemaking to better accommodate the
added cost of open concomitant surgical ablation.
We stated our analysis using the September 2021 update of the FY
2021 MedPAR file reflected that the cases reporting an open concomitant
surgical ablation code combination are predominately found in the
higher (CC or MCC) severity level MS-DRGs of their current base MS-DRG
assignment, suggesting that the patient's co-morbid conditions may also
be contributing to the higher costs of these cases. Secondly, for the
numerous procedure combinations that would comprise an ``open
concomitant surgical ablation'' procedure, the increase in average
costs appeared to directly correlate with the number of procedures
performed. For example, cases that describe ``Open MVR + Open surgical
ablation'' generally demonstrated costs that were lower than cases that
describe ``Open MVR + Open AVR + Open CABG + Open surgical ablation.''
We also noted using the September 2021 update of the FY 2021 MedPAR
file, we analyzed how applying the NonCC subgroup criteria to all MS-
DRGs currently split into three severity levels would affect the MS-DRG
structure beginning in FY 2022. Similar to our findings discussed in
the FY 2022 IPPS/LTCH final rule, findings from our analysis using the
September 2021 update of the FY 2021 MedPAR file indicated that MS-DRGs
216, 217, 218 as well as approximately 40 other MS-DRGs would be
subject to change based on the three-way severity level split criterion
finalized in FY 2021.
Therefore, we stated we believe that additional time was needed to
allow for further analysis of the claims data to determine to what
extent the patient's co-morbid conditions are also contributing to
higher costs and to identify other contributing factors that might
exist with respect to the increased length of stay and costs of these
cases in these MS-DRGs. For the reasons summarized, and after
consideration of the public comments we received, we did not make any
MS-DRG changes for cases involving the open concomitant surgical
ablation procedures for FY 2023.
For this FY 2024 IPPS/LTCH PPS proposed rule, we again received a
request to review the MS-DRG assignment of cases involving open
concomitant surgical ablation procedures. The requestor recommended
that CMS reassign open concomitant surgical ablation procedures for
atrial fibrillation (AF) from MS-DRGs 219, 220, and 221 (Cardiac Valve
and Other Major Cardiothoracic Procedures without Cardiac
Catheterization with MCC, with CC, and without CC/MCC, respectively) to
MS-DRGs 216, 217 and 218. The requestor further recommended that if CMS
does not reassign cases involving open concomitant surgical ablation
procedures to MS-DRGs 216, 217 and 218, in the alternative, CMS should
create new MS-DRGs for all open mitral or aortic valve repair or
replacement procedures with concomitant surgical ablation for AF to
improve clinical coherence when three to four open heart procedures are
performed in one setting.
The requestor suggested that the following three MS-DRGs be created
to reflect current standard of care for these patients:
Suggested New MS-DRG XXX--2 procedures;
Suggested New MS-DRG XXX--3 procedures; and
Suggested New MS-DRG XXX--4+ procedures.
The requestor stated that cases reporting open surgical ablation
procedures for AF performed during open valve repair/replacement
procedures are typically assigned to MS-DRGs 216, 217, 218, 219, 220
and
[[Page 26693]]
221, with the majority of the cases being assigned to MS-DRGs 219, 220
and 221 because of the surgical hierarchy in MDC 05 and because there
is less of a need for cardiac catheterization in these cases. The
requestor performed its own data analysis, and stated their analysis
showed that the data continues to demonstrate that claims with open
surgical ablation procedures for AF are not clinically similar to the
remaining cases in MS-DRGs 219, 220 and 221, and there are significant
differences in resource utilization that reflect those clinical
differences.
To explore mechanisms to address this request, we began our
analysis by examining claims data from the September 2022 update of the
FY 2022 MedPAR file for cases reporting procedure code combinations
describing open concomitant surgical ablations assigned to MS-DRGs 216,
217, 218, 219, 220 and 221. We refer readers to Tables 6P.3a and 6P.3b
associated with this proposed rule (which are available on the CMS
website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS) for the data analysis of cases reporting
procedure code combinations describing open concomitant surgical
ablations in the September 2022 update of the FY 2022 MedPAR file.
Table 6P.3a associated with this proposed rule sets forth the list of
ICD-10-PCS procedure codes reflecting mitral valve repair or
replacement (MVR), aortic valve repair or replacement (AVR), coronary
artery bypass grafting (CABG) and surgical ablation procedures that we
examined in this analysis. Table 6P.3b associated with this proposed
rule shows the data analysis findings of cases reporting procedure code
combinations describing open concomitant surgical ablations assigned to
MS-DRGs 216, 217, 218, 219, 220 and 221 from the September 2022 update
of the FY 2022 MedPAR file.
As shown in Table 6P.3b associated with this proposed rule, while
the average lengths of stay and average costs of cases reporting
procedure code combinations describing open concomitant surgical
ablations are higher than all cases in their respective MS-DRG, we
found there is variation in the volume, length of stay, and average
costs of the cases. For MS-DRG 216, we found 439 cases reporting
procedure code combinations describing open concomitant surgical
ablations with the average length of stay ranging from 16.7 days to
20.3 days and average costs ranging from $78,586 to $111,439 for these
cases. For MS-DRG 217, we found 92 cases reporting procedure code
combinations describing open concomitant surgical ablations with the
average length of stay ranging from 8.5 days to 14 days and average
costs ranging from $43,221 to $98,001 for these cases. For MS-DRG 218,
we found 2 cases reporting procedure code combinations describing open
concomitant surgical ablations with the average length of stay of 6.5
days and average cost of $38,519 for these cases. For MS-DRG 219, we
found 1,136 cases reporting procedure code combinations describing open
concomitant surgical ablations with the average length of stay ranging
from 9.5 days to 13.6 days and average costs ranging from $60,495 to
$94,572 for these cases. For MS-DRG 220, we found 770 cases reporting
procedure code combinations describing open concomitant surgical
ablations with the average length of stay ranging from 6.7 days to 9.6
days and average costs ranging from $49,900 to $84,293 for these cases.
For MS-DRG 221, we found 38 cases reporting procedure code combinations
describing open concomitant surgical ablations with the average length
of stay ranging from 4.5 days to 5.8 days and average costs ranging
from $30,725 to $59,024 for these cases.
Similar to our analysis of the data as discussed in the FY 2023
IPPS/LTCH PPS final rule, this data analysis also shows for the
numerous procedure combinations that would comprise an ``open
concomitant surgical ablation'' procedure, the increase in average
costs appears to directly correlate with the number of procedures
performed. The data analysis reflects that cases that describe ``Open
MVR + Open AVR'' in addition to other concomitant procedures generally
demonstrate higher average costs in their respective MS-DRGs. In MS-DRG
216, we identified a total of 439 cases reporting procedure code
combinations describing open concomitant surgical ablations with an
average length of stay of 17.7 days and average costs of $89,877. Of
those 439 cases, there were 40 cases reporting an aortic valve repair/
replacement procedure, a mitral valve repair/replacement procedure, and
another concomitant procedure with average costs of $106,301 and an
average length of stay of 17.9 days. In MS-DRG 217, we identified a
total of 92 cases reporting procedure code combinations describing open
concomitant surgical ablations with an average length of stay of 10
days and average costs of $60,975. Of those 92 cases, there were 9
cases reporting an aortic valve repair/replacement procedure, a mitral
valve repair/replacement procedure, and another concomitant procedure
with average costs of $82,514 and an average length of stay of 12.5
days. In MS-DRG 219, we identified a total of 1,136 cases reporting
procedure code combinations describing open concomitant surgical
ablations with an average length of stay of 11.2 days and average costs
of $70,693. Of those 1,136 cases, there were 102 cases reporting an
aortic valve repair/replacement procedure, a mitral valve repair/
replacement procedure, and another concomitant procedure with average
costs of $85,537 and an average length of stay of 12.8 days. In MS-DRG
220, we identified a total of 770 cases reporting procedure code
combinations describing open concomitant surgical ablations with an
average length of stay of 7.3 days and average costs of $52,456. Of
those 770 cases, there were 48 cases reporting an aortic valve repair/
replacement procedure, a mitral valve repair/replacement procedure, and
another concomitant procedure with average costs of $67,344 and an
average length of stay of 8.4 days. For MS-DRG 218 and MS-DRG 221, we
did not identify any cases reporting procedure code combinations
describing open concomitant surgical ablations with an aortic valve
repair/replacement procedure, a mitral valve repair/replacement
procedure, and another concomitant procedure.
In examining this request, we note that the requestor suggested
that CMS reassign open concomitant surgical ablation procedures for
atrial fibrillation (AF) from MS-DRGs 219, 220, and 221 (Cardiac Valve
and Other Major Cardiothoracic Procedures without Cardiac
Catheterization with MCC, with CC, and without CC/MCC, respectively) to
MS-DRGs 216, 217 and 218 for FY 2024, however, as discussed in the FY
2023 IPPS/LTCH PPS final rule, MS-DRGs 216, 217 and 218 are defined by
the performance of cardiac catheterization. We continue to be concerned
about the effect on clinical coherence of assigning cases reporting
procedure code combinations describing open concomitant surgical
ablations that do not also have a cardiac catherization procedure
reported to MS-DRGs that are defined by the performance of that
procedure. We also note, as discussed in section II.C.1.b of this
proposed rule, using the December 2022 update of the FY 2022 MedPAR
file, we analyzed how applying the NonCC subgroup criteria to all MS-
DRGs currently split into three severity levels would affect the MS-DRG
structure beginning in FY 2024. Similar to our findings discussed in
the
[[Page 26694]]
FY 2022 and FY 2023 IPPS/LTCH PPS final rules, findings from our
analysis indicate that MS-DRGs 216, 217, 218 as well as approximately
44 other base MS-DRGs would be subject to change based on the three-way
severity level split criterion finalized in FY 2021. Specifically, we
note that the total number of cases in MS-DRG 218 is again below 500.
We refer the reader to Table 6P.10b associated with this proposed rule
(which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS) for the
list of the 135 MS-DRGs that would potentially be subject to deletion
and the list of the 86 new MS-DRGs that would potentially be created
under this policy if the NonCC subgroup criteria was applied.
To further analyze the claims data to determine to what extent the
performance of multiple procedures is contributing to higher costs and
to identify other contributing factors that might exist with respect to
the increased length of stay and costs of these cases in these MS-DRGs,
we analyzed the cases reporting a concomitant procedure code
combination without reporting a procedure code describing open surgical
ablation assigned to MS-DRGs 216, 217, 218, 219, 220, and 221. We refer
readers to Tables 6P.3c associated with this proposed rule (which are
available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS) for the data analysis of
cases reporting a concomitant procedure code combination without
reporting a procedure code describing open surgical ablation assigned
to MS-DRGs 216, 217, 218, 219, 220, and 221 from the September 2022
update of the FY 2022 MedPAR file.
The data analysis similarly reflects that cases that report ``Open
MVR + Open AVR'' in addition to other concomitant procedures generally
demonstrate higher average costs in their respective MS-DRGs, even in
instances where an open surgical ablation was not reported. In MS-DRG
216, we identified a total of 2,759 cases reporting a concomitant
procedure code combination without reporting a procedure code
describing open surgical ablation with an average length of stay of
17.5 days and average costs of $89,334. Of those 2,759 cases, there
were 240 cases reporting an aortic valve repair/replacement procedure,
a mitral valve repair/replacement procedure, and another concomitant
procedure with average costs of $116,611 and an average length of stay
of 22.7 days. In MS-DRG 217, we identified a total of 852 cases
reporting a concomitant procedure code combination without reporting a
procedure code describing open surgical ablation with an average length
of stay of 10.7 days and average costs of $56,208. Of those 852 cases,
there were 31 cases reporting an aortic valve repair/replacement
procedure, a mitral valve repair/replacement procedure, and another
concomitant procedure with average costs of $70,831 and an average
length of stay of 12.6 days. In MS-DRG 218, we identified a total of 64
cases reporting a concomitant procedure code combination without
reporting a procedure code describing open surgical ablation with an
average length of stay of 6.5 days and average costs of $39,924, none
of which reported an aortic valve repair/replacement procedure, a
mitral valve repair/replacement procedure, and another concomitant
procedure. In MS-DRG 219, we identified a total of 7,604 cases
reporting a concomitant procedure code combination without reporting a
procedure code describing open surgical ablation with an average length
of stay of 11.1 days and average costs of $66,412. Of those 7,604
cases, there were 579 cases reporting an aortic valve repair/
replacement procedure, a mitral valve repair/replacement procedure, and
another concomitant procedure with average costs of $85,890 and an
average length of stay of 13.7 days. In MS-DRG 220, we identified a
total of 6,430 cases reporting a concomitant procedure code combination
without reporting a procedure code describing open surgical ablation
with an average length of stay of 6.5 days and average costs of
$45,472. Of those 6,430 cases, there were 260 cases reporting an aortic
valve repair/replacement procedure, a mitral valve repair/replacement
procedure, and another concomitant procedure with average costs of
$63,761 and an average length of stay of 7.8 days. In MS-DRG 221, we
identified a total of 666 cases reporting a concomitant procedure code
combination without reporting a procedure code describing open surgical
ablation with an average length of stay of 5.0 days and average costs
of $39,777. Of those 666 cases, there were 9 cases reporting an aortic
valve repair/replacement procedure, a mitral valve repair/replacement
procedure, and another concomitant procedure with average costs of
$38,156 and an average length of stay of 5.6 days.
Analysis of the claims data suggests that it is the performance of
an aortic valve repair or replacement procedure, a mitral valve repair
or replacement procedure plus another concomitant procedure that is
associated with increased hospital resource utilization, not solely the
performance of open surgical ablation as suggested by the requestor,
when compared to other cases in their respective MS-DRGs. We reviewed
these data and note, clinically, the management of mixed valve disease
is challenging because patients with mixed valve disease are often
frail, elderly, and present with multiple comorbidities. The
combination of conditions in mixed valve disease, such as aortic
stenosis and mitral stenosis, can result in a greater reduction of
cardiac output than in isolated valvular stenosis. Patients requiring
an aortic valve procedure and a mitral valve procedure in the same
operative session are more complex cases and can be at significant risk
for adverse events if there is moderate or severe disease of one or
more cardiac valves. The data analysis clearly shows that cases
reporting aortic valve repair or replacement procedure, a mitral valve
repair or replacement procedure and another concomitant procedure have
higher average costs and generally longer lengths of stay compared to
all the cases in their assigned MS-DRG. For these reasons, we are
proposing to create a new MS-DRG for cases reporting an aortic valve
repair or replacement procedure, a mitral valve repair or replacement
procedure, and another concomitant procedure.
To compare and analyze the impact of our suggested modifications,
we ran a simulation using the most recent claims data from the December
2022 update of the FY 2022 MedPAR file. The following table illustrates
our findings for all 892 cases reporting procedure codes describing an
aortic valve repair or replacement procedure, a mitral valve repair or
replacement procedure, and another concomitant procedure. We believe
the resulting proposed MS-DRG assignment is more clinically
homogeneous, coherent and better reflects hospital resource use.
BILLING CODE 4120-01-P
[[Page 26695]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.027
We applied the criteria to create subgroups in a base MS-DRG as
discussed in section II.C.1.b. of this FY 2024 IPPS/LTCH PPS proposed
rule. As shown in the table that follows, a three-way split of the
proposed new MS-DRG failed to meet the criterion that there be at least
500 or more cases in each subgroup.
[GRAPHIC] [TIFF OMITTED] TP01MY23.028
We then applied the criteria for a two-way split for the ``with CC/
MCC'' and ``without CC/MCC'' subgroups and again found that the
criterion that there be at least 500 or more cases in each subgroup
could also not be met. The following table illustrates our findings.
[GRAPHIC] [TIFF OMITTED] TP01MY23.029
We also applied the criteria for a two-way split for the ``with
MCC'' and ``without MCC'' subgroups and found that the criterion that
there be at least 500 or more cases in each subgroup similarly could
not be met. The following table illustrates our findings.
[GRAPHIC] [TIFF OMITTED] TP01MY23.030
Therefore, for FY 2024, we are not proposing to subdivide the
proposed new MS-DRG for cases reporting procedure codes describing an
aortic valve repair or replacement procedure, a mitral valve repair or
replacement procedure, and another concomitant procedure into severity
levels.
In summary, for FY 2024, taking into consideration that it
clinically requires greater resources to perform an aortic valve repair
or replacement procedure, a mitral valve repair or replacement
procedure, and another concomitant procedure, we are proposing to
create a new base MS-DRG for cases reporting an aortic valve repair or
replacement procedure, a mitral valve repair or replacement procedure,
and another concomitant procedure in MDC 05. The proposed new MS-DRG is
proposed new MS-DRG 212 (Concomitant Aortic and Mitral Valve
Procedures). We refer the reader to Table 6P.4a associated with this
proposed rule (which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index) for the list of procedure codes we are
proposing to define in the logic for the proposed new MS-DRG. We note
that discussion of the surgical hierarchy for the proposed
modifications is discussed in section II.C.15. of this proposed rule.
b. External Heart Assist Device
Impella[reg] Ventricular Support Systems are temporary heart assist
devices intended to support blood pressure and provide increased blood
flow to critical organs in patients with cardiogenic shock, by drawing
blood out of the heart and pumping it into the aorta, partially or
fully bypassing the left ventricle to provide adequate circulation of
blood (replace or supplement left ventricle pumping) while also
allowing damaged heart muscle the opportunity to rest and recover in
patients who need short-term support.
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 44820 through
44831), we
[[Page 26696]]
discussed a request to reassign certain cases reporting procedure codes
describing the insertion of a percutaneous short-term external heart
assist device from MS-DRG 215 (Other Heart Assist System Implant) to
MS-DRGs 216, 217, and 218 (Cardiac Valve and Other Major Cardiothoracic
Procedures with Cardiac Catheterization with MCC, with CC, and without
CC/MCC, respectively). We stated that our clinical advisors reviewed
the clinical issues and the claims data and agreed that cases reporting
a procedure code that describes the intraoperative insertion of a
short-term external heart assist device are generally less resource
intensive and are clinically distinct from other cases reporting
procedure codes describing the insertion of other types of heart assist
devices currently assigned to MS-DRG 215. We also stated that
critically ill patients who are experiencing or at risk for cardiogenic
shock from an emergent event such as heart attack or virus that impacts
the functioning of the heart and requires longer heart pump support are
different from those patients who require intraoperative support only.
Patients receiving a short-term external heart assist device
intraoperatively during coronary interventions often have an underlying
disease pathology such as heart failure related to occluded coronary
vessels that is broadly similar in kind to other patients also
receiving these interventions without the need for an insertion of a
short-term external heart assist device. In the post-operative period,
these patients can recover and can be sufficiently rehabilitated prior
to discharge. For these reasons, we finalized our proposal to assign
ICD-10-PCS codes 02HA0RJ, 02HA3RJ or 02HA4RJ that describe the
intraoperative insertion of a short-term external heart assist device
to MS-DRGs 216, 217, 218, 219, 220 and 221.
For this FY 2024 IPPS/LTCH PPS proposed rule, we received a request
to reassign certain cases reporting procedure codes describing the
insertion of a short-term external heart assist device using an
axillary artery conduit from MS-DRG 215 to MS-DRGs 001 and 002 (Heart
Transplant or Implant of Heart Assist System with MCC and without MCC,
respectively) and MS-DRG 003 (ECMO or Tracheostomy with MV >96 Hours or
Principal Diagnosis Except Face, Mouth and Neck with Major O.R.
Procedures).
The Impella[reg] 5.5 with SmartAssist[reg] System is designed for
longer-duration support (up to 14 days) than other femoral access
percutaneous ventricular assist devices (pVADs) that treat cardiogenic
shock (up to 4 days) providing full cardiac and hemodynamic support
with 5.5 liters of blood flow per minute. The Impella[reg] 5.5 with
SmartAssist[reg] System is considered a hybrid procedure of an open
vascular exposure and an endovascular procedure. The Impella[reg] 5.5
with SmartAssist[reg] System surgical pump can be inserted through an
open chest for direct aortic access or a surgical incision that exposes
the axillary artery. In the axillary artery approach, a surgical graft
conduit is anastomosed to the axillary artery by a surgeon in the
operating room. The device is positioned across the aortic valve, with
the inlet located in the left ventricle and the outlet in the ascending
aorta to allow the device to directly unload via the native pathway and
to support coronary perfusion. According to the requestor, the
Impella[reg] 5.5 with SmartAssist[reg] System is indicated for more
complex patients than other femoral artery access pVADs, however the
insertion of a short-term external heart assist device using an
axillary artery conduit (such as the Impella[reg] 5.5 with
SmartAssist[reg] System) is reported with the same ICD-10-PCS code that
describes insertion of a percutaneous short-term external heart assist
device and are therefore also assigned to MS-DRG 215. According to the
requestor, Impella[reg] 5.5 with SmartAssist[reg] System is more
clinically comparable to implantable heart assist systems, such as left
ventricular assist devices (LVADs), and like LVADs, the insertion of a
short-term external heart assist device using an axillary artery
conduit must be performed by a surgeon in the operating room. The
requestor performed its own data analysis, and stated their analysis
showed a significant variation in the resource utilization for patients
treated with the Impella[reg] 5.5 with SmartAssist[reg] System compared
to patients treated with other femoral access pVADs assigned to MS-DRG
215.
Following the submission of the FY 2024 MS-DRG classification
change request for certain cases reporting procedure codes describing
the insertion of a short-term external heart assist device using an
axillary artery conduit, this same requestor (the manufacturer of the
Impella[reg] Ventricular Support Systems) submitted a code proposal
requesting a new ICD-10-PCS procedure code to describe the Impella[reg]
5.5 with SmartAssist[reg] System for consideration as an agenda topic
to be discussed at the March 7-8, 2023 ICD-10 Coordination and
Maintenance Committee meeting. The proposal was presented and discussed
at the March 7-8, 2023 ICD-10 Coordination and Maintenance Committee
meeting. We refer the reader to the CMS website at: https://www.cms.gov/Medicare/Coding/ICD10/C-and-M-Meeting-Materials for
additional detailed information regarding the request, including a
recording of the discussion and the related meeting materials. Public
comments in response to the code proposal were due by April 7, 2023.
In reviewing this MS-DRG reclassification request, we note that we
agree with the requestor that the insertion of a short-term external
heart assist device using an axillary artery conduit (such as the
Impella[reg] 5.5 with SmartAssist[reg] System) is not separately
identifiable in the claims data. Therefore, in this section, we address
the assignment of the existing procedure codes describing the insertion
of short-term external heart assist devices, including our proposed
reassignment of a subset of these cases for FY 2024.
The following ICD-10-PCS procedure codes describe the insertion of
a short-term external heart assist device.
[GRAPHIC] [TIFF OMITTED] TP01MY23.031
In the ICD-10 MS-DRG Definitions Manual Version 40.1, procedure
codes 02HA0RZ, 02HA3RZ, and 02HA4RZ are currently recognized as
extensive O.R. procedures assigned to MS-DRG 215 (Other Respiratory
System O.R. Procedures with MCC, with CC, and without CC/MCC,
respectively) in MDC 05.
[[Page 26697]]
As stated previously, the request for FY 2024 rulemaking was to
reassign certain cases reporting procedure codes describing the
insertion of a short-term external heart assist device using an
axillary artery conduit from MS-DRG 215 to MS-DRGs 001 and 002 (Heart
Transplant or Implant of Heart Assist System with MCC and without MCC,
respectively) and MS-DRG 003 (ECMO or Tracheostomy with MV >96 Hours or
Principal Diagnosis Except Face, Mouth and Neck with Major O.R.
Procedures). During our review of this request, we note that the
current GROUPER logic for MS-DRGs 001 and 002 is comprised of two
lists. The first list includes procedure codes identifying a heart
transplant procedure, and the second list includes procedure codes
identifying the implantation of a heart assist system (including short-
term external heart assist systems) and includes code combinations or
procedure code ``clusters'' that, when reported together, satisfy the
logic for assignment to MS-DRGs 001 and 002. The code combinations are
represented by two procedure codes and include either one code for the
insertion of the device with one code for removal of the device or one
code for the revision of the device with one code for the removal of
the device.
We also note that the GROUPER logic for MS-DRG 003 is defined by a
(1) procedure code for extracorporeal oxygenation (ECMO) (2) a
procedure code for tracheostomy, mechanical ventilation and a procedure
code further classified as extensive or (3) a procedure code for
tracheostomy with a procedure code further classified as extensive and
a principal diagnosis not assigned to MS-DRGs 011, 012 or 013 as
reflected in the logic table:
[GRAPHIC] [TIFF OMITTED] TP01MY23.032
As procedure codes describing the insertion of a short-term
external heart assist device are classified as extensive procedures in
Version 40.1, specific assignment of these procedure codes to MS-DRG
003 is not required. When the other parameters of the GROUPER logic are
met and procedure codes describing the insertion of a short-term
external heart assist device are also reported, MS-DRG 003 will be
assigned, therefore we did not include MS-DRG 003 in our analysis. We
refer the reader to the ICD-10 MS-DRG Version 40.1 Definitions Manual
(which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software, for complete documentation of the GROUPER
logic for the listed MS-DRGs and for Appendix E--Operating Room
Procedures and Procedure Code/MS-DRG Index.
To begin our analysis, we examined claims data from the September
2022 update of the FY 2022 MedPAR file for MS-DRG 215 to identify cases
reporting ICD-10-PCS codes 02HA0RZ, 02HA3RZ, and 02HA4RZ. Our findings
are shown in the following table:
[[Page 26698]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.033
As shown in the table, we identified a total of 3,587 cases within
MS-DRG 215 with an average length of stay of 9 days and average costs
of $86,774. Of these 3,587 cases, there are 60 cases reporting a
procedure code describing the open insertion of a short-term external
heart assist device with an average length of stay of 9.2 days and
average costs of $130,153. There are 3,424 cases reporting a procedure
code describing a percutaneous insertion of a short-term external heart
assist device with an average length of stay of 8.9 days and average
costs of $86,640. There are 6 cases reporting a procedure code
describing a percutaneous endoscopic insertion of a short-term external
heart assist device with an average length of stay of 6.7 days and
average costs of $63,923. The data analysis shows that the average
length of stay is longer and the average costs are higher for the cases
reporting a procedure code describing the open insertion of a short-
term external heart assist device compared to all cases in MS-DRG 215,
while the average length of stay is shorter and the average costs are
lower for the cases reporting a procedure code describing the
percutaneous or percutaneous endoscopic insertion of a short-term
external heart assist device compared to all cases in that MS-DRG.
We then examined claims data from the September 2022 update of the
FY 2022 MedPAR for MS-DRGs 001 and 002. Our findings are shown in the
following table.
[GRAPHIC] [TIFF OMITTED] TP01MY23.034
While the average costs for all cases in MS-DRG 001 are higher than
the average costs of the cases reporting a procedure code describing
the open insertion of a short-term external heart assist device, the
data suggest that overall, cases reporting a procedure code describing
the open insertion of a short-term external heart assist device may be
more appropriately aligned with the average costs of the cases in MS-
DRGs 001 and 002 in comparison to MS-DRG 215, even though the average
length of stay is shorter.
We then reviewed the clinical considerations along with this data
analysis and agreed that cases reporting a procedure code that
describes the open insertion of a short-term external heart assist
device are generally more resource intensive and are clinically
distinct from other cases reporting procedure codes describing the
insertion of short-term external heart devices by other approaches
currently assigned to MS-DRG 215. The availability of mechanical
circulatory support devices to provide acute hemodynamic support for
cardiogenic shock or to support percutaneous coronary intervention
(PCI) has expanded over the past decade. There is now a portfolio of
short-term external heart assist devices available that each have
different indications for use and techniques for implantation.
The percutaneous or percutaneous endoscopic insertion of a short-
term external heart assist device involves standard catheterization
techniques except for the requirement of a large-bore 13 or 14 Fr
sheath. Short-term external heart assist devices inserted in this
manner generally provide blood flow up to 2.5 L/min for systemic
perfusion and are intended for temporary (<= 4 days) use to maintain
stable heart function. In contrast, the open insertion of a short-term
external heart assist device or the insertion of short-term external
heart assist devices using an axillary artery conduit requires a
surgical cutdown of the axillary artery to place the larger 23 Fr
sheaths of these devices. Short-term external heart assist devices that
are inserted via an open approach or using an axillary artery conduit
can provide blood flow up to 5.5 L/min for systemic perfusion and are
intended for longer use (<= 14 days). They are indicated for the
treatment of ongoing cardiogenic shock that occurs less than 48 hours
following acute myocardial infarction or open-heart surgery or in the
setting of cardiomyopathy, including peripartum cardiomyopathy, or
myocarditis as a result of isolated left ventricular failure that is
not responsive to medical management and conventional treatment
measures. We note the indications for the open insertion of a short-
term external heart assist device or the insertion of short-term
external heart assist devices using an axillary artery conduit are more
closely aligned with MS-DRGs 001 and 002 as compared to MS-DRG 215. For
these reasons, we believe reassigning ICD-10-PCS code 02HA0RZ that
describes the open insertion of a short-term external heart assist
device to Pre-MDC MS-DRGs 001 and 002 would improve clinical coherence
in these MS-DRGs.
To compare and analyze the impact of these potential modifications,
we ran a simulation using the claims data from the September 2022
update of the FY 2022 MedPAR file. The following table reflects our
simulation for ICD-10-PCS procedure code 02HA0RZ that describes the
open insertion of a short-term external heart assist device if it was
moved to MS-DRGs 001 and 002.
[[Page 26699]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.035
We believe that this simulation supports that the resulting MS-DRG
assignments would be more clinically homogeneous, coherent and better
reflect hospital resource use. A review of this simulation shows that
this distribution of ICD-10-PCS code 02HA0RZ that describes the open
insertion of a short-term external heart assist device if moved to MS-
DRGs 001 and 002, slightly decreases the average costs of the cases
remaining in MS-DRG 215 by about $3,000, while similarly having a
limited effect on the average costs of MS-DRGS 001 and 002. Therefore,
for FY 2024, we are proposing to reassign ICD-10-PCS code 02HA0RZ when
reported as a standalone procedure from MDC 05 in MS-DRG 215 to Pre-MDC
MS-DRGs 001 and 002. Under this proposal, procedure code 02HA0RZ will
no longer need to be reported as part of a procedure code combination
or procedure code ``cluster'' to satisfy the logic for assignment to
MS-DRGs 001 and 002.
We will continue to monitor the clinical cohesiveness of the
procedures assigned to MS-DRGs 001 and 002 to assess whether they
continue to be aligned on resource use, as well as current shifts in
treatment practices, to determine if additional refinements may be
warranted in the future. The increased availability of short-term
external heart assist devices and their development into low profile,
high output pumps has shifted the management of cardiogenic shock that
is unresponsive to other interventions in the years since these MS-DRGs
were created. These short-term devices can now be used as a bridge to
provide the time needed for clinical decision making, native heart
recovery, or until another procedure can be performed, such as the
insertion of a left ventricular assist device (LVAD) or cardiac
transplantation.
As noted previously, this same requestor (the manufacturer of the
Impella[reg] Ventricular Support Systems) submitted a code proposal to
be discussed at the March 7-8, 2023 ICD-10 Coordination and Maintenance
Committee meeting to request a change to how the Impella[reg] 5.5 with
SmartAssist[reg] System is coded within the ICD-10-PCS classification
as there are no unique ICD-10-PCS codes to describe the insertion of a
short-term external heart assist system using an axillary artery
conduit. Because the decisions on the diagnosis and procedure code
proposals that were presented at the March 7-8, 2023 ICD-10-CM
Coordination and Maintenance Committee meeting for an October 1
implementation (upcoming FY) are not finalized in time to include in
Table 6A.--New Diagnosis Codes and Table 6B.--New Procedure Codes in
association with this FY 2024 IPPS/LTCH PPS proposed rule, as we have
noted in prior rulemaking (86 FR 44805), we use our established process
to examine the MS-DRG assignment for the predecessor codes to determine
the most appropriate MS-DRG assignment. Specifically, we review the
predecessor code and MS-DRG assignment most closely associated with the
new procedure code, and in the absence of claims data, we consider
other factors that may be relevant to the MS-DRG assignment, including
the severity of illness, treatment difficulty, complexity of service
and the resources utilized in the diagnosis and/or treatment of the
condition. We have noted in prior rulemaking that this process does not
automatically result in the new procedure code being assigned to the
same MS-DRG or to have the same designation (O.R. versus Non-O.R.) as
the predecessor code.
Under this established process, the MS-DRG assignment for any new
procedure codes describing the Impella[reg] 5.5 with SmartAssist[reg]
System, if finalized following the March meeting, would be reflected in
Table 6B.--New Procedure Codes associated with the final rule for FY
2024. In the event there is not support for the new procedure code as
presented at the March 7-8, 2023 ICD-10 Coordination and Maintenance
Committee meeting to describe the insertion of a short-term external
heart assist system using an axillary artery conduit, the procedure
will be reported with current coding that is applicable within the
classification as displayed in the ICD-10 Coordination and Maintenance
Committee meeting materials (available on the CMS website at: https://www.cms.gov/Medicare/Coding/ICD10/C-and-M-Meeting-Materials). We refer
the reader to section II.C.14. of the preamble of this proposed rule
for further information regarding Table 6B.
As discussed in prior rulemaking, interested parties may use
current coding information to consider the potential MS-DRG assignments
for procedure codes that may be finalized after the March meeting and
submit public comments for consideration. Specifically, in the ICD-10
Coordination and Maintenance Committee meeting materials (available on
the CMS website at: https://www.cms.gov/Medicare/Coding/ICD10/C-and-M-Meeting-Materials), for each procedure code proposal we provide the
current coding that is applicable within the classification and that
should be reported in the absence of a more unique code, or until such
time a new code is created and becomes effective. The procedure code(s)
listed in current coding are generally, but not always, the same
code(s) that are considered as the predecessor code(s) for purposes of
MS-DRG assignment. As previously noted, our process for determining the
MS-DRG assignment for a new procedure code does not automatically
result in the new procedure code being assigned to the same MS-DRG or
having the same designation (O.R. versus Non-O.R.) as the predecessor
code. However, this current coding information can be used in
conjunction with the GROUPER logic, as set forth in the ICD-10 MS-DRG
Definitions Manual and publicly available on our CMS website at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software to review
[[Page 26700]]
the MS-DRG assignment of the current code(s) and examine the potential
MS-DRG assignment of the proposed code(s), to assist in formulating any
public comments for submission to CMS for consideration.
In summary, we are proposing to reassign ICD-10-PCS code 02HA0RZ
(Insertion of short-term external heart assist system into heart, open
approach) from MDC 05 in MS-DRG 215 to Pre-MDC MS-DRGs 001 and 002 for
FY 2024. Separately, and as previously discussed, a code proposal was
discussed at the March 7-8, 2023 ICD-10 Coordination and Maintenance
Committee meeting to request a change to how the Impella[reg] 5.5 with
SmartAssist[reg] System is coded within the ICD-10-PCS classification.
If finalized, the new procedure code would be included in the FY 2024
code update files that are made available in late May/early June on the
CMS website at: https://www.cms.gov/medicare/coding/icd10. In addition,
using our established process, if finalized, the MS-DRG assignment for
any new procedure codes describing the Impella[reg] 5.5 with
SmartAssist[reg] System will be displayed in Table 6B.--New Procedure
Codes in association with the FY 2024 IPPS/LTCH PPS final rule that
will be made publicly available in association with the final rule on
the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS.
c. Ultrasound Accelerated Thrombolysis for Deep Venous Thrombosis
We received a request to reassign cases reporting ultrasound
accelerated thrombolysis (USAT) of peripheral vascular structures
procedures with the administration of thrombolytic(s) for deep venous
thrombosis from MS-DRGs 252, 253, and 254 (Other Vascular Procedures
with MCC, with CC, and without CC/MCC, respectively) to MS-DRGs 270,
271, and 272 (Other Major Cardiovascular Procedures with MCC, with CC,
and without CC/MCC, respectively). Deep venous thrombosis (DVT) is
caused when a blood clot (or thrombus) forms in a vein, primarily in
large veins of the lower leg and thigh, but may also occur in the deep
veins of the pelvis and less commonly, in the upper extremities. Risk
factors for DVT are similar to those of pulmonary embolism as discussed
in section II.C.4.a. of this proposed rule, and include prolonged
immobilization from any cause, obesity, cancer, fractured hip or leg,
use of certain medications such as oral contraceptives, and the
presence of certain medical conditions such as heart failure. Common
symptoms of DVT include leg (or arm) swelling, pain, cramping, or
heaviness, skin discoloration, the feeling of warmth in the affected
area, or there may not be any noticeable symptoms.
Thrombolysis is a type of treatment where the infusion of
thrombolytics, (fibrinolytic or ``clot-busting'' drugs) is used to
dissolve blood clots that form in the arteries or veins with the goal
of improving blood flow and preventing long-term damage to tissues and
organs. Conventional catheter-directed thrombolysis (CDT) procedures
generally rely on a multi-sidehole catheter placed adjacent to the
thrombus through which thrombolytics are delivered directly to the
thrombus, however, the EKOSTM EkoSonic[reg] Endovascular
System (EKOSTM System) employs ultrasound to assist in
thrombolysis. The ultrasound does not itself dissolve the thrombus, but
pulses of ultrasonic energy temporarily make the fibrin in the thrombus
more porous and increase fluid flow within the thrombus. High
frequency, low-intensity ultrasonic waves create a pressure gradient
that drives the thrombolytic into the thrombus and keeps it in close
proximity to the binding sites. USAT is also referred to as ultrasound-
assisted thrombolysis or ultrasound-enhanced thrombolysis.
According to the requestor (the manufacturer of the
EKOSTM device), USAT of peripheral vascular structures with
the administration of thrombolytic(s) for the treatment of DVT
performed using the EKOSTM device utilizes more resources in
comparison to other procedures that are currently assigned to MS-DRGs
252, 253, and 254 and is not clinically coherent with the other
procedures assigned to those MS-DRGs. The requestor stated that the
cases reporting USAT of peripheral vascular structures with the
administration of thrombolytic(s) for DVT are more comparable with and
more clinically aligned with the procedures assigned to MS-DRGs 270,
271, and 272. The requestor stated they performed an analysis of cases
reporting USAT of peripheral vascular structures for DVT with the
following ICD-10-PCS procedure codes.
[[Page 26701]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.036
We note that the requestor did not include a list of diagnosis
codes describing DVT or a list of procedure codes describing the
administration of thrombolytic(s) in connection with its analysis.
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58561 through
58579), we summarized and responded to public comments expressing
concern with the proposed MS-DRG assignments for the newly created
procedure codes describing USAT of several anatomic sites that were
effective with discharges on and after October 1, 2020 (FY 2021).
Similar to the current request for FY 2024, for FY 2021, the commenters
recommended that USAT procedures performed with the EKOSTM
device for the treatment of DVT be assigned to MS-DRGs 270, 271, and
272 instead of MS-DRGs 252, 253, and 254. We refer the reader to the FY
2021 IPPS/LTCH PPS final rule (85 FR 58561 through 58579), available on
the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS, for the detailed discussion.
[[Page 26702]]
We analyzed claims data from the September 2022 update of the FY
2022 MedPAR file for MS-DRGs 252, 253, and 254 and cases reporting a
principal diagnosis of DVT and USAT of peripheral vascular structures
procedure with and without the administration of thrombolytic(s). We
identified claims reporting an USAT of peripheral vascular structures
procedure, the administration of thrombolytic(s), and a diagnosis of
DVT with the listed codes as shown in Table 6P.5a associated with this
proposed rule (and available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS). The findings from our analysis are shown in the
following table.
[GRAPHIC] [TIFF OMITTED] TP01MY23.037
As shown in the table, we identified a total of 20,939 cases in MS-
DRG 252 with an average length of stay of 8 days and average costs of
$29,307. Of the 20,939 cases, we found 51 cases reporting a principal
diagnosis of DVT and USAT with thrombolytic(s) with an average length
of stay of 6.4 days and average costs of $36,660 and 10 cases reporting
a principal diagnosis of DVT and USAT without thrombolytic(s) with an
average length of stay of 6.7 days and average costs of $21,538. The
data demonstrates that the cases reporting a principal diagnosis of DVT
and USAT with or without thrombolytic(s) have a shorter average length
of stay compared to the average length of stay of all the cases in MS-
DRG 252 (6.4 days and 6.7 days, respectively versus 8 days). However,
the average costs for the cases reporting a principal diagnosis of DVT
and USAT with thrombolytic(s) are higher than the average costs of all
the cases in MS-DRG 252 ($36,660 versus $29,307) and the average costs
for the cases reporting a principal diagnosis of DVT and USAT without
thrombolytic(s) are lower than the average costs of all the cases in
MS-DRG 252 ($21,538 versus $29,307). The data indicate that the cases
reporting a principal diagnosis of DVT and USAT with thrombolytic(s)
appear to consume more resources in comparison to the other cases in
MS-DRG 252, although it is unclear if the higher resource consumption
is a direct result of the EKOSTM device technology utilized
in the performance of the thrombolysis procedure, or the fact that
these cases also include the reporting of at least one or more
secondary MCC diagnoses, or a combination of both factors. Conversely,
the data indicate that the cases reporting a principal diagnosis of DVT
and USAT without thrombolytic(s) appear to be less resource intensive
with a difference in average costs of $7,769 ($29,307-$21,538 =
$7,769). Accordingly, the data appear to reflect that the cases
reporting use of the EKOSTM device technology with
thrombolytic(s) may have an impact on the consumption of resources when
compared to all the cases in MS-DRG 252.
For MS-DRG 253, we identified a total of 16,650 cases with an
average length of stay of 5.2 days and average costs of $22,685. Of the
16,650 cases, we found 80 cases reporting a principal diagnosis of DVT
and USAT with thrombolytic(s) with an average length of stay of 5.2
days and average costs of $26,471 and 11 cases reporting a principal
diagnosis of DVT and USAT without thrombolytic(s) with an average
length of stay of 3.8 days and average costs of $20,126. The data
demonstrates that the average length of stay for cases reporting a
principal diagnosis of DVT and USAT with thrombolytic(s) is the same as
the average length of stay for all the cases in MS-DRG 253 (5.2 days).
Conversely, the average length of stay for the cases reporting a
principal diagnosis of DVT and USAT without thrombolytic(s) is shorter
than the average length of stay of all the cases in MS-DRG 253 (3.8
days versus 5.2 days). Similar to MS-DRG 252, the average costs for the
cases reporting a principal diagnosis of DVT and USAT with
thrombolytic(s) are higher than the average costs of all the cases in
MS-DRG 253 ($26,471 versus $22,685) and the average costs for the cases
reporting a principal diagnosis of DVT and USAT without thrombolytic(s)
are lower than the average costs of all the cases in MS-DRG 253
($20,126 versus $22,685). The data indicate that the cases reporting a
principal diagnosis of DVT and USAT with thrombolytic(s) appear to
consume more resources in comparison to the
[[Page 26703]]
other cases in MS-DRG 253, although it is unclear if the higher
resource consumption is a direct result of the EKOSTM device
technology utilized in the performance of the thrombolysis procedure,
or the fact that these cases also include the reporting of at least one
or more secondary CC diagnoses, or a combination of both factors.
For MS-DRG 254, we identified a total of 6,707 cases with an
average length of stay of 2.4 days and average costs of $15,438. Of the
6,707 cases, we found 22 cases reporting a principal diagnosis of DVT
and USAT with thrombolytic(s) with an average length of stay of 3 days
and average costs of $21,867 and 9 cases reporting a principal
diagnosis of DVT and USAT without thrombolytic(s) with an average
length of stay of 2 days and average costs of $17,750. The data
demonstrates that the cases reporting a principal diagnosis of DVT and
USAT with thrombolytic(s) have a longer average length of stay compared
to the average length of stay of all the cases in MS-DRG 254 (3 days
versus 2.4 days), however, the cases reporting a principal diagnosis of
DVT and USAT without thrombolytic(s) have a shorter but comparable
average length of stay compared to the average length of stay of all
the cases in MS-DRG 254 (2 days versus 2.4 days). Additionally, the
average costs for the cases reporting a principal diagnosis of DVT and
USAT with or without thrombolytic(s) are higher than the average costs
of all the cases in MS-DRG 254 ($21,867 and $17,750 respectively versus
$15,438) with a corresponding difference in average costs of $6,429 and
$2,312 respectively. Similar to our findings for MS-DRGs 252 and 253,
the data for MS-DRG 254 indicate the cases reporting a principal
diagnosis of DVT and USAT with thrombolytic(s) appear to consume more
resources in comparison to the other cases in their respective MS-DRG.
In addition, as noted, for MS-DRG 254, the average costs of cases
reporting a principal diagnosis of DVT and USAT without thrombolytic(s)
are also higher than the average costs of all the cases in MS-DRG 254.
However, it is unclear if the higher resource consumption is a direct
result of the EKOSTM device technology utilized in the
performance of the thrombolysis procedure alone, or if there are other
contributing factors, since cases grouping to MS-DRG 254 do not include
the reporting of at least one or more secondary CC or MCC diagnoses.
Our review of the data for MS-DRGs 252, 253, and 254 and our
initial analysis for cases reporting a principal diagnosis of DVT and
USAT procedure with and without the administration of thrombolytic(s)
suggests that the administration of thrombolytic(s) may be considered a
factor in the consumption of resources for these cases in MS-DRGs 252,
253, and 254 where USAT is performed in the treatment of a DVT. For
example, in MS-DRG 252, there are 51 cases reporting a principal
diagnosis of DVT and USAT procedure with the administration of
thrombolytic(s) and 10 cases reporting a principal diagnosis of DVT and
USAT procedure without the administration of thrombolytic(s), with both
subsets of cases showing a comparable average length of stay of 6.4 and
6.7 days, respectively, however, the difference in average costs for
cases with and without thrombolytic(s) is $15,122 ($36,660-$21,538 =
$15,122). For MS-DRG 253, there are 80 cases reporting a principal
diagnosis of DVT and USAT procedure with the administration of
thrombolytic(s) and 11 cases reporting a principal diagnosis of DVT and
USAT procedure without the administration of thrombolytic(s), with both
subsets of cases showing a difference in the average length of stay
(5.2 days and 3.8 days, respectively) and a difference in average costs
of $6,345 ($26,471-$20,126 = $6,345). For MS-DRG 254, there are 22
cases reporting a principal diagnosis of DVT and USAT procedure with
the administration of thrombolytic(s) and 9 cases reporting a principal
diagnosis of DVT and USAT procedure without the administration of
thrombolytic(s), however, both subsets of cases have a similar average
length of stay (3 days and 2 days, respectively) with a difference in
average costs of $4,117 ($21,867-$17,750 = $4,117).
Since the request we received was to reassign cases reporting
ultrasound accelerated thrombolysis (USAT) with the administration of
thrombolytic(s) for the treatment of deep venous thrombosis (DVT) from
MS-DRGs 252, 253, and 254 to MS-DRGs 270, 271, and 272, based on our
approach utilized in our initial analysis of claims reporting USAT with
a principal diagnosis for DVT in MS-DRGs 252, 253, and 254, we then
analyzed claims data from the September 2022 update of the FY 2022
MedPAR file for all cases in MS-DRGs 270, 271, and 272 and compared it
to the cases reporting a principal diagnosis of DVT and USAT procedure
with or without thrombolytic(s) in MS-DRGs 252, 253, and 254. The
findings from our analysis are shown in the following tables.
[GRAPHIC] [TIFF OMITTED] TP01MY23.038
[[Page 26704]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.039
The claims data show that the 61 cases reporting a principal
diagnosis of DVT and USAT with or without thrombolytic(s) in MS-DRG 252
have average costs that are lower than the average costs of all cases
in MS-DRG 270 ($34,181 versus $42,517) and have a shorter average
length of stay compared to all the cases in MS-DRG 270 (6.4 days versus
9.5 days). The 91 cases reporting a principal diagnosis of DVT and USAT
with or without thrombolytic(s) in MS-DRG 253 have a comparable average
length of stay (5 days versus 5.4 days) in comparison to all the cases
in MS-DRG 271 and lower average costs in comparison to all the cases in
MS-DRG 271 ($25,704 versus $30,030) with a difference of $4,326.
Finally, the 31 cases reporting a principal diagnosis of DVT and USAT
with or without thrombolytic(s) in MS-DRG 254 have an average length of
stay that is comparable to all the cases in the MS-DRG 272 (2.7 days
versus 2.4 days) and comparable average costs ($20,672 versus $21,556)
with a difference of $884.
Upon analysis of the claims data and our review of the request, we
do not agree with reassigning cases reporting an USAT procedure with
the administration of thrombolytic(s) and a principal diagnosis of DVT
from MS-DRGs 252, 253, and 254 to MS-DRGs 270, 271, and 272. As
previously noted, the data do not support that cases reporting USAT
(with or without thrombolytic(s)) for DVT utilize similar resources
when compared to other procedures currently assigned to MS-DRGs 270,
271, and 272. We do not agree that cases reporting USAT (with or
without thrombolytic(s)) are more comparable with and more clinically
aligned with the procedures assigned to MS-DRGs 270, 271, and 272
because the majority of procedures in these MS-DRGs describe procedures
performed on the heart and great vessels with either an open or an
endoscopic approach in contrast to the USAT endovascular (percutaneous)
procedure performed on the peripheral vascular structures. In addition,
the majority of procedures in MS-DRGs 270, 271, and 272 are performed
on patients who are not clinically similar to patients who undergo USAT
for DVT since they describe procedures such as bypass, occlusion, and
restriction that are typically performed for patients with conditions
other than a DVT, such as atherosclerosis, aneurysm, and acute
myocardial infarction (AMI). Lastly, a number of procedures in these
MS-DRGs also involve the use of a permanently implanted device while
the procedures utilizing USAT do not. Therefore, we do not consider
USAT procedures to be major cardiovascular procedures, nor do we
believe the cases reporting USAT with (or without thrombolytic(s)) for
DVT demonstrate a similar level of technical complexity when compared
to other procedures currently assigned to MS-DRGs 270, 271, and 272.
As noted, while the average costs are higher for cases reporting
the administration of a thrombolytic, we question whether the higher
average costs may also reflect other factors, such as the use of the
EKOSTM device or the performance of other O.R. procedures
that also group to MS-DRGs 252, 253, and 254. Consistent with the
analysis discussed in section II.C.4.a. of this proposed rule for a
similar, but separate request related to thrombolysis procedures, we
believed it would also be beneficial to examine cases reporting
standard CDT procedures with or without thrombolytic(s) for the
treatment of DVT in MS-DRGs 252, 253, and 254, and compare the findings
to the cases reporting USAT with or without thrombolytic(s) for the
treatment of DVT.
Therefore, we conducted additional analyses to determine if there
were significant differences in resource utilization for cases
reporting standard CDT with or without thrombolytic(s) versus USAT
procedures with or without thrombolytic(s) in the treatment of DVT,
since claims data to compare the two modalities is now available and
studies have reported similar clinical outcomes in reducing DVT
regardless of which thrombolysis modality is utilized.\5\ We analyzed
claims data from the September 2022 update of the FY 2022 MedPAR file
for all cases in MS-DRGs 252, 253, and 254 and cases reporting a
standard CDT procedure with or without the administration of
thrombolytic(s) and a principal diagnosis of DVT. We utilized the
previously listed procedure codes for the administration of
thrombolytic(s) and the previously listed diagnosis codes for a
principal diagnosis of DVT. We identified cases describing standard CDT
procedures performed in the treatment of DVT with the procedure codes
listed in Table 6P.5a. associated with this proposed rule and available
on
[[Page 26705]]
the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS. The findings from our analysis are
shown in the following table. We note there were no cases found to
report a standard CDT procedure with or without thrombolytic(s) and a
principal diagnosis of DVT in MS-DRGs 253 or 254.
---------------------------------------------------------------------------
\5\ Engelberger, Rolf & Stuck, Anna K. & Spirk, David &
Willenberg, Torsten & Haine, Axel & P[eacute]riard, Daniel &
Baumgartner, Iris & Kucher, Nils. (2017). Ultrasound-assisted versus
conventional catheter-directed thrombolysis for acute ilio-femoral
deep vein thrombosis: one-year follow-up data of a randomized-
controlled trial. Journal of Thrombosis and Haemostasis. 15.
10.1111/jth.13709.
[GRAPHIC] [TIFF OMITTED] TP01MY23.040
The data shows that the 3 cases reporting a principal diagnosis of
DVT and standard CDT with or without thrombolytic(s) in MS-DRG 252 have
a shorter average length of stay compared to all cases in MS-DRG 252
(2.3 days versus 8 days) and lower average costs ($10,603 versus
$29,307).
Overall, our analysis of the claims data for cases reporting a
principal diagnosis of DVT and USAT or standard CDT, with or without
thrombolytic(s), demonstrate a low volume of cases, however, the
average costs of the cases reporting USAT with thrombolytic(s) reflect
a significantly higher consumption of resources than all cases in MS-
DRGs 252, 253, and 254. Because it is also possible that a patient may
be admitted to a hospital and receive thrombolysis (USAT or CDT) with a
principal diagnosis other than a DVT or the DVT condition may be
reported as a secondary diagnosis, we believed additional analysis for
cases reporting either USAT or CDT, regardless of the principal
diagnosis would provide us with more beneficial information in our
review of these cases.
Therefore, using the September 2022 update of the FY 2022 MedPAR
file, we conducted an analysis of MS-DRGs 252, 253, and 254 for cases
reporting either USAT or CDT with and without thrombolytic(s) with any
principal diagnosis from MDC 5. Our findings are shown in the following
table.
[GRAPHIC] [TIFF OMITTED] TP01MY23.041
The findings from our analysis show a larger volume of cases for
each respective MS-DRG (252, 253, and 254) for cases reporting USAT or
CDT procedures with any MDC 05 principal diagnosis versus the findings
from our earlier analysis involving cases specifically reporting a
principal diagnosis of DVT. The claims data also show that the 468
cases reporting any principal diagnosis from MDC 05 and USAT or CDT
with or without thrombolytic(s) in MS-DRG 252 have average costs that
are higher than the average costs of all cases in MS-DRG 252 ($39,181
versus $29,307) and have a comparable average length of stay (8.6 days
versus 8.0 days). The 722 cases reporting any principal diagnosis from
MDC 05 and USAT or CDT with or without thrombolytic(s) in MS-DRG 253
have a shorter average length of stay (4.9 days versus 5.2 days) in
comparison to all the cases in MS-DRG 253 and higher average costs
($29,663 versus $22,685) with a difference of $6,978. Finally, the 195
cases reporting any principal diagnosis from MDC 05 and USAT or CDT
with or without thrombolytic(s) in MS-DRG 254 have an average length of
stay that is comparable to all the cases in the MS-DRG 272 (2.6 days
versus 2.4 days) and higher average costs ($22,487 versus $15,438) with
a difference of $7,049.
In summary, based on our review and the claims data analysis for
cases in MS-DRGs 252, 253, and 254 and MS-DRGs 270, 271, and 272, and
for cases reporting standard CDT or USAT with or without
thrombolytic(s) regardless of the principal diagnosis reported from MDC
05, we believe that while the subset of cases for patients undergoing a
thrombolysis (CDT or USAT)
[[Page 26706]]
procedure for DVT does not clinically align with patients undergoing
surgery for acute myocardial infarction (AMI) and does not involve the
same level of complexity as cases grouping to MS-DRGs 270, 271, and
272, the differences in resource consumption warrant reassignment of
these cases. Specifically, we believe the clinical and data analyses
support creating a new base MS-DRG to distinguish cases reporting USAT
or standard CDT procedure of peripheral vascular structures with or
without thrombolytic(s) from other cases currently grouping to MS-DRGs
252, 253, and 254. We believe a new MS-DRG would reflect more
appropriate payment for USAT and standard CDT procedures of peripheral
vascular structures.
To compare and analyze the impact of our suggested modifications,
we ran a simulation using the most recent claims data from the December
2022 update of the FY 2022 MedPAR file. The following table illustrates
our findings for all 1,487 cases reporting procedure codes describing
an USAT or CDT procedure with any principal diagnosis from MDC 05.
[GRAPHIC] [TIFF OMITTED] TP01MY23.042
Consistent with our established process as discussed in section
II.C.1.b. of the preamble of this proposed rule, once the decision has
been made to propose to make further modifications to the MS-DRGs, such
as creating a new base MS-DRG, all five criteria to create subgroups
must be met for the base MS-DRG to be split (or subdivided) by a CC
subgroup. Therefore, we applied the criteria to create subgroups in a
base MS-DRG. We note 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 500 cases in the NonCC (without CC/MCC) subgroup.
[GRAPHIC] [TIFF OMITTED] TP01MY23.043
As discussed in section II.C.1.b. of the preamble of this proposed
rule, if the criteria for a three-way split fail, the next step is to
determine if the criteria are satisfied for a two-way split. We
therefore applied the criteria for a two-way split for the ``with MCC
and without MCC'' subgroups. We note that, as shown in the table that
follows, a two-way split of this base MS-DRG met all five criteria. For
the proposed MS-DRGs, there is at least (1) 500 or more cases in the
MCC group and in the without MCC subgroup; (2) 5 percent or more of the
cases in the MCC group and in the without MCC subgroup; (3) a 20
percent difference in average costs between the MCC group and the
without MCC group; (4) a $2,000 difference in average costs between the
MCC group and the without MCC group; and (5) a 3-percent reduction in
cost variance, indicating that the proposed severity level splits
increase the explanatory power of the base MS-DRG in capturing
differences in expected cost between the proposed MS-DRG severity level
splits by at least 3 percent and thus improve the overall accuracy of
the IPPS payment system. The following table illustrates our findings
for the suggested MS-DRGs with a two-way severity level split.
[GRAPHIC] [TIFF OMITTED] TP01MY23.044
Accordingly, because the criteria for the two-way split were met,
we believe a split (or CC subgroup) is warranted for the proposed new
base MS-DRG. As a result, for FY 2024, we are proposing to create new
MS-DRG 278 (Ultrasound Accelerated and Other Thrombolysis of Peripheral
Vascular Structures with MCC) and new MS-DRG 279 (Ultrasound
Accelerated and Other Thrombolysis of Peripheral Vascular Structures
without MCC).
We are proposing to define the logic for the proposed new MS-DRGs
using the previously listed procedure codes for USAT and CDT, as
identified and discussed in our analysis of the claims data in Table
6P.5a associated with this proposed rule.
d. Coronary Intravascular Lithotripsy
We received a request to review the MS-DRG assignment of cases
describing percutaneous coronary intravascular lithotripsy (IVL)
involving the insertion of a coronary drug-eluting stent. Coronary IVL
is utilized in a subset of percutaneous coronary interventions (PCI)
procedures when the artery is severely calcified. The presence of
[[Page 26707]]
calcium can create various challenges in PCI procedures as it can
prevent the optimal deployment of coronary stents and can negatively
impact patient outcomes. To fully optimize the PCI for severely
calcified arteries, advanced techniques, such as coronary IVL, that
utilize specialty devices are often required. In coronary IVL, a
lithotripsy device catheter is delivered from a small incision in the
patient's arm or leg through to the coronary arterial system of the
heart to reach the site of a severely calcified lesion. The lithotripsy
emitters at the end of the catheter create acoustic pressure waves that
are intended to break up the calcification that is restricting the
blood flow in the vessels of the heart to help open the blood vessels
when an angioplasty balloon is inflated. After the lithotripsy is
performed, the provider can implant an intraluminal device, also called
a stent, to keep the vessel open.
According to the requestor, PCIs involving coronary IVL are
clinically more complex because coronary IVL is a therapy deployed
exclusively in severely calcified coronary lesions, and these lesion
types are associated with longer procedure times and increased
utilization of hospital resources. The requestor performed its own
analysis of claims data for cases reporting procedure codes describing
coronary IVL in MS-DRGs 246 and 247 (Percutaneous Cardiovascular
Procedures with Drug-Eluting Stent with MCC or 4+ Arteries or Stents
and without MCC, respectively) and stated that their findings showed a
significant disparity in total standardized costs for cases in MS-DRG
247. Therefore, according to the requestor, the reassignment of all
cases reporting procedure codes describing percutaneous coronary IVL
involving the insertion of a drug-eluting intraluminal device from the
lower severity level MS-DRG 247 to the higher severity level MS-DRG 246
would be reasonable. The requestor also asked that CMS analyze the
cases reporting procedure codes describing percutaneous coronary IVL
involving the insertion of a non-drug-eluting intraluminal device to
determine if reclassifying cases from the lower severity level MS-DRG
249 (Percutaneous Cardiovascular Procedures with Non-Drug-Eluting Stent
without MCC) to the higher severity level MS-DRG 248 (Percutaneous
Cardiovascular Procedures with Non-Drug-Eluting Stent with MCC or 4+
Arteries or Stents) would be warranted.
The four ICD-10-PCS procedure codes that describe percutaneous
coronary IVL are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TP01MY23.045
The Shockwave C2 Intravascular Lithotripsy System, indicated for
lithotripsy-enabled, low-pressure dilation of calcified, stenotic de
novo coronary arteries prior to stenting, is identified by the
reporting of an ICD-10-PCS code that describes percutaneous coronary
IVL shown in the previous table. The Shockwave C2 Intravascular
Lithotripsy System was approved for new technology add-on payments for
FY 2022 (86 FR 45151 through 45153) and FY 2023 (87 FR 48913). We refer
readers to section II.E.5 of the preamble of this proposed rule for a
discussion regarding the proposed FY 2024 status of technologies
approved for FY 2023 new technology add-on payments, including the
Shockwave C2 Intravascular Lithotripsy System.
The requestor is correct that cases reporting procedure codes that
describe percutaneous coronary IVL involving the insertion of a drug-
eluting intraluminal device group to MS-DRGs 246 and 247. The requestor
is also correct that cases reporting procedure codes that describe
percutaneous coronary IVL involving the insertion of a non-drug-eluting
intraluminal device group to MS-DRGs 248 and 249. We refer the reader
to the ICD-10 MS-DRG Definitions Manual Version 40.1, which is
available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software, for complete documentation of the GROUPER logic for MS-DRGs
246, 247, 248, and 249.
In analyzing this request, we noted that coronary IVL is a vessel
preparation technique and that there may be instances where an
intraluminal device is unable to be inserted after the application of
the IVL pulses. Therefore, in our analysis of cases reporting procedure
codes describing percutaneous coronary IVL involving the insertion of a
drug-eluting intraluminal device and non-drug-eluting intraluminal
device that group to MS-DRGs 246, 247, 248, and 249, we included cases
reporting percutaneous coronary IVL without procedure codes describing
the insertion of a intraluminal device that group to MS-DRGs 250 and
251 (Percutaneous Cardiovascular Procedures without Coronary Artery
Stent with MCC and without MCC, respectively) in our examination of
claims data from the September 2022 update of the FY 2022 MedPAR file
for cases reporting percutaneous coronary IVL and compared the results
to all cases in their respective MS-DRG.
The following table shows our findings:
[[Page 26708]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.046
As shown by the table, in MS-DRG 246, we identified a total of
40,647 cases, with an average length of stay of 5.2 days and average
costs of $25,630. Of those 40,647 cases, there were 2,359 cases
reporting percutaneous coronary IVL, with higher average costs as
compared to all cases in MS-DRG 246 ($35,503 compared to $25,630), and
a longer average length of stay (5.7 days compared to 5.2 days). In MS-
DRG 247, we identified a total of 54,671 cases with an average length
of stay of 2.4 days and average costs of $16,241. Of those 54,671
cases, there were 1,505 cases reporting percutaneous coronary IVL, with
higher average costs as compared to all cases in MS-DRG 247 ($24,141
compared to $16,241), and a longer average length of stay (2.7 days
compared to 2.4 days). In MS-DRG 248, we identified a total of 555
cases with an average length of stay of 5.9 days and average costs of
$25,740. Of those 555 cases, there were 13 cases reporting percutaneous
coronary IVL, with higher average costs as compared to all cases in MS-
DRG 248 ($34,492 compared to $25,740), and a longer average length of
stay (7.2 days compared to 5.9 days). In MS-DRG 249, we identified a
total of 604 cases with an average length of stay of 2.5 days and
average costs of $14,909. Of those 604 cases, there were 11 cases
reporting percutaneous coronary IVL, with higher average costs as
compared to all cases in MS-DRG 249 ($18,648 compared to $14,909), and
a longer average length of stay (2.8 days compared to 2.5 days). In MS-
DRG 250, we identified a total of 3,483 cases with an average length of
stay of 4.8 days and average costs of $20,634. Of those 3,483 cases,
there were 201 cases reporting percutaneous coronary IVL, with higher
average costs as compared to all cases in MS-DRG 250 ($25,628 compared
to $20,634), and a shorter average length of stay (4.4 days compared to
4.8 days). In MS-DRG 251, we identified a total of 3,199 cases with an
average length of stay of 2.5 days and average costs of $14,273. Of
those 3,199 cases, there were 185 cases reporting percutaneous coronary
IVL, with higher average costs as compared to all cases in MS-DRG 251
($20,289 compared to $14,273), and a shorter average length of stay
(2.4 days compared to 2.5 days). The data analysis shows that the
average costs of cases reporting percutaneous coronary IVL, with or
without involving the insertion of intraluminal device, are higher than
for all cases in their respective MS-DRG.
The data analysis also shows that when the insertion of an
intraluminal device was reported with percutaneous coronary IVL,
average costs are generally similar without regard as to whether a
drug-eluting or a non-drug-eluting intraluminal device was placed. In
MS-DRG 246, there were 2,359 cases reporting percutaneous coronary IVL
involving the insertion of a drug-eluting intraluminal device with
average costs of $35,503 compared to 13 cases reporting percutaneous
coronary IVL involving the insertion of a non-drug-eluting intraluminal
device with average costs of $34,492 in MS-DRG 248. In MS-DRG 247,
there were 1,505 cases reporting percutaneous coronary IVL involving
the insertion of a drug-eluting intraluminal device with average costs
of $24,141 compared to 11 cases reporting percutaneous coronary IVL
involving the insertion of a non-drug-eluting intraluminal device with
average costs of $18,648 in MS-DRG 249.
We reviewed this data analysis and agree that the performance of
percutaneous coronary IVL contributes to increased resource consumption
for these PCI procedures. We also agree that clinically, the presence
of severe calcification can increase the treatment difficulty and
complexity of service. The data analysis clearly shows that cases
reporting percutaneous coronary IVL, with or without involving the
insertion of intraluminal device, have higher average costs and
generally longer lengths of stay compared to all the cases in their
assigned MS-DRG. For these reasons, we are proposing to create new MS-
DRGs for percutaneous coronary IVL involving the insertion of
[[Page 26709]]
an intraluminal device. While there is not a large number of cases
reporting percutaneous coronary IVL without the insertion of an
intraluminal device represented in the Medicare data, and we generally
prefer not to create a new MS-DRG unless it would include a substantial
number of cases, we believe creating a separate MS-DRG for these cases
as well would appropriately address the differential in resource
consumption. Therefore, we are also proposing to create a new MS-DRG
for cases describing percutaneous coronary IVL without the insertion of
an intraluminal device.
To compare and analyze the impact of our suggested modifications,
we ran a simulation using the most recent claims data from the December
2022 update of the FY 2022 MedPAR file. The following table illustrates
our findings for all 4,238 cases reporting procedure codes describing
percutaneous coronary IVL involving the insertion of an intraluminal
device.
[GRAPHIC] [TIFF OMITTED] TP01MY23.047
We applied the criteria to create subgroups in a base MS-DRG as
discussed in section II.C.1.b. of this FY 2024 IPPS/LTCH PPS proposed
rule. As shown, a three-way split of the proposed new 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.
[GRAPHIC] [TIFF OMITTED] TP01MY23.048
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. The following table illustrates our findings.
[GRAPHIC] [TIFF OMITTED] TP01MY23.049
For the proposed new MS-DRGs for cases reporting procedure codes
describing percutaneous coronary IVL involving the insertion of an
intraluminal device, 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 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 coronary intravascular lithotripsy without
the insertion of an intraluminal device, we identified a total of 404
cases using the most recent claims data from the December 2022 update
of the FY 2022 MedPAR file, so the criterion that there are at least
500 or more cases in each subgroup could not be met. Therefore, for FY
2024, we are not proposing to subdivide the proposed new MS-DRG for
coronary intravascular lithotripsy without an intraluminal device into
severity levels.
In summary, for FY 2024, taking into consideration that it
clinically requires greater resources to perform coronary intravascular
lithotripsy, we are proposing to create two new MS-DRGs with a two-way
severity level split for cases describing coronary intravascular
lithotripsy involving the insertion of an intraluminal device in MDC
05. We are also proposing to create a new MS-DRG for cases describing
coronary intravascular lithotripsy without an intraluminal device.
These proposed new MS-DRGs are proposed new MS-DRG 323 (Coronary
Intravascular Lithotripsy with Intraluminal Device
[[Page 26710]]
with MCC), proposed new MS-DRG 324 (Coronary Intravascular Lithotripsy
with Intraluminal Device without MCC) and proposed new MS-DRG 325
(Coronary Intravascular Lithotripsy without Intraluminal Device). We
refer the reader to Table 6P.6a associated with this proposed rule
(which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index) for
the list of procedure codes we are proposing to define in the logic for
each of the proposed new MS-DRGs. We note that discussion of the
surgical hierarchy for the proposed modifications is discussed in
section II.C.15. of this proposed rule.
In reviewing this issue, we noted that we received a separate but
related request in FY 2022 rulemaking. In the FY 2022 IPPS/LTCH PPS
final rule (86 FR 44848 through 44850), we discussed a request to
review the MS-DRG assignments of claims involving the insertion of
coronary stents in PCIs. The requestor suggested that CMS eliminate the
distinction between drug-eluting and bare-metal coronary stents in the
MS-DRG classification. According to the requestor, coated stents have a
clinical performance comparable to drug-eluting stents however they are
grouped with bare-metal stents because they do not contain a drug. The
requestor asserted that this comingling muddies the clinical coherence
of the MS-DRG structure, as one cannot infer distinctions in clinical
performance or benefits among the groups and potentially creates a
barrier (based on hospital decision-making) to patient access to modern
coated stents. In response, we stated that based on a review of the
procedure codes that are currently assigned to MS-DRGs 246, 247, 248,
and 249, our clinical advisors agreed that further refinement of these
MS-DRGs may be warranted. We noted that in the FY 2003 IPPS/LTCH PPS
final rule (67 FR 50003 through 50005), although the FDA had not yet
approved the technology for use, we created two new temporary CMS DRGs
to reflect cases involving the insertion of a drug-eluting coronary
artery stent as signified by the presence of code ICD-9-CM procedure
code 36.07 (Insertion of drug-eluting coronary artery stent) in
recognition of the potentially significant impact this technology may
conceivably have on the treatment of coronary artery blockages, the
predictions of its rapid, widespread use, and that the higher costs of
this technology could create undue financial hardships for hospitals
due to the high volume of stent cases. In the FY 2022 final rule, we
noted that the distinction between drug-eluting and non-drug-eluting
stents is found elsewhere in the ICD-10-PCS procedure code
classification and stated evaluating this request required a more
extensive analysis to assess potential impacts across the MS-DRGs. We
also stated that we believed it would be more appropriate to consider
this request further in future rulemaking.
As discussed earlier in this section of this proposed rule, our
analysis of claims data from the September 2022 update of the FY 2022
MedPAR file indicates that in cases reporting percutaneous coronary IVL
involving the insertion of an intraluminal device, average costs are
generally similar without regard as to whether a drug-eluting or non-
drug-eluting intraluminal device was inserted. Therefore, in
consideration of the prior request discussed in FY 2022 rulemaking and
to further explore this current finding, we examined claims data from
the September 2022 update of the FY 2022 MedPAR file for MS-DRGs 246,
247, 248, and 249 for ``all other cases'' assigned to MS-DRGs 246, 247,
248, and 249 that did not report percutaneous coronary IVL as reflected
in the previous table.
We again note that the data analysis shows that in percutaneous
cardiovascular procedures involving the insertion of an intraluminal
device, the average costs are generally similar without regard as to
whether a drug-eluting or non-drug-eluting intraluminal device(s) was
inserted. In MS-DRG 246, there were 38,288 cases reporting percutaneous
cardiovascular procedures involving the insertion of a drug-eluting
intraluminal device with an MCC or procedures involving four or more
arteries or intraluminal devices with average costs of $25,022 compared
to 542 cases reporting percutaneous cardiovascular procedures involving
the insertion of a non-drug-eluting intraluminal device with an MCC or
procedures involving four or more arteries or intraluminal devices with
average costs of $25,530 in MS-DRG 248. In MS-DRG 247, there were
53,166 cases reporting percutaneous cardiovascular procedures involving
the insertion of a drug-eluting intraluminal device without an MCC with
average costs of $16,017 compared to 593 cases reporting percutaneous
coronary IVL involving the insertion of a non-drug-eluting intraluminal
device without an MCC with average costs of $14,840 in MS-DRG 249.
We reviewed these findings and believe that it may no longer be
necessary to subdivide the MS-DRGs based on the type of coronary
intraluminal device inserted. Drug-eluting intraluminal devices consist
of a standard metallic stent, a polymer coating, and an anti-restenotic
drug that is mixed within the polymer and released over time. In
current practice, drug-eluting intraluminal devices are generally
viewed as the default type of intraluminal device considered for
patients undergoing PCI, although non-drug-eluting stents such as bare-
metal coronary artery stents can also be used in PCI procedures for a
range of indications, including stable and unstable angina, acute
myocardial infarction (MI), and multiple-vessel disease. The related
data analysis clearly shows that in the years since the MS-DRGs for
cases involving the insertion of a drug-eluting coronary artery stent
were created, cases reporting percutaneous cardiovascular procedures
involving the insertion of a drug-eluting intraluminal device now
demonstrate average costs and lengths of stays comparable to cases
reporting percutaneous cardiovascular procedures involving the
insertion of a non-drug-eluting intraluminal device. For these reasons,
we are proposing the deletion of MS-DRGs 246, 247, 248, and 249, and
the creation of new MS-DRGs.
We note that in the FY 2008 IPPS/LTCH PPS final rule (72 FR 47259
through 47260) we stated we found that percutaneous transluminal
coronary angioplasties (PTCAs) with four or more vessels or four or
more stents were more comparable in average charges to the higher
weighted DRG in the group and made changes to the GROUPER logic. Claims
containing ICD-9-CM procedure code 00.66 for PTCA, and code 36.07
(Insertion of drug-eluting coronary artery stent(s)), and code 00.43
(Procedure on four or more vessels) or code 00.48 (Insertion of four or
more vascular stents) were assigned to MS-DRG 246. In addition, claims
containing ICD-9-CM procedure code 00.66 for PTCA, and code 36.06
(Insertion of non-drug-eluting coronary artery stent(s)), and code
00.43 or code 00.48 were assigned to MS-DRG 248. We also made
conforming changes to the MS-DRG titles as follows: MS-DRG 246 was
titled ``Percutaneous Cardiovascular Procedures with Drug-Eluting
Stent(s) with MCC or 4 or more Vessels/Stents''. MS-DRG 248 was titled
``Percutaneous Cardiovascular Procedures with Non-Drug-Eluting Stent(s)
with MCC or 4 or more Vessels/Stents''. In FY 2018 IPPS/LTCH PPS final
rule (82 FR 38024), we finalized our proposal to revise the title of
MS-DRG 246 to ``Percutaneous Cardiovascular Procedures with Drug-
Eluting Stent with MCC or 4+ Arteries
[[Page 26711]]
or Stents'' and the title of MS-DRG 248 to ``Percutaneous
Cardiovascular Procedures with Non-Drug-Eluting Stent with MCC or 4+
Arteries or Stents'' to better reflect the ICD-10-PCS terminology of
``arteries'' versus ``vessels'' as used in the procedure code titles
within the classification.
Recognizing that the current GROUPER logic for case assignment to
MS-DRGs 246 or 248 continues to require at least one secondary
diagnosis designated as an MCC or procedures involving four or more
arteries or intraluminal devices, we examined claims data from the
September 2022 update of the FY 2022 MedPAR file for cases reporting
percutaneous cardiovascular procedures involving four or more arteries
or intraluminal devices and compared these data to all cases in MS-DRGs
246 and 248.
[GRAPHIC] [TIFF OMITTED] TP01MY23.050
In MS-DRG 246, we identified a total of 40,647 cases with an
average length of stay of 5.2 days and average costs of $25,630. Of
those 40,647 cases, there were 3,430 cases reporting percutaneous
cardiovascular procedures involving four or more arteries or
intraluminal devices, with higher average costs as compared to all
cases in MS-DRG 246 ($27,397 compared to $25,630), and a shorter
average length of stay (3.2 days compared to 5.2 days). In MS-DRG 248,
we identified a total of 555 cases with an average length of stay of
5.9 days and average costs of $25,740. Of those 555 cases, there were
21 cases reporting percutaneous cardiovascular procedures involving
four or more arteries or intraluminal devices, with higher average
costs as compared to all cases in MS-DRG 248 ($28,251 compared to
$25,740), and a shorter average length of stay (3.4 days compared to
5.9 days). This analysis demonstrates that cases reporting percutaneous
procedures involving four or more arteries or intraluminal devices
continue to be more comparable in average costs and resource
consumption to the cases in the higher weighted MS-DRG in the group and
indicates that maintaining the logic that recognizes the performance of
percutaneous cardiovascular procedures involving four or more arteries
or intraluminal devices that exists currently in MS-DRGs 246 and 248 in
the proposed new MS-DRGs is warranted.
Presently, MS-DRGs 246 and 248 are defined as base MS-DRGs, each of
which is split by a two-way severity level subgroup. Our proposal
includes the creation of one base MS-DRG split also by a two-way
severity level subgroup. To compare and analyze the impact of our
suggested modifications, we ran a simulation using the most recent
claims data from the December 2022 update of the FY 2022 MedPAR file.
The following table illustrates our findings for all 97,338 cases
reporting percutaneous cardiovascular procedures involving intraluminal
devices.
[GRAPHIC] [TIFF OMITTED] TP01MY23.051
We applied the criteria to create subgroups in a base MS-DRG as
discussed in section II.C.1.b. of this FY 2024 IPPS/LTCH PPS proposed
rule. As shown in the table that follows, a three-way split of the
proposed new MS-DRGs 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.
[[Page 26712]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.052
We then applied the criteria for a two-way split for the ``with
MCC'' and ``without MCC'' subgroups for the proposed new MS-DRGs and
found that all five criteria were met. The following table illustrates
our findings.
[GRAPHIC] [TIFF OMITTED] TP01MY23.053
For the proposed new 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.
The proposed refinements for cases reporting percutaneous
cardiovascular procedures with intraluminal devices represents the
first step in investigating how we may evaluate the distinctions
between drug-eluting and non-drug-eluting intraluminal devices found
elsewhere in the ICD-10-PCS procedure code classification. We are
making concerted efforts to continue refining the ICD-10 MS-DRGs and we
believe the resulting MS-DRG assignments in our current proposal would
be more clinically homogeneous, coherent and better reflect current
trends and hospital resource use.
In summary, for FY 2024, taking into consideration it appears to no
longer be necessary to subdivide the MS-DRGs for percutaneous
cardiovascular procedures based on the type of coronary intraluminal
device inserted, we are proposing to delete MS-DRGs 246, 247, 248, and
249, and create a new base MS-DRG with a two-way severity level split
for cases describing percutaneous cardiovascular procedures with
intraluminal device in MDC 05. These proposed new MS-DRGs are proposed
new MS-DRG 321 (Percutaneous Cardiovascular Procedures with
Intraluminal Device with MCC or 4+ Arteries/Intraluminal Devices) and
proposed new MS-DRG 322 (Percutaneous Cardiovascular Procedures with
Intraluminal Device without MCC). We are proposing to add the procedure
codes from current MS-DRGs 246, 247, 248, and 249 to the proposed new
MS-DRGs 321 and 322. We are also proposing to revise the titles for MS-
DRGs 250 and 251 from ``Percutaneous Cardiovascular Procedures without
Coronary Artery Stent with MCC, and without MCC, respectively'' to
``Percutaneous Cardiovascular Procedures without Intraluminal Device
with MCC, and without MCC, respectively'' to better reflect the ICD-10-
PCS terminology of ``intraluminal devices'' versus ``stents'' as used
in the procedure code titles within the classification.
We note that discussion of the surgical hierarchy for the proposed
modifications is discussed in section II.C.15. of this proposed rule.
e. Shock
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 44831 through
44833), we discussed a request we received to review the MS-DRG
assignment of ICD-10-CM diagnosis code I21.A1 (Myocardial infarction
type 2). The requestor stated that when a type 2 myocardial infarction
is documented, per coding guidelines, it is to be coded as a secondary
diagnosis since it is due to an underlying cause. This requestor also
noted that when a type 2 myocardial infarction is coded with a
principal diagnosis in MDC 05 (Diseases and Disorders of the
Circulatory System), the GROUPER logic assigns MS-DRGs 280 through 282
(Acute Myocardial Infarction, Discharged Alive with MCC, with CC, and
without CC/MCC, respectively). The requestor questioned if this GROUPER
logic was correct or if the logic should be changed so that a type 2
myocardial infarction, coded as a secondary diagnosis, does not result
in the assignment of a MS-DRG that describes an acute myocardial
infarction. During our review of this issue, we also noted that ICD-10-
CM diagnosis code I21.A1 (Myocardial infarction type 2) was one of the
listed principal diagnoses in the GROUPER logic for MS-DRGs 222 and 223
(Cardiac Defibrillator Implant with Cardiac Catheterization with Acute
Myocardial Infarction (AMI), Heart Failure (HF), or Shock with and
without MCC, respectively). However, code I21.A1 was not recognized in
these same MS-DRGs when coded as a secondary diagnosis. Acknowledging
that coding guidelines instruct to code I21.A1 after the diagnosis code
that describes the underlying cause, we indicated our clinical advisors
recommended adding special logic in MS-DRGs 222 and 223 to have code
I21.A1 also qualify when coded as a secondary diagnosis in combination
with a principal diagnosis in MDC 05 since these diagnosis code
combinations also describe acute myocardial infarctions. In the FY 2022
final rule, after consideration of the public comment, we finalized our
proposal to maintain the structure of MS-DRGs 280 through 285, without
[[Page 26713]]
modification, for FY 2022. We also finalized our proposal to modify the
GROUPER logic to allow cases reporting diagnosis code I21.A1
(Myocardial infarction type 2) as a secondary diagnosis to group to MS-
DRGs 222 and 223 when reported with qualifying procedures, effective
October 1, 2021. Under this finalization, code I21.A1, as a secondary
diagnosis, is used in the definition of the logic for assignment to MS-
DRGs 222 and 223, and therefore does not act as an MCC in these MS-
DRGs.
In response to this final policy, for this FY 2024 IPPS/LTCH PPS
proposed rule, we received a related request to also add ICD-10-CM
diagnosis code R57.0 (Cardiogenic shock) to the list of ``secondary
diagnoses'' that group to MS-DRGs 222 and 223. Cardiogenic shock occurs
when the heart cannot pump enough oxygen-rich blood to the brain and
other vital organs resulting in inadequate tissue perfusion. The most
common cause of cardiogenic shock is acute myocardial infarction. Other
causes include myocarditis, endocarditis, papillary muscle rupture,
left ventricular free wall rupture, acute ventricular septal defect,
severe congestive heart failure, end-stage cardiomyopathy, severe
valvular dysfunction, acute cardiac tamponade, cardiac contusion,
massive pulmonary embolus, or the overdose of drugs such as beta
blockers or calcium channel blockers.
Since the MS-DRG titles contain the word ``shock'', the requestor
indicated that it seemed reasonable for the GROUPER logic to recognize
cardiogenic shock when coded as a secondary diagnosis because,
according to the requestor, the specific underlying cardiac condition
responsible for causing the cardiogenic shock must always be sequenced
first. The requestor further asserted that ICD-10-CM coding guidelines
require codes from Chapter 18 (Symptoms, Signs, and Abnormal Clinical
and Laboratory Findings) to be sequenced first, therefore when coding
guidelines are followed, this code can never be an appropriate
principal diagnosis. The requestor acknowledged that if code R57.0 were
to be added to the list of ``secondary diagnoses'' that group to MS-
DRGs 222 and 223, and therefore used in the definition of the logic for
assignment, the code would no longer act as an MCC in MS-DRGs 222 and
223.
To begin our analysis, we reviewed the GROUPER logic. We note that
ICD-10-CM diagnosis code R57.0 (Cardiogenic shock) is currently one of
the listed principal diagnoses in the GROUPER logic for MS-DRGs 222 and
223. The requestor is correct that diagnosis code R57.0 is not
currently recognized in these same MS-DRGs when coded as a secondary
diagnosis. We refer the reader to the ICD-10 MS-DRG Definitions Manual
Version 40.1, which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software, for complete
documentation of the GROUPER logic for MS-DRGs 222 and 223.
The requestor is also correct that the diagnosis code R57.0 is
found in Chapter 18 (Symptoms, Signs and Abnormal Clinical and
Laboratory Findings) of ICD-10-CM and that diagnosis code R57.0 has a
current severity designation of MCC when reported as a secondary
diagnosis. We disagree, however, that this code can never be an
appropriate principal diagnosis. We note that according to the ICD-10-
CM Official Guidelines for Coding and Reporting, diagnoses described by
codes from Chapter 18 of ICD-10-CM, such as R57.0, are acceptable for
reporting when a related definitive diagnosis has not been established
(confirmed) by the provider. We also point out that a ``code first''
note appears at ICD-10-CM diagnosis code I21.A1 (Myocardial infarction
type 2). The ``code first'' note is an etiology/manifestation coding
convention (additional detail can be found in the ICD-10-CM Official
Guidelines for Coding and Reporting), indicating that the condition has
both an underlying etiology and manifestation due to the underlying
etiology. No such ``code first'' notes appear at ICD-10-CM diagnosis
code R57.0 (Cardiogenic shock). If providers have cases involving
cardiogenic shock which they need ICD-10 coding assistance, we
encourage them to submit their questions to the American Hospital
Association's Central Office on ICD-10 at https://www.codingclinicadvisor.com/.
We then examined claims data from the September 2022 update of the
FY 2022 MedPAR file for all cases in MS-DRGs 222 and 223 (Cardiac
Defibrillator Implant with Cardiac Catheterization with AMI, HF or
Shock, with and without MCC, respectively) and compared the results to
cases that had a principal diagnosis or a secondary diagnosis of
cardiogenic shock in these MS-DRGs. We also included MS-DRGs 224 and
225 (Cardiac Defibrillator Implant with Cardiac Catheterization without
AMI, HF or Shock with and without MCC, respectively) and MS-DRGs 226
and 227 (Cardiac Defibrillator Implant without Cardiac Catheterization
with and without MCC, respectively) in our analysis as the logic for
these MS-DRGs is similar, differing only in the reporting of a
diagnosis that describes acute myocardial infarction, heart failure or
shock, or the performance of cardiac catheterization. The following
table shows our findings:
[[Page 26714]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.054
In MS-DRG 222, we identified a total of 1,488 cases with an average
length of stay of 11 days and average costs of $64,794. Of those 1,488
cases, there were six cases reporting a principal diagnosis of R57.0,
with higher average costs as compared to all cases in MS-DRG 222
($88,486 compared to $64,794), and a longer average length of stay
(13.5 days compared to 11 days). There were 322 cases reporting a
secondary diagnosis of R57.0, with higher average costs as compared to
all cases in MS-DRG 222 ($77,451 compared to $64,794), and a longer
average length of stay (15.1 days compared to 11 days). In MS-DRG 224,
we identified a total of 1,606 cases with an average length of stay of
9.4 days and average costs of $60,583. Of those 1,606 cases, there were
zero cases reporting a principal diagnosis of R57.0. There were 268
cases reporting a secondary diagnosis of R57.0, with higher average
costs as compared to all cases in MS-DRG 224 ($77,334 compared to
$60,583), and a longer average length of stay (12.9 days compared to
9.4 days). In MS-DRG 226, we identified a total of 3,595 cases with an
average length of stay of 8.3 days and average costs of $53,706. Of
those 3,595 cases, there were four cases reporting a principal
diagnosis of R57.0, with higher average costs as compared to all cases
in MS-DRG 226 ($72,349 compared to $53,706), and a longer average
length of stay (14.3 days compared to 8.3 days). There were 325 cases
reporting a secondary diagnosis of R57.0, with higher average costs as
compared to all cases in MS-DRG 226 ($65,266 compared to $53,706), and
a longer average length of stay (12.5 days compared to 8.3 days). We
found zero cases across MS-DRGs 223, 225, and 227 reporting R57.0 as
principal or as a secondary diagnosis. Our analysis clearly shows that
the cases reporting a secondary diagnosis of cardiogenic shock in MS-
DRGs 222, 224 and 226 had higher average costs and longer average
length of stay compared to all cases in their respective MS-DRGs.
We reviewed these data and do not recommend modifying the GROUPER
logic to allow cases reporting diagnosis code R57.0 (Cardiogenic shock)
as a secondary diagnosis to group to MS-DRGs 222 and 223 when reported
with qualifying procedures. As noted by the requestor, and as discussed
in FY 2022 IPPS/LTCH PPS final rule (86 FR 44831 through 44833), a
diagnosis code may define the logic for a specific MS-DRG assignment in
three different ways. 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.
We believe that patients with cardiogenic shock as a secondary
diagnosis tend to be more severely ill and these inpatient admissions
are associated with greater resource utilization. Cardiogenic shock
represents a life-threatening emergency that requires urgent treatment
that focuses on getting blood flowing properly to prevent, and protect
against, organ failure, brain injury or death. For clinical
consistency, it is more appropriate for ICD-10-CM diagnosis code R57.0
to act as an MCC when cardiogenic shock is documented in the medical
record and coded as a secondary diagnosis. Therefore, we are not
proposing to modify the GROUPER logic to allow cases reporting
diagnosis code R57.0 (Cardiogenic shock) as a secondary diagnosis to
group to MS-DRGs 222 and 223 when reported with qualifying procedures.
During our review of this issue we noted that the data analysis
shows that in procedures involving a cardiac defibrillator implant, the
average costs and length of stay are generally similar
[[Page 26715]]
without regard to the presence of diagnosis codes describing AMI, HF or
shock. In MS-DRG 222, there were 1,488 cases reporting cardiac
defibrillator implant with cardiac catheterization with AMI, HF, or
Shock with an MCC with average costs of $64,794 and an average length
of stay of 11 days compared to 1,606 cases reporting cardiac
defibrillator implant with cardiac catheterization without AMI, HF, or
Shock with an MCC with average costs of $60,583 and an average length
of stay of 9.4 days in MS-DRG 224. In MS-DRG 223, there were 270 cases
reporting cardiac defibrillator implant with cardiac catheterization
with AMI, HF or Shock without an MCC with average costs of $43,500 and
an average length of stay of 5.7 days compared to 1,167 cases reporting
cardiac defibrillator implant with cardiac catheterization without AMI,
HF, or Shock without an MCC with average costs of $42,442 and an
average length of stay of 4.6 days in MS-DRG 225.
The analysis of MS-DRGs 222, 223, 224, 225, 226, and 227 further
demonstrates that the average length of stay and average costs for all
cases are similar for each of the ``without MCC'' subgroups. As stated
previously, for all of the cases in MS-DRG 223, we found that the
average length of stay was 5.7 days with average costs of $43,500, and
for all of the cases in MS-DRG 225, the average length of stay was 4.6
days with average costs of $42,442. Likewise, for all of the cases in
MS-DRG 227, we found that the average length of stay was 3.9 days with
average costs of $41,636.
We reviewed these findings and believe that it may no longer be
necessary to subdivide these MS-DRGs based on the diagnosis codes
reported. We note that in the FY 2004 IPPS/LTCH PPS final rule (68 FR
45356 through 45358), we stated we found that patients who are admitted
with acute myocardial infarction, heart failure, or shock and have a
cardiac catheterization are generally acute patients who require
emergency implantation of the defibrillator. Thus, we stated there were
very high costs associated with these patients. Therefore, we finalized
the creation of new DRGs for patients receiving a cardiac defibrillator
implant with cardiac catheterization and with a principal diagnosis of
acute myocardial infarction, heart failure, or shock.
Our analysis of claims data from the September 2022 update of the
FY 2022 MedPAR clearly shows that in the 20 years since the DRGs for
cases involving a cardiac defibrillator implant with cardiac
catheterization split based on the presence or absence of diagnosis
codes describing acute myocardial infarction, heart failure, or shock
were created, cases reporting a cardiac defibrillator implant with
cardiac catheterization continue to demonstrate higher average costs
and longer lengths of stays, however these increased costs appear to be
more related to the procedures performed than to the diagnoses reported
on the claim, and therefore we believe it is time to restructure these
MS-DRGs accordingly.
We do note that when reviewing consumption of hospital resources
for the cases reporting cardiac defibrillator implant with cardiac
catheterization during a hospital stay, the claims data clearly shows
that the cases reporting secondary diagnoses designated as MCCs are
more resource intensive as compared to other cases reporting cardiac
defibrillator implant. As noted previously, in MS-DRG 222, there were
1,488 cases reporting cardiac defibrillator implant with cardiac
catheterization with AMI, HF, or Shock with an MCC with average costs
of $64,794 and an average length of stay of 11 days. Similarly, in MS-
DRG 224, there were 1,606 cases reporting cardiac defibrillator implant
with cardiac catheterization without AMI, HF, or Shock with an MCC with
average costs of $60,583 and an average length of stay of 9.4 days in
MS-DRG 224. In comparison, there were 270 cases reporting cardiac
defibrillator implant with cardiac catheterization with AMI, HF, or
Shock without an MCC with average costs of $43,500 and an average
length of stay of 5.7 days in MS-DRG 223, 1,167 cases reporting cardiac
defibrillator implant with cardiac catheterization without AMI, HF, or
Shock without an MCC with average costs of $42,442 and an average
length of stay of 4.6 days in MS-DRG 225, 3,595 cases reporting cardiac
defibrillator implant without cardiac catheterization with an MCC with
average costs of $53,706 and an average length of stay of 8.3 days in
MS-DRG 226, and 2,522 cases reporting cardiac defibrillator implant
without cardiac catheterization without an MCC with average costs of
$41,636 and an average length of stay of 3.9 days in MS-DRG 227.
Therefore, we support the removal of the special logic defined as
``Principal Diagnosis AMI/HF/SHOCK'' from the definition for assignment
to any proposed modifications to the MS-DRGs, noting the cases can be
appropriately grouped along with cases reporting any MDC 05 diagnosis
when reported with qualifying procedures, in any restructured proposed
MS-DRGs. For these reasons, we are proposing the deletion of MS-DRGs
222, 223, 224, 225, 226, and 227, and the creation of three new MS-
DRGs. Our proposal includes the creation of one base MS-DRG for cases
reporting a cardiac defibrillator implant with cardiac catheterization
and a secondary diagnosis designated as an MCC and another base MS-DRG
split by a two-way severity level subgroup for cases reporting a
cardiac defibrillator implant without cardiac catheterization.
To compare and analyze the impact of our suggested modifications,
we ran a simulation using the most recent claims data from the December
2022 update of the FY 2022 MedPAR file. The following table illustrates
our findings for all 3,467 cases reporting a cardiac defibrillator
implant with cardiac catheterization and a secondary diagnosis
designated as an MCC. We note that as discussed in prior rulemaking (86
FR 44831 through 44833), a diagnosis code may define the logic for a
specific MS-DRG assignment in three different ways. The diagnosis code
may be listed as principal or as any one of the secondary diagnoses, as
a secondary diagnosis, or only as a secondary diagnosis. For this
specific scenario, we propose that secondary diagnosis codes with a
severity designation of MCC be used in the definition of the logic for
assignment to the proposed base MS-DRG for cases reporting a cardiac
defibrillator implant with cardiac catheterization and a secondary
diagnosis designated as an MCC. Therefore, we did not apply the
criteria to create further subgroups in a base MS-DRG for cases
reporting a cardiac defibrillator implant with cardiac catheterization
and a secondary diagnosis designated as an MCC as discussed in section
II.C.1.b. of this FY 2024 IPPS/LTCH PPS proposed rule. We believe the
resulting proposed MS-DRG assignment is more clinically homogeneous,
coherent and better reflects hospital resource use.
[[Page 26716]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.055
To further compare and analyze the impact of our suggested
modifications, we then ran a simulation using the most recent claims
data from the December 2022 update of the FY 2022 MedPAR file for cases
reporting a cardiac defibrillator implant without additionally
reporting both a cardiac catheterization and a secondary diagnosis
designated as an MCC. The following table illustrates our findings for
all 7,935 cases.
[GRAPHIC] [TIFF OMITTED] TP01MY23.056
We applied the criteria to create subgroups in a base MS-DRG as
discussed in section II.C.1.b. of this FY 2024 IPPS/LTCH PPS proposed
rule. As shown in the table that follows, a three-way split of the
proposed new MS-DRGs failed the criterion that there be at least 500
cases for each subgroup due to low volume. Specifically, for the
``without CC/MCC'' (NonCC) split, there were only 452 cases in the
subgroup. The criterion that there be at least a 20% difference in
average costs between the CC and NonCC subgroup also failed to be met.
[GRAPHIC] [TIFF OMITTED] TP01MY23.057
We then applied the criteria for a two-way split for the ``with
MCC'' and ``without MCC'' subgroups for the proposed new MS-DRGs and
found that all five criteria were met. The following table illustrates
our findings.
[GRAPHIC] [TIFF OMITTED] TP01MY23.058
For the proposed new 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.
In summary, for FY 2024, taking into consideration that it appears
to no longer be necessary to subdivide the MS-DRGs for cases reporting
a cardiac defibrillator implant based on the diagnosis code reported,
we are proposing to delete MS-DRGs 222, 223, 224, 225, 226, and 227,
and create a new MS-DRG for cases reporting a cardiac defibrillator
implant with cardiac catheterization and a secondary diagnosis
designated as an MCC in MDC 05. We are also proposing to create two new
MS-DRGs with a two-way severity level split for cases reporting a
cardiac defibrillator implant without additionally reporting both a
cardiac catheterization and a secondary diagnosis designated as an MCC.
These proposed new MS-DRGs are proposed new MS-DRG 275 (Cardiac
Defibrillator Implant with Cardiac Catheterization and MCC), proposed
new MS-DRG 276 (Cardiac Defibrillator Implant with MCC) and proposed
new MS-DRG 277 (Cardiac Defibrillator Implant without MCC).
[[Page 26717]]
We note that the procedure codes describing cardiac catheterization
are designated as non-O.R. procedures, therefore, as part of the logic
for MS-DRG 275, we are also proposing to designate these codes as non-
O.R. procedures affecting the MS-DRG. We refer the reader to Table
6P.7a and Table 6P.7b associated with this proposed rule (which is
available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index) for the list of
procedure codes we are proposing to define in the logic for each of the
proposed new MS-DRGs. We note that discussion of the surgical hierarchy
for the proposed modifications is discussed in section II.C.15. of this
proposed rule.
6. MDC 06 (Diseases and Disorders of the Digestive System):
Appendicitis
In the FY 2023 IPPS/LTCH PPS proposed rule (87 FR 28163 through
28165) and final rule (87 FR 48849 through 48850), we discussed a
request related to the MS-DRG assignment of diagnosis codes describing
acute appendicitis with generalized peritonitis, with and without
perforation or abscess when reported with an appendectomy procedure. In
that discussion, we stated that any future proposed changes to the MS-
DRGs for appendectomy procedures would be dependent on the diagnosis
code revisions that are finalized by the CDC/National Center for Health
Statistics (NCHS) since the CDC/NCHS staff presented a proposal for
further revisions to the diagnosis codes describing acute appendicitis
with generalized peritonitis at the March 8-9, 2022 ICD-10 Coordination
and Maintenance Committee meeting. Specifically, the CDC/NCHS staff
proposed to expand diagnosis codes K35.20 (Acute appendicitis with
generalized peritonitis, without abscess) and K35.21 (Acute
appendicitis with generalized peritonitis, with abscess), making them
sub-categories and creating new diagnosis codes to identify and
describe acute appendicitis with generalized peritonitis, with
perforation and without perforation, and unspecified as to perforation.
We noted that the deadline for submitting public comments on the
diagnosis code proposals discussed at the March 8-9, 2022, ICD-10
Coordination and Maintenance Committee meeting was May 9, 2022, and
according to the CDC/NCHS staff, the diagnosis code proposals were
being considered for an October 1, 2023 implementation (FY 2024). We
refer the reader to the CDC website at https://www.cdc.gov/nchs/icd/icd10cm_maintenance.htm for additional detailed information regarding
the proposal, including a recording of the discussion and the related
meeting materials.
As shown in Appendix B--Diagnosis Code/MDC/MS-DRG Index of the ICD-
10 MS-DRG Definitions Manual V40.1 (available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software), diagnosis codes K35.20 and K35.21 are
currently assigned to medical MS-DRGs 371, 372, and 373 (Major
Gastrointestinal Disorders and Peritoneal Infections with MCC, with CC,
and without CC/MCC, respectively) in MDC 06. Diagnosis code K35.21 is
also assigned to surgical MS-DRGs 338, 339, and 340 (Appendectomy with
Complicated Principal Diagnosis with MCC, with CC, and without CC/MCC,
respectively) in MDC 06 because diagnosis code K35.21 is defined as a
complicated diagnosis in the GROUPER logic. Therefore, when a procedure
code describing an appendectomy is reported with principal diagnosis
code K35.21, the logic for case assignment to MS-DRGs 338, 339, or 340
is satisfied.
As discussed in section II.C.12. of the preamble of this proposed
rule, Table 6C--Invalid Diagnosis Codes (available on the CMS website
at: https://www.cms.gov/medicare/medicare-fee-for-service-payment/
acuteinpatientpps) lists the diagnosis codes that are no longer
effective October 1, 2023. Included in this table are diagnosis codes
K35.20 and K35.21. In addition, as shown in the following table and in
Table 6A--New Diagnosis Codes associated with this proposed rule
(available on the CMS website at: https://www.cms.gov/medicare/
medicare-fee-for-service-payment/acuteinpatientpps), six new diagnosis
codes describing acute appendicitis with generalized peritonitis, with
and without perforation or abscess were finalized and are effective
with discharges on and after October 1, 2023. Consistent with our
established process for assigning new diagnosis and procedure codes, we
reviewed the predecessor codes (K35.20 and K35.21) to determine the MS-
DRG assignment most closely associated with the new diagnosis codes. In
addition, the proposed severity level designations for the new
diagnosis codes are set forth in Table 6A. As shown, the new codes are
proposed for assignment to medical MS-DRGs 371, 372, and 373 (Major
Gastrointestinal Disorders and Peritoneal Infections with MCC, with CC,
and without CC/MCC, respectively), in accordance with the assignment of
predecessor codes K35.20 and K35.21.
[GRAPHIC] [TIFF OMITTED] TP01MY23.059
[[Page 26718]]
As the acute appendicitis diagnosis code revisions have been
finalized by the CDC/NCHS, we believe it is now appropriate to address
the MS-DRG request for diagnosis code K35.20 describing acute
appendicitis with generalized peritonitis when an appendectomy
procedure is performed. We refer the reader to the ICD-10 MS-DRG
Definitions Manual Version 40.1, which is available on the CMS website
at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software, for complete
documentation of the GROUPER logic for MS-DRGs 338, 339, and 340
(Appendectomy with Complicated Principal Diagnosis with MCC, with CC,
and without CC/MCC, respectively) and MS-DRGs 341, 342, and 343
(Appendectomy without Complicated Principal Diagnosis with MCC, with
CC, and without CC/MCC, respectively) that includes the procedure codes
defined in the logic for an appendectomy.
We first analyzed claims data from the September 2022 update of the
FY 2022 MedPAR file for MS-DRGs 338, 339, and 340 and cases reporting
any one of the following diagnosis codes currently defined in the logic
as a complicated principal diagnosis when reported as a principal
diagnosis.
[GRAPHIC] [TIFF OMITTED] TP01MY23.060
Our findings are shown in the following table. We note that if a
diagnosis is not listed it is because there were no cases found.
[GRAPHIC] [TIFF OMITTED] TP01MY23.061
The data shows that overall, each of the ``complicated'' diagnoses
appear to have a comparable average length of stay and similar average
costs when compared to the average length of stay and average costs of
all the cases in the respective MS-DRG, as well as, to each other.
Next, we analyzed claims data from the September 2022 update of the
FY 2022 MedPAR file for MS-DRGs 341, 342, and 343 and cases reporting
any one of the following diagnosis codes describing acute appendicitis.
[[Page 26719]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.062
Our findings are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TP01MY23.063
Similar to the findings for the ``complicated'' diagnoses, the
``uncomplicated'' diagnoses also have a comparable average length of
stay and similar average costs when compared to the average length of
stay and average costs of all the cases in the respective MS-DRG.
Based on our analysis for both the ``complicated'' and
``uncomplicated'' diagnoses combined with our review of all the cases
in the MS-DRGs, we believe the findings support a prior comment, as
summarized in the FY 2023 IPPS/LTCH PPS final rule (87 FR 48849), that
clinically, both localized and generalized peritonitis in association
with an appendectomy require the same level of patient care, including
extensive intraoperative irrigation at the surgical site, direct
inspection or imaging of the abdomen to identify possible abscess, use
of intravenous antibiotics, and prolonged monitoring. In addition,
localized peritonitis progresses to generalized peritonitis. In our
direct comparison of the ``complicated'' versus
[[Page 26720]]
``uncomplicated'' MS-DRGs, we believe the distinction is no longer
meaningful with regard to resource consumption. As shown in the
following table, the ``with MCC'' MS-DRGs, the ``with CC'' MS-DRGs, and
the ``without CC/MCC'' MS-DRGs all have a comparable average length of
stay and similar average costs. For example, MS-DRG 338 has an average
length of stay of 7 days with average costs of $20,311 and MS-DRG 341
has an average length of stay of 5.8 days and average costs of $19,080.
The volume of cases for this MS-DRG pair is also similar with 579 cases
in MS-DRG 338 and 533 cases in MS-DRG 341.
[GRAPHIC] [TIFF OMITTED] TP01MY23.064
As a result of our analysis and review of this issue, we believe
the findings support eliminating the logic for ``complicated'' and
``uncomplicated'' diagnoses and restructuring the six MS-DRGs. We also
note that in our review of the logic for the appendectomy procedures,
we identified procedures listed in the current logic that we did not
agree reflect an actual appendectomy as suggested in the title of the
current MS-DRGs, rather the logic describes various procedures
performed on the appendix.
To compare and analyze the impact of our suggested modifications,
we ran a simulation using the most recent claims data from the December
2022 update of the FY 2022 MedPAR file. The following table illustrates
our findings for all 8,060 cases reporting procedure codes describing a
procedure performed on the appendix.
[GRAPHIC] [TIFF OMITTED] TP01MY23.065
Consistent with our established process as discussed in section
II.C.1.b. of the preamble of this proposed rule, once the decision has
been made to propose to make further modifications to the MS-DRGs, all
five criteria to create subgroups must be met for the base MS-DRG to be
split (or subdivided) by a CC subgroup. Therefore, we applied the
criteria to create subgroups in a base MS-DRG. We note that, as shown
in the table that follows, a three-way split of this proposed new base
MS-DRG was met. The following table illustrates our findings.
[[Page 26721]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.066
For the proposed new MS-DRGs, there is (1) at least 500 cases in
the MCC subgroup, the CC subgroup, and in the without CC/MCC subgroup;
(2) at least 5 percent of the cases are in the MCC subgroup, the CC
subgroup, and in the without CC/MCC subgroup; (3) at least a 20 percent
difference in average costs between the MCC subgroup and the CC
subgroup and between the CC group and NonCC subgroup; (4) at least a
$2,000 difference in average costs between the MCC subgroup and the
with CC subgroup and between the CC subgroup and NonCC 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.
Therefore, we are proposing to delete MS-DRGs 338, 339, 340, 341,
342, and 343 and proposing to create new MS-DRGs 397 Appendix
Procedures with MCC, MS-DRG 398 Appendix Procedures with CC, and MS-DRG
399 Appendix Procedures without CC/MCC for FY 2024. These proposed new
MS-DRGs would no longer require a diagnosis in the definition of the
logic for case assignment. We are also proposing to include the current
list of appendectomy procedures in the logic for case assignment of
appendix procedures for the proposed new MS-DRGs.
7. MDC 07 (Diseases and Disorders of the Hepatobiliary System and
Pancreas): Alcoholic Hepatitis
We received a request to create new MS-DRGs with a two-way split
(with MCC and without MCC) for cases reporting alcoholic hepatitis.
Alcoholic hepatitis is identified with ICD-10-CM diagnosis codes K70.10
(Alcoholic hepatitis without ascites) and K70.11 (Alcoholic hepatitis
with ascites) which are currently assigned to MS-DRGs 432, 433, and 434
(Cirrhosis and Alcoholic Hepatitis with MCC, with CC, and without CC/
MCC, respectively) when reported as a principal diagnosis.
Alcoholic hepatitis is characterized as an inflammatory condition
due to chronic, excessive alcohol use and is considered an acute form
of alcohol-associated liver disease (ALD). Data suggests that ALD was
responsible for over 100,000 hospitalizations in 2017 and admissions
for ALD continued to increase during the COVID-19 public health
emergency.\6\ Data also suggest that ALD may be one of the leading
causes of liver transplants in the U.S.
---------------------------------------------------------------------------
\6\ Gonzalez HC, Zhou Y, Nimri FM, Rupp LB, Trudeau S, Gordon
SC. Alcohol-related hepatitis admissions increased 50% in the first
months of the COVID-19 pandemic in the USA. Liver Int. 2022
Apr;42(4):762-764.
---------------------------------------------------------------------------
The requestor stated that currently there are no effective
therapies available to treat alcoholic hepatitis and current treatment
guidelines suggest corticosteroids, despite increased risk of infection
and minimal impact on survival beyond 28 days. However, the requestor
(manufacturer of Larsucosterol) also indicated that epigenetic therapy
is currently being studied to address various types of acute and
chronic organ injury and provided information related to its AHFIRM
(Alcohol-associated Hepatitis to evaluate saFety and effIcacy of
LaRsucosterol (DUR-928) treatMent) Phase 2b study for patients
diagnosed with alcoholic hepatitis. The FDA granted Fast Track
Designation to DUR-928 for the treatment of alcoholic hepatitis in
2020.
The requestor stated it performed its own analysis using two years
of claims data, (calendar years 2018 and 2019), and its findings showed
that the patients with alcoholic hepatitis are distinct from the
typical Medicare beneficiary and that the condition disproportionately
affects younger patients that represent a small proportion of the cases
currently grouping to MS-DRGs 432, 433, and 434. According to the
requestor, the low volume of cases reporting alcoholic hepatitis have
little to no impact on the annual recalibration of the MS-DRG relative
payment weights for MS-DRGs 432, 433, and 434, resulting in
underpayments. The requestor stated its analysis of cases reporting
alcoholic hepatitis showed higher resource utilization and a longer
length of stay when compared to all cases in MS-DRGs 432, 433, and 434.
The requestor stated it applied the criteria to create subgroups for
the cases reporting alcoholic hepatitis currently grouping to MS-DRGs
432, 433, and 434 and found that the criteria for a two-way split (with
MCC and without MCC) was met. The requestor further stated that
splitting out the cases reporting alcoholic hepatitis from MS-DRGs 432,
433, and 434 would enable more accurate payment of these cases and
support research that is specific to alcoholic hepatitis distinct from
cirrhosis.
The logic for case assignment to MS-DRGs 432, 433, and 434 is
comprised of the following diagnosis codes.
[[Page 26722]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.067
We analyzed claims data from the September 2022 update of the FY
2022 MedPAR file for MS-DRGs 432, 433, and 434 and cases reporting any
one of the listed diagnoses as a principal diagnosis. We note that if a
diagnosis code is not listed it is because there were no cases found
reporting that code in the respective MS-DRG. The findings from our
analysis are shown in the following table.
BILLING CODE 4120-01-P
[[Page 26723]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.068
[[Page 26724]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.069
BILLING CODE 4120-01-C
Based on our initial analysis for cases in MS-DRGs 432, 433, and
434, the data clearly demonstrate that there are several diagnoses,
other than the two diagnoses identified by the requestor (codes K70.10
and K70.11) with increased resource utilization when compared to the
average length of stay and average costs of all cases in MS-DRGs 432,
433, and 434.
The data show that the cases in MS-DRG 432 reporting diagnosis
codes K70.11, K70.31, K70.40, K70.41, K74.3, or K74.5 as a principal
diagnosis have a longer average length of stay (9.1 days, 7.5 days, 8.1
days, 8.7 days, 7.3 days, and 8.2 days, respectively versus 6.8 days)
and higher average costs ($20,727, $17,694, $19,277, $22,530, $18,020,
and $16,569, respectively versus $16,532) compared to the average
length of stay and the average costs for all the cases in MS-DRG 432.
We note that the cases reporting diagnosis codes K70.10, K74.4, or
K74.69 as a principal diagnosis also have a longer average length of
stay (7.4 days, 7.5 days, and 6.9 days, respectively versus 6.8 days)
compared to all the cases in MS-DRG 432, however, the average costs of
these cases are lower ($14,710, $15,324 and $16,501, respectively
versus $16,532) compared to the average costs for all the cases.
For MS-DRG 433, the cases reporting diagnosis codes K70.11, K70.30,
K70.31, K70.40, or K70.9 as a principal diagnosis have a longer average
length of stay (5.0 days, 4.5 days, 4.4 days, 4.6 days, and 4.8 days,
respectively versus 4.3 days) and comparable average costs ($10,085,
$9,343, $9,548, $9,066, and $11,893, respectively versus $9,007)
compared to the average length of stay and the average costs for all
the cases in MS-DRG 433. We note that the cases reporting diagnosis
code K70.10 as a principal diagnosis also have a longer average length
of stay (4.8 days versus 4.3 days) compared to all the cases in MS-DRG
433, however, the average costs of these cases are lower ($8,436 versus
$9,007) compared to the average costs for all the cases in the MS-DRG.
Lastly, for MS-DRG 434, the cases reporting diagnosis codes K70.31,
K74.3, or K74.60 as a principal diagnosis have a longer average length
of stay (3 days, 4.2 days, and 2.6 days, respectively versus 2.8 days)
and higher average costs ($6,348, $8,485, and $5,862, respectively
versus $5,825)
[[Page 26725]]
compared to the average length of stay and the average costs for all
the cases in MS-DRG 434.
The data also show that there is significantly more case volume for
several of the other diagnoses compared to the case volume of the two
diagnoses (K70.10 and K70.11) associated with the request to create new
MS-DRGs. We identified diagnosis code K70.31 (Alcoholic cirrhosis of
liver with ascites) to be the most prevalent diagnosis with respect to
case volume reported across MS-DRGs 432, 433, and 434. For example, as
shown in the table, we found 5,687 cases in MS-DRG 432 reporting
diagnosis code K70.31 as a principal diagnosis compared to 269 cases
reporting diagnosis code K70.10 and 244 cases reporting diagnosis code
K70.11. For MS-DRG 433, we found 2,825 cases reporting diagnosis code
K70.31 as a principal diagnosis compared to 309 cases reporting
diagnosis code K70.10 and 173 cases reporting diagnosis code K70.11.
Lastly, for MS-DRG 434, we found 179 cases reporting diagnosis code
K70.31 as a principal diagnosis compared to 41 cases reporting
diagnosis code K70.10 and 8 cases reporting diagnosis code K70.11.
Following our initial review of the claims data for the cases
reporting any one of the listed diagnoses as a principal diagnosis that
are included in the logic for case assignment to MS-DRGs 432, 433, and
434, we performed additional analyses to focus on the cases
specifically reporting diagnosis code K70.10 or K70.11 as a principal
diagnosis in response to the request to create new MS-DRGs with a two-
way split (with and without MCC, respectively). The findings from our
analysis are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TP01MY23.070
The data show that the 513 cases reporting alcoholic hepatitis
without or with ascites in MS-DRG 432 have a longer average length of
stay (8.2 days versus 6.8 days) and higher average costs ($17,572
versus $16,532). For MS-DRG 433, the data show that the 482 cases
reporting alcoholic hepatitis without or with ascites have a longer
average length of stay (4.9 days versus 4.3 days) and a difference in
average costs of $21 ($9,028 versus $9,007). For MS-DRG 434, the 49
cases reporting alcoholic hepatitis without or with ascites have a
shorter length of stay (2.4 days versus 2.8 days) and lower average
costs ($5,544 versus $5,825).
Based on the results of our review and our analysis of the claims
data for cases reporting a principal diagnosis of alcoholic hepatitis
without or with ascites (codes K70.10 or K70.11), we believe the cases
demonstrate similar patterns of resource intensity in comparison to the
other cases in MS-DRGs 432, 433, and 434. We also believe that these
diagnoses are clinically coherent with the other diagnoses currently
assigned to MS-DRGs 432, 433, and 434. While we recognize the concerns
expressed by the requestor for this subset of patients with respect to
the younger population and the lower volume of cases, we note that the
logic for case assignment to MS-DRGs 432, 433, and 434 includes
clinically related diagnoses that differ in severity and resource
intensity with alcoholic hepatitis being at the lowest end of the
severity spectrum. Therefore, we are proposing to maintain the
structure of MS-DRGs 432, 433, and 434 for FY 2024.
[[Page 26726]]
We note, as discussed in section II.C.1.b. of this proposed rule,
using the December 2022 update of the FY 2022 MedPAR file, we analyzed
how applying the NonCC subgroup criteria to all MS-DRGs currently split
into three severity levels would affect the MS-DRG structure beginning
in FY 2024. Findings from our analysis indicate that MS-DRGs 432, 433,
and 434, as well as approximately 44 other base MS-DRGs would be
subject to change based on the three-way severity level split criterion
finalized in FY 2021. We refer the reader to Table 6P.10b associated
with this proposed rule (which is available on the CMS website at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS) for the list of the 135 MS-DRGs that would
potentially be subject to deletion and the list of the 86 new MS-DRGs
that would potentially be created under this policy if the NonCC
subgroup criteria was applied.
8. MDC 08 (Diseases and Disorders of the Musculoskeletal System and
Connective Tissue): Spinal Fusion
We received a request to reassign cases reporting spinal fusion
procedures utilizing an aprevoTM customized interbody fusion
device from the lower severity MS-DRG 455 (Combined Anterior and
Posterior Spinal Fusion without CC/MCC) to the higher severity MS-DRG
453 (Combined Anterior and Posterior Spinal Fusion with MCC), from the
lower severity MS-DRG 458 (Spinal Fusion Except Cervical with Spinal
Curvature, Malignancy, Infection or Extensive Fusions without CC/MCC)
to the higher severity level MS-DRG 456 (Spinal Fusion Except Cervical
with Spinal Curvature, Malignancy, Infection or Extensive Fusions with
MCC) when a diagnosis of malalignment is reported, and from MS-DRGs 459
and 460 (Spinal Fusion Except Cervical with MCC and without MCC,
respectively) to MS-DRG 456.
We note that the AprevoTM Intervertebral Body Fusion
Device technology was discussed in the FY 2022 IPPS/LTCH PPS proposed
(86 FR 25361 through 25365) and final rules (86 FR 45127 through 45133)
with respect to a new technology add-on payment application and was
approved for add-on payments for FY 2022. We also note that, as
discussed in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49468 through
49469), CMS finalized the continuation of the new technology add-on
payments for this technology for FY 2023.
In support of the new technology add-on payment application that
was submitted for FY 2022 consideration, we received a request and
proposal to create new ICD-10-PCS codes to differentiate spinal fusion
procedures that utilize an aprevoTM customized interbody
fusion device, which was discussed at the March 9-10, 2021 ICD-10
Coordination and Maintenance Committee meeting. As a result, effective
October 1, 2021 (FY 2022), we implemented 12 new ICD-10-PCS procedure
codes to identify and describe spinal fusion procedures utilizing the
aprevoTM customized interbody fusion device as shown in the
following table.
[GRAPHIC] [TIFF OMITTED] TP01MY23.071
[[Page 26727]]
Each of the listed procedure codes are assigned to MDC 01 (Diseases
and Disorders of the Nervous System) in MS-DRGs 028, 029, and 030
(Spinal Procedures with MCC, with CC or Spinal Neurostimulators, and
without CC/MCC, respectively) and to MDC 08 (Diseases and Disorders of
the Musculoskeletal System and Connective Tissue) in MS-DRGs 453, 454,
and 455 (Combined Anterior and Posterior Spinal Fusion with MCC, with
CC, and without CC/MCC, respectively), MS-DRGs 456, 457, and 458
(Spinal Fusion Except Cervical With Spinal Curvature, Malignancy,
Infection or Extensive Fusions with MCC, with CC, and without CC/MCC,
respectively), and MS-DRGs 459 and 460 (Spinal Fusion Except Cervical
with MCC and without MCC, respectively).
The requestor (the manufacturer of aprevoTM customized
interbody spinal fusion devices) expressed concerns that findings from
its analysis of claims data for spinal fusion MS-DRGs 453, 454, 455,
456, 457, 458, 459, and 460 from the first half of FY 2022 indicate
there may be unintentional miscoded claims from providers with whom
they do not have an explicit relationship. Specifically, the requestor
stated that a subset of the facilities identified in its analysis are
not customers to whom the aprevoTM custom-made device was
provided. The volume of cases initially identified by the requestor in
its analysis totaled 89 cases, however, upon eliminating the provider
claims from the facilities that are not a current client, the resulting
volume was 14 cases. The requestor stated that subsequently, after
another quarter's data became available from current clients for cases
reporting the performance of a spinal fusion procedure utilizing an
aprevoTM customized interbody spinal fusion device, they
identified an additional 16 cases for a total of 30 cases, all of which
were assigned to MS-DRGs 453, 454, and 455.
Upon further review of the data, the requestor stated it found that
cases reporting the performance of a spinal fusion procedure utilizing
an aprevoTM customized interbody spinal fusion device had
higher average costs in comparison to the average costs of all the
cases in the highest severity level ``with MCC'' MS-DRGs 453 and 456.
According to the requestor, this finding suggested that the use of the
device impacts intensity of resources such that the cases reporting the
performance of a spinal fusion procedure utilizing an
aprevoTM customized interbody spinal fusion device merit
reassignment to the highest severity level ``with MCC'' MS-DRGs (MS-
DRGs 453 and 456). The requestor asserted that while spinal disorders
impact approximately 65 million patients in the U.S., the patients
undergoing spine surgery with an aprevoTM customized
interbody spinal fusion device are those with irreversible,
debilitating conditions. In addition, the requestor stated that since
the cases reporting the performance of a spinal fusion procedure
utilizing an aprevoTM customized interbody spinal fusion
device already appear to map to the most resource intensive MS-DRGs for
spinal procedures, there is no other alternative assignment for these
procedures, with the exception of a new MS-DRG. Lastly, the requestor
maintained that reassigning cases reporting the performance of a spinal
fusion procedure utilizing an aprevoTM customized interbody
spinal fusion device to the ``with MCC'' level aligns with CMS's
factors that are considered in review of MS-DRG classification change
requests, including treatment difficulty, complexity of service, and
utilization of resources.
We analyzed data from the September 2022 update of the FY 2022
MedPAR file for MS-DRGs 453, 454, 455, 456, 457, 458, 459, and 460 and
cases reporting any one of the previously listed procedure codes
describing utilization of an aprevoTM customized interbody
spinal fusion device. Our findings are shown in the following table.
[[Page 26728]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.072
We found the majority of cases reporting the performance of a
spinal fusion procedure utilizing an aprevoTM customized
interbody spinal fusion device in MS-DRGs 453, 454, and 455 with a
total of 159 cases (17 + 75 + 67 = 159) with an average length of stay
of 4.1 days and average costs of $66,847. The 17 cases identified in
MS-DRG 453 appear to have a comparable average length of stay and
comparable average costs compared to all the cases in MS-DRG 453 with a
difference of 1 day and a difference in average costs of $1,383 for the
cases reporting the performance of a spinal fusion procedure utilizing
an aprevoTM customized interbody spinal fusion device. The
75 cases found in MS-DRG 454 have an identical average length of stay
of 4.4 days in comparison to all the cases in MS-DRG 454, however, the
difference in average costs is $21,067 ($75,294 - $54,227 = $21,067)
for the cases reporting the performance of a spinal fusion procedure
utilizing an aprevoTM customized interbody spinal fusion
device. The 67 cases found in MS-DRG 455 also have an identical average
length of stay of 2.7 days in comparison to all the cases in MS-DRG
455, however, the difference in average costs is $13,604 ($54,287 -
$40,683 = $13,604) for the cases reporting the performance of a spinal
fusion procedure utilizing an aprevoTM customized interbody
spinal fusion device. As shown in the table, there were no cases found
to report utilization of an aprevoTM customized interbody
spinal fusion device in MS-DRG 456. For MS-DRG 457, the 2 cases found
to report utilization of an aprevoTM customized interbody
spinal fusion device appear to be outliers with a difference in average
costs of $105,032 ($158,782 - $53,750 = $105,032) and a shorter average
length of stay (3.5 days versus 6.4 days) in comparison to all the
cases in MS-DRG 457. For MS-DRG 458, we found 1 case reporting
utilization of an aprevoTM customized interbody spinal
fusion device with an average length of stay almost three times the
average length of stay of all the cases in MS-DRG 458 (12 days versus
3.5 days) and average costs that are twice as high ($91,672 versus
$40,343) compared to the average costs of all the cases in MS-DRG 458.
For MS-DRG 459, the 2 cases reporting utilization of an
aprevoTM customized interbody spinal fusion device had a
shorter average length of stay (5 days versus 9.8 days) compared to the
average length of stay of all the cases in MS-DRG 459 with a difference
in average costs of $3,697 ($57,039 - $53,342 = $3,697). For MS-DRG
460, the 30 cases reporting utilization of an aprevoTM
customized interbody spinal fusion device had a longer average length
of stay (4.5 days versus 3.5 days) compared to the average length of
stay of all the cases in MS-DRG 460 with a difference in average costs
of $14,762 ($46,683 - $31,921 = $14,762).
As previously discussed, the requestor expressed concerns that
there may be unintentional miscoded claims from providers with whom
they do not have an explicit relationship. We note that following the
submission of the request for the FY 2024 MS-DRG
[[Page 26729]]
classification change for cases reporting the performance of a spinal
fusion procedure utilizing an aprevoTM customized interbody
spinal fusion device, this same requestor (the manufacturer of
aprevoTM customized interbody spinal fusion devices)
submitted a code proposal requesting a revision to the title of the
current procedure codes that identify and describe a spinal fusion
procedure utilizing an aprevoTM customized interbody spinal
fusion device for consideration as an agenda topic to be discussed at
the March 7-8, 2023 ICD-10 Coordination and Maintenance Committee
meeting. The requestor stated its belief that the term ``customizable''
as currently reflected in each of the 12 procedure code descriptions is
potentially misunderstood by providers to encompass expandable
interbody fusion cages that have been available for several years and
which were not approved for new technology add-on payment as was the
aprevoTM customized interbody spinal fusion device.
According to the requestor, these other interbody fusion devices do not
require the same patient specific surgical plan coordination as the
aprevoTM customized interbody spinal fusion device and do
not offer the personalized fit that matches the topography of a
patient's bone. Therefore, in an effort to encourage appropriate
reporting for cases where an aprevoTM customized interbody
spinal fusion device has been utilized in the performance of a spinal
fusion procedure, the requestor provided alternative terminology for
consideration.
The proposal to revise the code title was presented and discussed
as an Addenda item at the March 7-8, 2023 ICD-10 Coordination and
Maintenance Committee meeting. We refer the reader to the CMS website
at: https://www.cms.gov/Medicare/Coding/ICD10/C-and-M-Meeting-Materials
for additional detailed information regarding the request, including a
recording of the discussion and the related meeting materials. Public
comments in response to the code proposal were due by April 7, 2023.
We note that the diagnosis and procedure code proposals that are
presented at the March ICD-10-CM Coordination and Maintenance Committee
meeting for an October 1 implementation (upcoming FY) are not finalized
in time to include in Table 6A.--New Diagnosis Codes, Table 6B.--New
Procedure Codes, Table 6C.--Invalid Diagnosis Codes, Table 6D.--Invalid
Procedure Codes, Table 6E.--Revised Diagnosis Code Titles or Table
6F.--Revised Procedure Code Titles in association with the proposed
rule. Accordingly, any update to the title of the procedure codes
describing utilization of an aprevoTM customized interbody
spinal fusion device, if finalized following the March meeting, would
be reflected in Table 6F.--Revised Procedure Code Titles associated
with the final rule for FY 2024.
Based on our review of this issue and our analysis of the claims
data, we agree that the findings appear to indicate that cases
reporting the performance of a procedure utilizing an
aprevoTM customized interbody spinal fusion device reflect a
higher consumption of resources. However, due to the concerns expressed
with respect to suspected inaccuracies of the coding and therefore,
reliability of the claims data, we believe further review is warranted.
In addition, as previously discussed, the proposal to revise the
current code descriptions was presented at the March 2023 ICD-10
Coordination and Maintenance Committee meeting and if finalized, the
revised coding may improve the reporting of procedures where an
aprevoTM customized interbody spinal fusion device is
utilized. We also believe that because this technology is currently
receiving new technology add-on payments, it would be advantageous to
allow for more claims data to be analyzed under the application of the
policy in consideration of any future modifications to the MS-DRGs for
which the technology is utilized in the performance of a spinal fusion
procedure.
With regard to possible future action, we will continue to monitor
the claims data for resolution of the potential coding issues
identified by the requestor. Because the procedure codes that we
analyzed and presented findings for in this FY 2024 IPPS/LTCH PPS
proposed rule may be revised based on the proposal as discussed at the
March 2023 ICD-10 Coordination and Maintenance Committee meeting, the
claims data that we examine in the future may change. However, we will
continue to collaborate with the American Hospital Association (AHA) as
one of the four Cooperating Parties through the AHA's Coding Clinic for
ICD-10-CM/PCS and provide further education on spinal fusion procedures
utilizing an aprevoTM customized interbody spinal fusion
device and the proper reporting of the ICD-10-PCS spinal fusion
procedure codes. Until these potential coding inaccuracies are
addressed and additional, future analysis of the procedures being
reported in the claims data can occur, we believe it would be premature
to propose any MS-DRG modifications for spinal fusion procedures
utilizing an aprevoTM customized interbody spinal fusion
device at this time. For these reasons, we are proposing to maintain
the current structure of MS-DRGs 453, 454, 455, 456, 457, 458, 459, and
460 for FY 2024.
9. MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract):
Complications of Arteriovenous Fistulas and Shunts
We received a request to add eight 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 eight ICD-10-CM
diagnosis codes submitted by the requestor, as well as their current
MDC assignments, are found in the table:
[[Page 26730]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.073
In order to be treated with dialysis, a procedure that replaces
kidney function when the organs fail, a connection must be established
between the dialysis equipment and the patient's bloodstream. To
establish long-term hemodialysis access, an arteriovenous (AV) fistula
or an AV shunt can be surgically created. An AV fistula is created by
suturing an artery directly to a vein, generally in the wrist, forearm,
inner elbow or upper arm. AV fistulas usually require from 8 to 12
weeks for maturation prior to initial use. AV shunts, also called AV
grafts, are created by connecting an artery and a vein using a graft
made of synthetic material. AV shunts do not require maturation, as AV
fistulas do, and they can be used for hemodialysis in as little as 24
hours after creation depending upon the type of graft that is used. The
requestor noted that diagnosis codes that describe complications of
dialysis catheters currently are in the list of 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 codes that
describe complications of arteriovenous fistulas and shunts should
reasonably be added.
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 procedure codes for the
insertion of tunneled or totally implantable vascular access devices.
We refer the reader to the ICD-10 MS-DRG Definitions Manual Version
40.1, which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software, for complete documentation of the GROUPER
logic for MS-DRGs 673, 674, and 675.
As discussed in the FY 2003 IPPS/LTCH PPS final rule (67 FR 49993
through 49994), the procedure code for the insertion of totally
implantable vascular access devices was 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 inserting these devices as an inpatient procedure for the purposes
of hemodialysis can lead to higher average charges and longer lengths
of stay for those cases. In the FY 2021 IPPS/LTCH PPS final rule (85 FR
58511 through 58517), we discussed a similar request to add 29 ICD-10-
CM diagnosis codes to the list of principal diagnoses assigned to MS-
DRGs 673, 674, and 675. In the FY 2021 IPPS/LTCH PPS final rule, we
finalized the assignment of diagnosis codes that describe diabetes
mellitus with diabetic chronic kidney disease, codes that describe
complications of kidney transplant and codes that describe mechanical
complications of vascular dialysis catheters to the list of qualifying
principal diagnoses in MS-DRGs 673, 674, and 675 and stated that we
believed the insertion of TIVADs or tunneled vascular access devices
for the purposes of hemodialysis was clinically related to these
diagnosis codes. We stated that for clinical coherence, the cases
reporting these diagnoses 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.
We reviewed the eight diagnosis codes submitted by the requestor.
Diagnosis codes T82.510A, T82.511A, T82.520A, T82.521A, T82.530A,
T82.531A, T82.590A and T82.591A describe mechanical complications of
arteriovenous fistulas and shunts and are currently assigned to MDC 05
(Diseases and Disorders of the Circulatory System). The eight diagnosis
codes 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 2022 update of the
FY 2022 MedPAR file for all cases reporting procedures describing the
insertion of TIVADs or tunneled vascular access devices with a
principal diagnosis describing mechanical complications of
arteriovenous fistulas and shunts and compared these data to cases in
MS-DRGs 673, 674 and 675. The following table shows our findings:
[[Page 26731]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.074
As shown in the table, there were 13,904 cases in MS-DRG 673 with
an average length of stay of 12.1 days and average costs of $31,946.
There were 748 cases reporting a principal diagnosis describing
mechanical complications of arteriovenous fistulas and shunts, 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 6 days and average costs of $24,467. There were 5,532 cases in MS-
DRG 674 with an average length of stay of 7.8 days and average costs of
$20,702. There was one case reporting a principal diagnosis describing
mechanical complications of arteriovenous fistulas and shunts, with a
secondary diagnosis of CC, and a procedure code for the insertion of a
TIVAD or tunneled vascular access device with a length of stay of three
days and costs of $6,418. There were 303 cases in MS-DRG 675 with an
average length of stay of 3.6 days and average costs of $13,343. There
were zero cases reporting a principal diagnosis describing mechanical
complications of arteriovenous fistulas and shunts, without a secondary
diagnosis of CC or MCC, and a procedure code for the insertion of a
TIVAD or tunneled vascular access device. We note that the average
length of stay and average costs of cases reporting a principal
diagnosis describing mechanical complications of arteriovenous fistulas
and shunts and the insertion of a TIVAD or a tunneled vascular access
device are lower than for all cases in MS-DRGs 673 and 674,
respectively.
To further examine the impact of moving the eight MDC 05 diagnoses
into MDC 11, we analyzed claims data for cases reporting an O.R.
procedure assigned to MDC 05 and a principal diagnosis describing
mechanical complications of arteriovenous fistulas and shunts. Our
findings are reflected in the following table:
[[Page 26732]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.075
Whenever there is a surgical procedure reported on the claim that
is unrelated to the MDC to which the case was assigned based on the
principal diagnosis, it results in an MS-DRG assignment to a surgical
class referred to as ``unrelated operating room procedures''. As shown
in the table, if we were to move the eight diagnosis codes describing
mechanical complications of arteriovenous fistulas and shunts from MDC
05 to MDC 11, 1,581 cases would be assigned to the surgical class
referred to as ``unrelated operating room procedures'' as an unintended
consequence. The data also indicates that there were more cases that
reported an O.R. procedure assigned to MDC 05 with a principal
diagnosis describing mechanical complications of arteriovenous fistulas
and shunts than there were cases reporting a principal diagnosis
describing mechanical complications of arteriovenous fistulas and
shunts and a procedure code for the insertion of a TIVAD or tunneled
vascular access device (1,581 cases versus 749 cases) demonstrating
that inpatient admissions for mechanical complications of arteriovenous
fistulas and shunts more typically have an O.R. procedure assigned to
MDC 05 performed.
We also reviewed the cases reporting an O.R. procedure assigned to
MDC 05 and a principal diagnosis describing mechanical complications of
arteriovenous fistulas and shunts to identify the top ten O.R.
procedures assigned to MDC 05 that were reported within the claims data
for these cases. Our findings are shown in the following table:
[[Page 26733]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.076
As noted previously, if we were to move the eight diagnosis codes
describing mechanical complications of arteriovenous fistulas and
shunts to MDC 11, cases reporting one of the O.R. procedures assigned
to MDC 05 shown in the table would be assigned to the surgical class
referred to as ``unrelated operating room procedures'' as an unintended
consequence.
Based on the results of our analysis, we do not support adding the
eight diagnosis codes that describe mechanical complications of
arteriovenous fistulas and shunts to the special logic in MS-DRGs 673,
674, and 675. As discussed previously, these diagnosis codes are
assigned to MDC 05 (Diseases and Disorders of the Circulatory System).
We note that patients can sometimes require the insertion of tunneled
or totally implantable vascular access devices for hemodialysis while
surgically created AV fistulas or AV shunts are unable to be accessed
due to mechanical complications, however more often these mechanical
complications related to AV fistulas or AV shunts require inpatient
admission for vascular surgery to be effectively treated. We believe
that the eight diagnosis codes describing mechanical complications of
arteriovenous fistulas and shunts are most clinically aligned with the
diagnosis codes assigned to MDC 05 (where they are currently assigned).
We also believe it would not be appropriate to move these diagnoses
into MDC 11 because it would inadvertently cause cases reporting the
eight diagnosis codes that describe mechanical complications of
arteriovenous fistulas and shunts with O.R. procedures assigned to MDC
05 to be assigned to an unrelated MS-DRG.
Therefore, for the reasons discussed, we are not proposing to add
the following eight ICD-10-CM codes to the list of principal diagnosis
codes for MS-DRGs 673, 674, and 675 when reported with a procedure code
describing the insertion of a TIVAD or a tunneled vascular access
device: T82.510A, T82.511A, T82.520A, T82.521A, T82.530A, T82.531A,
T82.590A and T82.591A.
10. Review of Procedure Codes in MS-DRGs 981 Through 983 and 987
Through 989
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.
Based on the results of our review of the claims data from the
September 2022 update of the FY 2022 MedPAR file of cases found to
group to MS-DRGs 981 through 983 or MS-DRGs 987 through 989, we are
proposing 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.
a. Percutaneous Endoscopic Resection of Colon
During our review of the cases that group to MS-DRGs 981 through
983, we
[[Page 26734]]
noted that when ICD-10-PCS procedure code 0DTN4ZZ (Resection of sigmoid
colon, percutaneous endoscopic approach) is reported with a principal
diagnosis in MDC 11 (Diseases and Disorders of the Kidney and Urinary
Tract), the cases group to MS-DRGs 981 through 983. The principal
diagnosis most frequently reported with ICD-10-PCS procedure code
0DTN4ZZ in MDC 11 is ICD-10-CM code N32.1 (Vesicointestinal fistula).
ICD-10-PCS procedure code 0DTN4ZZ currently groups to several MDCs,
which are listed in the following table.
[GRAPHIC] [TIFF OMITTED] TP01MY23.077
We examined claims data from the September 2022 update of the FY
2022 MedPAR file to identify the average length of stay and average
costs for cases reporting procedure code 0DTN4ZZ with a principal
diagnosis in MDC 11, which are currently grouping to MS-DRGs 981
through 983, as well as all cases in MS-DRGs 981 through 983. Our
findings are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TP01MY23.078
We then examined the MS-DRGs within MDC 11 and determined that the
cases reporting procedure code 0DTN4ZZ with a principal diagnosis in
MDC 11 would most suitably group to MS-DRGs 673, 674, and 675 (Other
Kidney and Urinary Tract Procedures with MCC, with CC, and without CC/
MCC, respectively), which contain procedures performed on structures
other than kidney and urinary tract anatomy.
To determine how the resources for this subset of cases compared to
cases in MS-DRGs 673, 674, and 675 as a whole, we examined the average
costs and length of stay for cases in MS-DRGs 673, 674, and 675. Our
findings are shown in this table.
[GRAPHIC] [TIFF OMITTED] TP01MY23.079
[[Page 26735]]
We reviewed the data and noted for this subset of cases, the
average costs are higher and the average length of stays are shorter
than for cases in MS-DRGs 673, 674, and 675. However, we believe that
when ICD-10-PCS procedure code 0DTN4ZZ is reported with a principal
diagnosis in MDC 11 (typically vesicointestinal fistula), the procedure
is related to the principal diagnosis. Because vesicointestinal
fistulas involve both the bladder and the bowel, some procedures in
both MDC 06 (Diseases and Disorders of the Digestive System) and MDC 11
(Diseases and Disorders of the Kidney and Urinary Tract) would be
expected to be related to a principal diagnosis of vesicointestinal
fistula (ICD-10-CM code N32.1). Therefore, we are proposing to add ICD-
10-PCS procedure code 0DTN4ZZ to MDC 11. Under this proposal, cases
reporting procedure code 0DTN4ZZ with a principal diagnosis of
vesicointestinal fistula (diagnosis code N32.1) in MDC 11 would group
to MS-DRGs 673, 674, and 675.
b. Open Excision of Muscle
During the review of the cases that group to MS-DRGs 981 through
983, we noted that when ICD-10-PCS procedure codes describing the open
excision of muscle 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. The list of 28 ICD-10-CM
procedure codes reviewed, as well as their current MDC assignments, are
found in the table:
[[Page 26736]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.080
We refer the reader to Appendix E of the ICD-10 MS-DRG Version 40.1
Definitions Manual (which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatientPPS/MS-DRGClassifications-and-Software) for the MS-DRG assignment for each
procedure code listed and further discussion of how each procedure code
may be assigned to multiple MDCs and MS-DRGs under the IPPS.
The principal diagnosis most frequently reported with the 28 ICD-
10-
[[Page 26737]]
PCS procedure codes describing the open excision of muscle in MDC 05 is
ICD-10-CM code I96 (Gangrene, not elsewhere classified). Gangrene is a
condition in which body tissue dies from not getting enough blood. It
can cause changes in skin color, numbness or pain, swelling, and other
symptoms. The combination of a procedure code describing the open
excision of muscle and ICD-10-CM diagnosis code I96 indicates open
debridement of muscle for gangrene was performed.
We examined claims data from the September 2022 update of the FY
2022 MedPAR file to identify the average length of stay and average
costs for cases reporting a procedure code describing the open excision
of muscle with a principal diagnosis in MDC 05, which are currently
grouping to MS-DRGs 981 through 983, as well as all cases in MS-DRGs
981 through 983. Our findings are shown in the following table.
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We then examined the MS-DRGs within MDC 05 and determined that the
cases reporting procedure codes describing the open excision of muscle
with a principal diagnosis in MDC 05 would most suitably group to MS-
DRG 264 (Other Circulatory System O.R. Procedures), which contains
procedures performed on structures other than circulatory anatomy.
To determine how the resources for this subset of cases compared to
cases in MS-DRG 264 as a whole, we examined the average costs and
length of stay for cases in MS-DRG 264. Our findings are shown in this
table.
[GRAPHIC] [TIFF OMITTED] TP01MY23.082
We reviewed the data and noted for this subset of cases, in the
``with MCC'' subgroup the average costs of the cases reporting
procedure codes describing the open excision of muscle with a principal
diagnosis in MDC 05 are slightly higher ($27,392 compared to $27,237)
and the average length of stay is longer (11.7 days compared to 9.9
days) than for all cases in MS-DRGs 264, while the cases in the ``with
CC'' and the ``without CC/MCC'' subgroups have lower average costs
($16,989 and $7,140 respectively compared to $27,237) and a shorter
average length of stay (7.9 days and 4.7 days respectively compared to
9.9 days) than for cases in MS-DRG 264. However, we believe that when a
procedure code describing the open excision of muscle is reported with
a principal diagnosis in MDC 05 (typically gangrene, not elsewhere
classified), the procedure is related to the principal diagnosis.
Because debridement, or the cutting away of dead and dying tissue, can
be performed to keep gangrene from spreading, a procedure code
describing the open excision of muscle would be expected to be related
to a principal diagnosis of gangrene, not elsewhere classified
(diagnosis code I96), and it is clinically appropriate for the
procedures to group to the same MS-DRGs as the principal diagnoses.
Therefore, we are proposing to add the 28 procedure codes listed
previously to MDC 05. Under this proposal, cases reporting a procedure
code describing the open excision of muscle with a principal diagnosis
of gangrene, not elsewhere classified (diagnosis code I96) in MDC 05
would group to MS-DRG 264.
c. Open Replacement of Skull With Synthetic Substitute
During our review of the cases that group to MS-DRGs 981 through
983, we noted that when ICD-10-PCS procedure code 0NR00JZ (Replacement
of skull with synthetic substitute, open
[[Page 26738]]
approach) is reported with a principal diagnosis in MDC 09 (Diseases
and Disorders of the Skin, Subcutaneous Tissue and Breast), the cases
group to MS-DRGs 981 through 983. The principal diagnosis most
frequently reported with ICD-10-PCS procedure code 0NR00JZ in MDC 09 is
ICD-10-CM code Z42.8 (Encounter for other plastic and reconstructive
surgery following medical procedure or healed injury).
ICD-10-PCS procedure code 0NR00JZ currently groups to several MDCs,
which are listed in the following table.
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We examined claims data from the September 2022 update of the FY
2022 MedPAR file to identify the average length of stay and average
costs for cases reporting procedure code 0NR00JZ with a principal
diagnosis in MDC 09, which are currently grouping to MS-DRGs 981
through 983, as well as all cases in MS-DRGs 981 through 983. Our
findings are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TP01MY23.084
We then examined the MS-DRGs within MDC 09 and determined that the
cases reporting procedure code 0NR00JZ with a principal diagnosis in
MDC 09 would most suitably group to MS-DRGs 579, 580, and 581 (Other
Skin, Subcutaneous Tissue and Breast Procedures with MCC, with CC, and
without CC/MCC, respectively) given the nature of the procedure. MS-
DRGs 579, 580, and 581 contain procedures assigned to MDC 09 that do
not fit within the specific surgical MS-DRGs in MDC 09, which are: skin
graft; skin debridement; mastectomy for malignancy; and breast biopsy,
local excision, and other breast procedures.
To determine how the resources for this subset of cases compared to
cases in MS-DRGs 579, 580, and 581 as a whole, we examined the average
costs and length of stay for cases in MS-DRGs 579, 580, and 581. Our
findings are shown in this table.
[GRAPHIC] [TIFF OMITTED] TP01MY23.085
[[Page 26739]]
We reviewed the data and noted for this subset of cases, the
average costs are higher and the average length of stays are shorter
than for cases in MS-DRGs 579, 580, and 581. However, we believe that
when ICD-10-PCS procedure code 0NR00JZ is reported with a principal
diagnosis in MDC 09 (typically encounter for other plastic and
reconstructive surgery following medical procedure or healed injury),
the procedure is related to the principal diagnosis.
Open brain surgeries that require removing a portion of the skull,
for indications such as brain tumor resection, hydrocephalus shunt
implantation, cerebral aneurysm clipping, evacuation of a brain
hemorrhage, microvascular decompression, and lobectomy, can sometimes
result in a residual cranial defect. We believe that it is clinically
appropriate for the procedure to group to the same MS-DRGs as the
principal diagnosis as procedure code 0NR00JZ can be used to describe
cranial reconstruction procedures that involve applying a cranial
prosthetic device to address the residual bony void and/or defect to
restore the natural contours of the skull.
Therefore, we are proposing to add ICD-10-PCS procedure code
0NR00JZ to MDC 09. Under this proposal, cases reporting procedure code
0NR00JZ with a principal diagnosis in MDC 09 (such as encounter for
other plastic and reconstructive surgery following medical procedure or
healed injury) would group to MS-DRGs 579, 580, and 581.
d. Endoscopic Dilation of Ureters With Intraluminal Device
During the review of the cases that group to MS-DRGs 987 through
989, we noted that when ICD-10-PCS procedure codes describing the
endoscopic dilation of ureters with an intraluminal device 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 987
through 989. The principal diagnosis most frequently reported with ICD-
10-PCS procedure codes describing the endoscopic dilation of ureters
with an intraluminal device in MDC 05 is ICD-10-CM code I13.0
(Hypertensive heart and chronic kidney disease with heart failure and
stage 1 through stage 4 chronic kidney disease, or unspecified chronic
kidney disease).
In the following tables, the ICD-10-PCS procedure codes describing
the endoscopic dilation of ureters with an intraluminal device are
listed, as well as their MDC and MS-DRG assignments.
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[GRAPHIC] [TIFF OMITTED] TP01MY23.087
We examined claims data from the September 2022 update of the FY
2022 MedPAR file to identify the average length of stay and average
costs for cases reporting procedure code 0T768DZ, 0T778DZ or 0T788DZ
with a principal diagnosis in MDC 05, which are currently grouping to
MS-DRGs 987 through 989, as well as all cases in MS-DRGs 987 through
989. Our findings are shown in the following table.
[[Page 26740]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.088
We then examined the MS-DRGs within MDC 05 and determined that the
cases reporting procedure codes describing the endoscopic dilation of
ureters with an intraluminal device with a principal diagnosis in MDC
05 would most suitably group to MS-DRG 264 (Other Circulatory System
O.R. Procedures), which contains procedures performed on structures
other than circulatory anatomy.
To determine how the resources for this subset of cases compared to
cases in MS-DRG 264 as a whole, we examined the average costs and
length of stay for cases in MS-DRG 264. Our findings are shown in this
table.
[GRAPHIC] [TIFF OMITTED] TP01MY23.089
We reviewed these data and noted that the average costs for this
subset of cases, most of which group to MS-DRG 987, are lower than the
average costs than for cases in MS-DRG 264. However, we believe that
when a procedure code describing the endoscopic dilation of ureters
with an intraluminal device is reported with a principal diagnosis in
MDC 05 (typically hypertensive heart and chronic kidney disease with
heart failure and stage 1 through stage 4 chronic kidney disease, or
unspecified chronic kidney disease), the procedure is related to the
principal diagnosis. Ureteral intraluminal devices are used to relieve
ureteral obstruction by passively dilating the ureter to allow urine to
drain through the center of the hollow intraluminal device as well as
around the device. Indications for endoscopic ureteral intraluminal
device placement include the uncomplicated ureteral obstruction due to
causes such as nephrolithiasis, tumor, or retroperitoneal fibrosis, or
obstruction complicated by urinary tract infection, renal
insufficiency, or renal failure. As the endoscopic dilation of ureters
with an intraluminal device would be expected to be related to a
principal diagnosis of hypertensive heart and chronic kidney disease
with heart failure and stage 1 through stage 4 chronic kidney disease,
or unspecified chronic kidney disease, not elsewhere classified
(diagnosis code I13.0), it is clinically appropriate for the procedures
to group to the same MS-DRGs as the principal diagnoses.
Therefore, we are proposing to add ICD-10-PCS procedure codes
0T768DZ, 0T778DZ and 0T788DZ to MDC 05. Under this proposal, cases
reporting procedure code 0T768DZ, 0T778DZ or 0T788DZ with a principal
diagnosis of hypertensive heart and chronic kidney disease with heart
failure and stage 1 through stage 4 chronic kidney disease, or
unspecified chronic kidney disease (I13.0) in MDC 05 would group to MS-
DRG 264.
e. Occlusion of Splenic Artery
During our review of the cases currently grouping to MS-DRGs 987
through 989, we noted that when ICD-10-PCS procedure codes describing
the occlusion of the splenic artery are reported in conjunction with
ICD-10-CM diagnosis codes in MDC 16 (Diseases and Disorders of Blood,
Blood Forming Organs and Immunologic Disorders), the cases group to MS-
DRGs 987 through 989. The principal diagnosis most frequently reported
with ICD-10-PCS procedure codes describing the occlusion of the splenic
artery in MDC 16 is ICD-10-CM code S36.032A (Major laceration of
spleen, initial encounter).
In the following tables, the ICD-10-PCS procedure codes describing
the occlusion of the splenic artery are listed, as well as their MDC
and MS-DRG assignments.
[[Page 26741]]
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We examined claims data from the September 2022 update of the FY
2022 MedPAR file to identify the average length of stay and average
costs for cases reporting procedure codes describing the occlusion of
the splenic artery with a principal diagnosis in MDC 16, which are
currently grouping to MS-DRGs 987 through 989, as well as all cases in
MS-DRGs 987 through 989. Our findings are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TP01MY23.092
[[Page 26742]]
We then examined the MS-DRGs within MDC 16 and determined that the
cases reporting a procedure code describing the occlusion of the
splenic artery with a principal diagnosis in MDC 16 would most suitably
group to MS-DRGs 799, 800, and 801 (Splenectomy with MCC, with CC, and
without CC/MCC, respectively) given the nature of the procedure.
We note, as discussed in section II.C.1.b of this proposed rule,
using the December 2022 update of the FY 2022 MedPAR file, we analyzed
how applying the NonCC subgroup criteria to all MS-DRGs currently split
into three severity levels would affect the MS-DRG structure beginning
in FY 2024. Findings from our analysis indicate that MS-DRGs 799, 800,
and 801 as well as approximately 44 other base MS-DRGs would be subject
to change based on the three-way severity level split criterion
finalized in FY 2021. We refer the reader to Table 6P.10b associated
with this proposed rule (which is available on the CMS website at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS) for the list of the 135 MS-DRGs that would
potentially be subject to deletion and the list of the 86 new MS-DRGs
that would potentially be created if the NonCC subgroup criteria was
applied.
To determine how the resources for this subset of cases compared to
cases in MS-DRGs 799, 800, and 801 as a whole, we examined the average
costs and length of stay for cases in MS-DRGs 799, 800, and 801. Our
findings are shown in this table.
[GRAPHIC] [TIFF OMITTED] TP01MY23.093
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We reviewed these data and noted that the average length of stay
and average costs of the subset of cases reporting a procedure code
describing the occlusion of the splenic artery with a principal
diagnosis in MDC 16 are more similar to those of cases in MS-DRGs 799,
800, and 801. We also note that in cases of splenic injury, the
diagnosis and prompt management of potentially life-threatening
hemorrhage is the primary goal. Procedures to occlude the splenic
artery, such as splenic embolization, can be performed for spleen
injuries, such as lacerations, in order to manage bleeding prior to or
instead of more invasive splenic procedures. A procedure code
describing the occlusion of the splenic artery would be expected to be
related to a principal diagnosis of a major laceration of spleen,
initial encounter (diagnosis code S36.032A) and it is clinically
appropriate for the procedures to group to the same MS-DRGs as the
principal diagnoses.
Given the similarity in resource use between this subset of cases
and cases in MS-DRGs 799, 800, and 801, and that we believe that
procedure codes describing the occlusion of the splenic artery are
related to principal diagnoses in MDC 16 (typically major laceration of
spleen, initial encounter), these cases would be more appropriately
assigned to MS-DRGs 799, 800, and 801 in MDC 16 than their current
assignment in MS-DRGs 987 through 989. Therefore, we are proposing to
add the nine procedure codes listed in the previous table that describe
the occlusion of the splenic artery to MDC 16 (Diseases and Disorders
of Blood, Blood Forming Organs and Immunologic Disorders) in MS-DRGs
799, 800, and 801. Under this proposal, cases reporting a principal
diagnosis of a major laceration of spleen, initial encounter (S36.032A)
with a procedure describing the occlusion of the splenic artery would
group to MS-DRGs 799, 800, and 801.
During the review of this issue, we noted that a splenectomy is a
surgical operation involving removal of the spleen, however the GROUPER
logic list for MS-DRGs 799, 800, and 801 does not exclusively contain
procedure codes that describe the removal of the spleen. We refer the
reader to the ICD-10 MS-DRG Version 40.1 Definitions Manual (which is
available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatientPPS/MS-DRGClassifications-and-Software) for complete documentation of the GROUPER logic for MS-DRGs
799, 800, and 801. Therefore, we are also proposing to revise the
titles of MDC 16 MS-DRGs 799, 800, and 801 from ``Splenectomy with MCC,
with CC, and without CC/MCC, respectively'' to ``Splenic Procedures
with MCC, with CC, and without CC/MCC, respectively'' to better reflect
the assigned procedures.
In addition to the internal review of procedures producing
assignment to MS-DRGs 981 through 983 or MS-DRGs 987 through 989, 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. We did not receive any requests suggesting
reassignment.
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.
Additionally, 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 for the cases to be
reassigned from one of the MS-DRG groups to the other. Based on the
results of our review of the claims data from the September 2022 update
of the FY 2022 MedPAR file we did not identify any cases for
reassignment. We also did not receive any requests suggesting
reassignment. Therefore, for FY 2024 we are not proposing to move any
cases
[[Page 26743]]
reporting procedure codes from MS-DRGs 981 through 983 to MS-DRGs 987
through 989 or vice versa.
11. Operating Room (O.R.) and Non-O.R. Procedures
a. Background
Under the IPPS MS-DRGs (and former CMS 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.
procedures or non-O.R. procedures affecting the MS-DRG, we recommend
the MS-DRG assignment which is then made available in association with
the proposed rule (Table 6B.--New Procedure Codes) and subject to
public comment. These proposed assignments are generally based on the
assignment of predecessor codes or the assignment of similar codes. For
example, we generally examine the MS-DRG assignment for similar
procedures, such as the other approaches for that procedure, to
determine the most appropriate MS-DRG assignment for procedures
proposed to be newly designated as O.R. procedures. As discussed in
section II.C.13 of the preamble of this proposed rule, we are making
Table 6B.--New Procedure Codes--FY 2024 available on the CMS website
at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. We also refer readers to the ICD-10 MS-
DRG Version 40.1 Definitions Manual at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.html for detailed information regarding
the designation of procedures as O.R. or non-O.R. (affecting the MS-
DRG) in Appendix E--Operating Room Procedures and Procedure Code/MS-DRG
Index.
In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19158), we stated
that, given the long period of time that has elapsed since the original
O.R. (extensive and non-extensive) and non-O.R. designations were
established, the incremental changes that have occurred to these O.R.
and non-O.R. procedure code lists, and changes in the way inpatient
care is delivered, we plan to conduct a comprehensive, systematic
review of the ICD-10-PCS procedure codes. This will be a multiyear
project during which we will also review the process for determining
when a procedure is considered an operating room procedure. For
example, we may restructure the current O.R. and non-O.R. designations
for procedures by leveraging the detail that is now available in the
ICD-10 claims data. We refer readers to the discussion regarding the
designation of procedure codes in the FY 2018 IPPS/LTCH PPS final rule
(82 FR 38066) where we stated that the determination of when a
procedure code should be designated as an O.R. procedure has become a
much more complex task. This is, in part, due to the number of various
approaches available in the ICD-10-PCS classification, as well as
changes in medical practice. While we have typically evaluated
procedures on the basis of whether or not they would be performed in an
operating room, we believe that there may be other factors to consider
with regard to resource utilization, particularly with the
implementation of ICD-10.
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 stated 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.
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58540 through
58541), we provided a summary of the comments we had received in
response to our request for 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. In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25158)
and final rule (86 FR 44891), and FY 2023 IPPS/LTCH PPS proposed rule
(87 FR 28174) and final rule (87 FR 48862), we stated that in
consideration of the ongoing PHE, we believed it may be appropriate to
allow additional time for the claims data to stabilize prior to
selecting the timeframe to analyze for this review.
For this FY 2024 IPPS/LTCH PPS proposed rule, we continue to
believe additional time is necessary as we continue to develop our
process and methodology. Therefore, we will provide more detail on this
analysis and the methodology for conducting this review in future
rulemaking.
We received the following requests regarding changing the
designation of specific ICD-10-PCS procedure codes from non-O.R. to
O.R. procedures. We summarize these requests in this section of this
rule and address why we are not considering a change to the designation
of these codes at this time.
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 48863), we discussed
a request we received to change the
[[Page 26744]]
designation of all ICD-10-PCS codes that describe diagnostic and
therapeutic percutaneous endoscopic procedures performed on thoracic
and abdominal organs, from non-O.R. to O.R. In the FY 2023 final rule,
we stated that we believed additional time was needed to fully examine
the numerous ICD-10-PCS codes in the classification that describe
diagnostic and therapeutic percutaneous endoscopic procedures performed
on thoracic and abdominal organs. We stated that rather than evaluating
the procedure codes describing diagnostic and therapeutic percutaneous
endoscopic procedures performed on thoracic and abdominal organs in
isolation, analysis should be performed for this subset of procedure
codes across the MS-DRGs, as part of the comprehensive procedure code
review. We also stated that as a component of our broader comprehensive
procedure code review, we are also reviewing the process for
determining when a procedure is considered an operating room procedure.
For this FY 2024 IPPS/LTCH PPS proposed rule, we again received a
request to change the designation of all ICD-10-PCS procedure codes
that describe diagnostic and therapeutic percutaneous endoscopic
procedures performed on thoracic and abdominal organs, from non-O.R. to
O.R from the same requestor. According to the requestor, diagnostic and
therapeutic thoracoscopic and laparoscopic procedures on thoracic and
abdominal organs are always performed in the operating room under
complex general anesthesia. The requestor did not provide a specific
list of the procedure codes that describe diagnostic and therapeutic
percutaneous endoscopic procedures performed on thoracic and abdominal
organs and are currently designated as non-O.R. for CMS for review, to
narrow the scope of this repeat request.
As we have signaled in prior rulemaking, the designation of an O.R.
procedure encompasses more than the physical location of the hospital
in which the procedure may be performed; in other words, the
performance of a procedure in an operating room is not the sole
determining factor we consider as we examine the designation of a
procedure in the ICD-10-PCS classification system. We also examine if,
and in what way, the performance of the procedure affects the resource
expenditure in those admissions in the inpatient setting, in addition
to examining other clinical factors such as procedure complexity, and
need for anesthesia administration as well as other types of sedation.
As also stated in prior rulemaking, we plan to conduct a comprehensive,
systematic review of the ICD-10-PCS procedure codes. Rather than
evaluating this subset of procedure codes in isolation, as any
potential change to the designation of these codes requires significant
review, we continue to believe that analysis of the designation of the
procedure codes describing diagnostic and therapeutic percutaneous
endoscopic procedures performed on thoracic and abdominal organs should
be performed across the MS-DRGs, as part of the comprehensive procedure
code review. Therefore, for the reasons discussed, we are not proposing
any changes to the designation of all ICD-10-PCS procedure codes that
describe diagnostic and therapeutic percutaneous endoscopic procedures
performed on thoracic and abdominal organs, from non-O.R. to O.R. for
FY 2024. As diagnostic and therapeutic percutaneous endoscopic
procedures performed on thoracic and abdominal organs differ greatly in
terms of clinical factors such as procedure complexity and resource
utilization, we invite feedback on what factors or criteria to consider
in determining whether a procedure should be designated as an O.R.
procedure in the ICD-10-PCS classification system when evaluating this
subset of procedure codes as part of the comprehensive procedure code
review. Feedback and other suggestions may be submitted by October 20,
2023, and directed to the new electronic intake system, Medicare
Electronic Application Request Information SystemTM
(MEARISTM), discussed in section II.C.1.b of the preamble of
this proposed rule at: https://mearis.cms.gov/public/home.
We will provide more detail on the comprehensive procedure code
review and the methodology for conducting this review in future
rulemaking.
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 44892 through
44895), CMS finalized the proposal to remove the 22 codes that describe
the open drainage of subcutaneous tissue and fascia listed in the
following table from the ICD-10 MS-DRGs Version 39 Definitions Manual
in Appendix E--Operating Room Procedures and Procedure Code/MS-DRG
Index as O.R. procedures. Under this finalization, these procedures no
longer impact MS-DRG assignment.
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In the FY 2022 final rule, we noted that the designation of the 22
procedure codes that describe the open drainage of subcutaneous tissue
and fascia as O.R. procedures was a result of a replication error in
transitioning to ICD-10. This replication error led to ICD-10-PCS
procedure codes that describe the open drainage of subcutaneous tissue
and fascia being listed as comparable translations for ICD-9-CM code
83.09 (Other incision of soft tissue), which was designated as a non-
extensive O.R. procedure under the ICD-9-CM MS-DRGs Version 32, as
opposed to being listed as comparable translations for ICD-9-CM code
86.04 (Other incision with drainage of skin and subcutaneous tissue)
which was designated as a non-O.R. procedure under the ICD-9-CM MS-DRGs
Version 32. We stated in the FY 2022 final rule that designating the 22
procedure codes that describe the open drainage of subcutaneous tissue
and fascia as non-O.R. procedures would result in a more accurate
replication of the comparable procedure, under the ICD-9-CM MS-DRGs
Version 32 which was 86.04, not 83.09 and is more aligned with current
shifts in treatment practices.
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 48863 through
48865), we discussed a request we received to re-examine this change in
designation. In the FY 2023 final rule, we did not make changes to the
designation of these codes and stated that procedure codes that
describe the open drainage of subcutaneous tissue and fascia do not
reflect the technical complexity or resource intensity in comparison to
other procedures that are designated as O.R. procedures. We stated that
our analysis of the September 2021 update of the FY 2021 MedPAR file
reflected that when the procedure codes that describe the open drainage
of the subcutaneous tissue and fascia are reported, approximately 70%
of the MS-DRGs assigned are classified as surgical MS-DRGs which
indicated at least one procedure code designated as an O.R. procedure
was also reported in these cases. We also stated that the non-O.R.
designation of the 22 procedure codes that describe the open drainage
of subcutaneous tissue and fascia as finalized in the FY 2022 final
rule better reflects the associated technical complexity and hospital
resource use of these procedures.
For this FY 2024 IPPS/LTCH PPS proposed rule, we again received a
request to re-examine the designation of the 22 procedure codes that
describe the open drainage of subcutaneous tissue and fascia as non-
O.R. procedures from the same requestor. The requestor stated that CMS
should return the designation of these procedure codes to O.R.
procedures to reflect the operating room resources utilized in the
performance of these procedures and suggested that CMS analyze claims
containing the 22 ICD-10-PCS codes to determine the percentage that
contained timed O.R. charges billed under revenue code 360. The
requestor also indicated there was confusion about the coded claims
data as presented in the FY 2023 final rule. The requestor noted that
the 22 procedure codes that describe the open drainage of subcutaneous
tissue and fascia were designated as O.R. procedures in FY 2021 so it
was unclear to the requestor why the table displayed by CMS associated
with the FY 2023 final rule contained assignment to medical MS-DRGs.
First, in response to the question about the coded claims data as
presented in the FY 2023 final rule, we note as generally stated in the
preamble
[[Page 26746]]
of the proposed rule each year, the diagnosis and procedure codes from
the specified FY MedPAR claims data are grouped through the applicable
version of the proposed FY GROUPER. The FY 2021 MedPAR claims data
presented in the FY 2023 final rule were regrouped using the proposed
FY 2023 MS-DRG classifications. In the proposed FY 2023 GROUPER, the
procedure codes that describe the open drainage of subcutaneous tissue
and fascia no longer impacted MS-DRG assignment and that is the reason
why assignments to medical DRGs were displayed in Table 6P.1f
associated with the FY 2023 final rule.
Next, we refer the reader to Table 6P.8a associated with this
proposed rule (which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS) for the data analysis of cases reporting the 22
procedure codes that describe the open drainage of subcutaneous tissue
and fascia in the September 2022 update of the FY 2022 MedPAR file. We
note that within each MDC, the MS-DRGs are divided into medical and
surgical categories. In general, surgical MS-DRGs are further defined
based on the precise surgical procedure performed while the medical MS-
DRGs are further defined based on the precise principal diagnosis for
which a patient was admitted to the hospital. In Table 6P.8a associated
with this proposed rule, column B displays the category of each MS-DRG
in MS-DRG GROUPER Version 40.1. The letter M is used to designate a
medical MS-DRG and the letter P is used to designate a surgical MS-DRG.
Overall, the data continues to indicate that the open drainage of
subcutaneous tissue and fascia was not the underlying reason for, or
main driver of, resource utilization for those cases. As shown in the
table, when the procedure codes that describe the open drainage of the
subcutaneous tissue and fascia are reported, approximately 55% of the
MS-DRGs assigned are classified as surgical MS-DRGs which indicates at
least one procedure code designated as an O.R. procedure was also
reported in these cases. We refer the reader to the ICD-10 MS-DRG
Version 40.1 Definitions Manual (which is available on the CMS website
at: https://www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatientPPS/MS-DRGClassifications-and-Software) for complete
documentation of the GROUPER logic for the listed MS-DRGs.
We reviewed these data and continue to believe that procedure codes
that describe the open drainage of subcutaneous tissue and fascia do
not reflect the technical complexity or resource intensity in
comparison to other procedures that are designated as O.R. procedures.
As stated in prior rulemaking, procedures describing the open drainage
of subcutaneous tissue and fascia can now be safely performed in the
outpatient setting and when performed during a hospitalization, it is
typically in conjunction with another O.R. procedure. In cases where
procedures describing open drainage of subcutaneous tissue and fascia
are the only procedures performed in an admission, the admission is
quite likely due to need for IV antibiotics as opposed to the need for
operating room resources in an inpatient setting.
We also note that, as stated in prior rulemaking (84 FR 42069), in
deciding whether to propose to make further modifications to the MS-
DRGs for particular circumstances brought to our attention, we do not
consider the reported revenue codes. Rather, as stated previously, we
consider whether the resource consumption and clinical characteristics
of the patients with a given set of conditions are significantly
different than the remaining patients represented in the MS-DRG. We do
this by evaluating the ICD-10-CM diagnosis and/or ICD-10-PCS procedure
codes that identify the patient conditions, procedures, and the
relevant MS-DRG(s) that are the subject of a request. Specifically, for
this request, we analyzed the cases reporting the ICD-10-PCS procedure
codes that describe the open drainage of subcutaneous tissue and
fascia. We then evaluated patient care costs using average costs and
average lengths of stay (based on the MedPAR data) to detect if, and in
what way, the performance of these procedures affects the resource
expenditure in those admissions in the inpatient setting, in addition
to examining other clinical factors such as procedure complexity, and
need for anesthesia administration as well as other types of sedation.
We continue to believe that the non-O.R. designation of the 22
procedure codes that describe the open drainage of subcutaneous tissue
and fascia as finalized in the FY 2022 final rule better reflects the
associated technical complexity and hospital resource use of these
procedures. Therefore, for the reasons discussed, we are not proposing
changes to the designation of the 22 codes that describe the open
drainage of subcutaneous tissue and fascia listed in the previous table
for FY 2024.
12. Proposed Changes to the MS-DRG Diagnosis Codes for FY 2024
a. Background of the CC List and the CC Exclusions List
Under the IPPS MS-DRG classification system, we have developed a
standard list of diagnoses that are considered CCs. Historically, we
developed this list using physician panels that classified each
diagnosis code based on whether the diagnosis, when present as a
secondary condition, would be considered a substantial complication or
comorbidity. A substantial complication or comorbidity was defined as a
condition that, because of its presence with a specific principal
diagnosis, would cause an increase in the length-of-stay by at least 1
day in at least 75 percent of the patients. However, depending on the
principal diagnosis of the patient, some diagnoses on the basic list of
complications and comorbidities may be excluded if they are closely
related to the principal diagnosis. In FY 2008, we evaluated each
diagnosis code to determine its impact on resource use and to determine
the most appropriate CC subclassification (NonCC, CC, or MCC)
assignment. We refer readers to sections II.D.2. and 3. of the preamble
of the FY 2008 IPPS final rule with comment period for a discussion of
the refinement of CCs in relation to the MS DRGs we adopted for FY 2008
(72 FR 47152 through 47171).
b. Overview of Comprehensive CC/MCC Analysis
In the FY 2008 IPPS/LTCH PPS final rule (72 FR 47159), we described
our process for establishing three different levels of CC severity into
which we would subdivide the diagnosis codes. The categorization of
diagnoses as a MCC, a CC, or a NonCC 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 assigning severity
levels to new codes and 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
through 19246) that with the transition to ICD-10-CM and the
significant changes that have occurred to diagnosis codes since the FY
2008 review, we
[[Page 26747]]
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
proposed 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 proposed 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 NonCC to a CC. We stated that postponing
adoption of the proposed 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 proposed 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 this methodology utilized to
mathematically measure the impact on resource use. We refer readers to
https://www.cms.gov/Outreach-and-Education/Outreach/OpenDoorForums/Downloads/10082019ListingSessionTrasncriptandQandAsandAudioFile.zip for
the transcript and audio file of the listening session. We also refer
readers to https://www.cms.gov/Medicare/MedicareFee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.html for
the supplementary file containing the mathematical data generated using
claims from the FY 2018 MedPAR file describing the impact on resource
use of specific ICD-10-CM diagnosis codes when reported as a secondary
diagnosis that was made available for the listening session.
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58550 through
58554), we discussed our 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 nine guiding principles and plan to present the
findings and proposals in future rulemaking. The nine guiding
principles are 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/post-procedure 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 or management of care or both.
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 refer readers to the FY 2021 IPPS/LTCH PPS final rule for a
complete discussion of our response to public comments regarding the
nine guiding principles.
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25175 through
25180), as another interval step in our comprehensive review of the
severity designations of ICD-10-CM diagnosis codes, we requested public
comments on a potential change to the severity level designations for
``unspecified'' ICD-10-CM diagnosis codes that we were considering
adopting for FY 2022. Specifically, we noted we were considering
changing the severity level designation of ``unspecified'' diagnosis
codes to a NonCC where there are other codes available in that code
subcategory that further specify the anatomic site. As summarized in
the FY 2022 IPPS/LTCH PPS final rule, many commenters expressed concern
with the potential severity level designation changes overall and
recommended that CMS delay any possible change to the designation of
these codes to give hospitals and their physicians time to prepare.
After careful consideration of the public comments we received, we
maintained the severity level designation of the ``unspecified''
diagnosis codes currently designated as a CC or MCC where there are
other codes available in that code subcategory that further specify the
anatomic site for FY 2022. We refer readers to the FY 2022 IPPS/LTCH
PPS final rule (86 FR 44916 through 44926) for a complete discussion of
our response to public comments regarding the potential severity level
designation changes. Instead, for FY 2022, we finalized a new Medicare
Code Editor (MCE) code edit for ``unspecified'' codes, effective with
discharges on and after April 1, 2022. We stated we believe finalizing
this new edit would provide additional time for providers to be
educated while not affecting the payment the provider is eligible to
receive. We refer the reader to section II.D.14.e. of the FY 2022 IPPS/
LTCH PPS final rule (86 FR 44940 through 44943) for the complete
discussion.
As discussed in the FY 2023 IPPS/LTCH PPS final rule (87 FR 48866),
we stated that as the new unspecified edit became effective beginning
with discharges on and after April 1, 2022, we believed it was
appropriate to not propose to change the designation of any ICD-10-CM
diagnosis codes, including the unspecified codes that are subject to
the ``Unspecified Code'' edit, as we continue our comprehensive CC/MCC
analysis to allow interested parties the time needed to become
acclimated to the new edit.
In the FY 2023 IPPS/LTCH proposed rule (87 FR 28177 through 28181),
we also requested public comments on how the reporting of diagnosis
codes in categories Z55-Z65 might improve our ability to recognize
severity of illness, complexity of illness, and/or utilization of
resources under the MS-DRGs. Consistent with the Administration's goal
of advancing health equity for all, including members of historically
underserved and under-resourced communities, as described in the
President's January 20, 2021 Executive Order 13985 on ``Advancing
Racial Equity and Support for Underserved Communities Through the
Federal Government,'' \7\ we stated we were also interested in
receiving feedback on how we might otherwise foster the documentation
and reporting of the
[[Page 26748]]
diagnosis codes describing social and economic circumstances to more
accurately reflect each health care encounter and improve the
reliability and validity of the coded data including in support of
efforts to advance health equity.
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\7\ Available at: https://www.federalregister.gov/documents/2021/01/25/2021-01753/advancing-racial-equity-and-support-for-underserved-communities-through-the-federal-government.
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We noted that social determinants of health (SDOH) are the
conditions in the environments where people are born, live, learn,
work, play, worship, and age that affect a wide range of health,
functioning, and quality-of-life outcomes and risks.\8\ The subset of Z
codes that describe the social determinants of health are found in
categories Z55-Z65 (Persons with potential health hazards related to
socioeconomic and psychosocial circumstances). These codes describe a
range of issues related--but not limited--to education and literacy,
employment, housing, ability to obtain adequate amounts of food or safe
drinking water, and occupational exposure to toxic agents, dust, or
radiation.
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\8\ Available at: https://health.gov/healthypeople/objectives-and-data/social-determinants-health.
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We received numerous public comments that expressed a variety of
views on our comment solicitation, including many comments that were
supportive, and others that offered specific suggestions for our
consideration in future rulemaking. Many commenters applauded CMS'
efforts to encourage documentation and reporting of SDOH diagnosis
codes given the impact that social risks can have on health outcomes.
These commenters stated that it is critical that physicians, other
health care professionals, and facilities recognize the impact SDOH
have on the health of their patients. Many commenters also stated that
the most immediate and important action CMS could take to increase the
use of SDOH Z codes is to finalize the evidence-based ``Screening for
Social Drivers of Health'' and ``Screen Positive Rate for Social
Drivers of Health'' measures proposed to be adopted in the Hospital
Inpatient Quality Reporting (IQR) Program. In the FY 2023 IPPS/LTCH PPS
final rule (87 FR 49202 through 49220), CMS finalized the ``Screening
for Social Drivers of Health'' and ``Screen Positive Rate for Social
Drivers of Health'' measures in the Hospital Inpatient Quality
Reporting (IQR) Program. We refer readers to the FY 2023 IPPS/LTCH PPS
final rule (87 FR 48867 through 48872) for the complete discussion of
the public comments received regarding the request for information on
SDOH diagnosis codes as well as the following section of this proposed
rule for our proposed changes to the severity level designation for
certain diagnosis codes that describe homelessness for FY 2024.
In this FY 2024 IPPS/LTCH PPS proposed rule, we continue to solicit
feedback regarding the guiding principles, as well as other possible
ways we can incorporate meaningful indicators of clinical severity. We
have made available on the CMS website updated impact on resource use
files so that the public can review the mathematical data for the
impact on resource use generated using claims from the FY 2019 through
the FY 2022 MedPAR files. The link to these files is posted on the CMS
website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software. When
providing additional feedback or comments, we encourage 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. We also continue to be
interested in receiving feedback on how we might otherwise foster the
documentation and reporting of the most specific diagnosis codes
supported by the available medical record documentation and clinical
knowledge of the patient's health condition to more accurately reflect
each health care encounter and improve the reliability and validity of
the coded data.
For new diagnosis codes approved for FY 2024, consistent with our
annual process for designating a severity level (MCC, CC or NonCC) for
new diagnosis codes, we first review the predecessor code designation,
followed by review and consideration of other factors that may be
relevant to the severity level designation, including the severity of
illness, treatment difficulty, complexity of service and the resources
utilized in the diagnosis or treatment of the condition. We note that
this process does not automatically result in the new diagnosis code
having the same designation as the predecessor code. We refer the
reader to section II.C.13 of this proposed rule for the discussion of
the proposed changes to the ICD-10-CM and ICD-10-PCS coding systems for
FY 2024.
c. Proposed Changes to Severity Levels
As discussed earlier in this section, in the FY 2023 IPPS/LTCH PPS
proposed rule (87 FR 28177 through 28181), we requested public comments
on how the reporting of diagnosis codes in categories Z55-Z65 might
improve our ability to recognize severity of illness, complexity of
illness, and/or utilization of resources under the MS-DRGs. We sought
comment on which specific SDOH Z codes were most likely to influence
(that is, increase) hospital resource utilization related to inpatient
care, including any supporting information that correlates inpatient
hospital resource use to specific SDOH Z codes. In the FY 2023 proposed
rule, we stated CMS believed a potential starting point for discussion
was consideration of the SDOH Z diagnosis codes describing homelessness
as homelessness can be reasonably expected to have an impact on
hospital utilization.
To further examine the diagnosis codes that describe SDOH, in the
FY 2023 proposed rule, we stated we reviewed the data on the impact on
resource use for diagnosis code Z59.0 (Homelessness) when reported as a
secondary diagnosis to facilitate discussion for the purposes of the
comment solicitation. We noted that prior to FY 2022, homelessness was
one of the more frequently reported codes that describe social
determinants of health. We also noted that effective FY 2022, the
subcategory was expanded and now included codes Z59.00 (Homelessness,
unspecified), Z59.01 (Sheltered homelessness), and code Z59.02
(Unsheltered homelessness).
We also displayed the impact on resource use data generated using
claims from the FY 2019 MedPAR file, FY 2020 MedPAR file and the FY
2021 MedPAR file, respectively, for the diagnosis code that describes
homelessness as a NonCC. We noted there was no data for codes Z59.01
(Sheltered homelessness) and code Z59.02 (Unsheltered homelessness) as
these codes became effective on October 1, 2021. We stated that when
examining diagnosis code Z59.0 (Homelessness) in FY 2019 and FY 2020,
the data suggested that when homelessness is reported as a secondary
diagnosis, the resources involved in caring for these patients are more
aligned with a CC than a NonCC or an MCC. However, in FY 2021, the data
suggested that the resources involved in caring for patients
experiencing homelessness are more aligned with a NonCC severity level
than a CC or an MCC severity level. We stated we were uncertain if the
data from FY 2021, in particular, reflected fluctuations that may be a
result of the public health emergency or even reduced hospitalizations
of certain conditions. We also stated we were uncertain if homelessness
may be underreported when there is not an
[[Page 26749]]
available field on the claim when other diagnoses are reported instead.
For this FY 2024 IPPS/LTCH PPS proposed rule, we again reviewed the
data on the impact on resource use for the ICD-10-CM SDOH Z codes that
describe homelessness, currently designated as NonCC, when reported as
a secondary diagnosis. The following table reflects the impact on
resource use data generated using claims from the September 2022 update
of the FY 2022 MedPAR file. We refer readers to the FY 2008 IPPS/LTCH
PPS final rule (72 FR 47159) for a complete discussion of our
historical approach to mathematically evaluate the extent to which the
presence of an ICD-10-CM code as a secondary diagnosis resulted in
increased hospital resource use, and the explanation of the columns in
the table.
[GRAPHIC] [TIFF OMITTED] TP01MY23.095
The table shows that the C1 finding is 1.75 for ICD-10-CM diagnosis
code Z59.00, 2.00 for ICD-10-CM diagnosis code Z59.01, and 2.12 for
ICD-10-CM diagnosis code Z59.02. A value close to 2.0 in column C1
suggests that the secondary diagnosis is more aligned with a CC than a
NonCC. Because the C1 values in the table are generally close to 2, the
data suggest that when these three SDOH Z codes are reported as a
secondary diagnosis, the resources involved in caring for a patient
experiencing homelessness support increasing the severity level from a
NonCC to a CC. The table also shows that the C2 finding was 2.19 for
ICD-10-CM diagnosis code Z59.00, 2.24 for ICD-10-CM diagnosis code
Z59.01, and 2.35 for ICD-10-CM diagnosis code Z59.02. A C2 value close
to 2.0 suggests the condition is more like a CC than a NonCC, but not
as significant in resource usage as an MCC when there is at least one
other secondary diagnosis that is a CC but none that is an MCC. Because
the C2 values in the table are generally close to 2, the data again
suggests that when these three SDOH Z codes are reported as a secondary
diagnosis, the resources involved in caring for a patient experiencing
homelessness support increasing the severity level from a NonCC to a
CC.
As discussed in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58550
through 58554), following the listening session on October 8, 2019, we
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 considering the nine guiding
principles identified by the workgroup, as summarized previously, to
illustrate how they might be applied in evaluating changes to the
severity designations of diagnosis codes, we note that homelessness is
a circumstance that can impede patient cooperation or management of
care or both. In addition, patients experiencing homelessness can
require a higher level of care by needing an extended length of stay.
As discussed in the FY 2023 proposed rule, healthcare needs for
patients experiencing homelessness (sheltered,\9\ unsheltered,\10\ or
unspecified) may be associated with increased resource utilization.\11\
Healthcare needs for patients experiencing homelessness may be
associated with increased resource utilization compared to other
patients due to difficulty finding discharge destinations to meet the
patient's multifaceted needs which can result in longer inpatient stays
and can have financial impacts for hospitals.\12\ Longer hospital stays
for these patients \13\ can also be associated with increased costs
because patients experiencing homelessness are less able to access care
at early stages of illness, and also may be exposed to communicable
disease and harsh climate conditions, resulting in more severe and
complex symptoms by the time they are admitted to hospitals,
potentially leading to worse health outcomes. Patients experiencing
homelessness can also be disproportionately affected by mental health
diagnoses and issues with substance use disorders. In addition,
patients experiencing homelessness may have limited or no access to
prescription medicines or over-the-counter medicines, including
adequate locations to store medications away from the heat or cold,\14\
and studies have shown difficulties adhering to medication regimens
among persons experiencing homelessness.\15\
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\9\ ``Sheltered homelessness'' refers to people experiencing
homelessness who were found in emergency shelters, safe havens,
transitional housing, or other temporary settings. HUD Press Release
No. 22-022, https://www.hud.gov/press/
press_releases_media_advisories/
hud_no_22_022#:~:text=HUD%20Releases%202021%20Annual%20Homeless%20Ass
essment%20Report%20Part%201,-
Report%20Suggests%20that&text=%E2%80%9CSheltered%20homelessness%E2%80
%9D%20refers%20to%20people,housing%2C%20or%20other%20temporary%20sett
ings. (accessed October 2022).
\10\ Unsheltered homelessness refers to ``a primary nighttime
residence that is a public or private place not designed for or
ordinarily used as a regularly sleeping accommodation for human
beings, including a car, park, abandoned building, bus or train
station, airport, or camping ground.'' HUD. 2011. HEARTH Homeless
Definition final rule, 24 CFR 578.3, https://www.govinfo.gov/content/pkg/FR-2011-12-05/pdf/2011-30942.pdf (accessed October
2022).
\11\ Koh HK, O'Connell JJ. Improving Health Care for Homeless
People. JAMA. 2016;316(24):2586-2587. doi:10.1001/jama.2016.18760.
\12\ Canham SL, Custodio K, Mauboules C, Good C, Bosma H. Health
and Psychosocial Needs of Older Adults Who Are Experiencing
Homelessness Following Hospital Discharge. Gerontologist. 2020 May
15;60(4):715-724. doi: 10.1093/geront/gnz078. PMID: 31228238.
https://pubmed.ncbi.nlm.nih.gov/31228238/.
\13\ Hwang SW, Weaver J, Aubry T. Hospital costs and length of
stay among homeless patients admitted to medical, surgical, and
psychiatric services. Med Care. 2011;49:350-354. https://journals.lww.com/lww-medicalcare/Fulltext/2019/01000/Trends,_Causes,_and_Outcomes_of_Hospitalizations.4.aspx.
\14\ Sun R (AHRQ), Karaca Z (AHRQ), Wong HS (AHRQ).
Characteristics of Homeless Individuals Using Emergency Department
Services in 2014. HCUP Statistical Brief #229. October 2017. Agency
for Healthcare Research and Quality, Rockville, MD. www.hcup-us.ahrq.gov/reports/statbriefs/sb229-Homeless-ED-Visits-2014.pdf.
\15\ Coe, Antoinette B. Coe et al. ``Medication Adherence
Challenges Among Patients Experiencing Homelessness in a Behavioral
Health Clinic. https://journals.lww.com/lww-medicalcare/Fulltext/2019/01000/Trends,_Causes,_and_Outcomes_of_Hospitalizations.4.aspx.
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Therefore, after considering the C1 and C2 ratings of the three
ICD-10-CM diagnosis codes that describe homelessness and consideration
of the nine guiding principles, we are proposing to change the severity
level designation for diagnosis codes Z59.00
[[Page 26750]]
(Homelessness, unspecified), Z59.01 (Sheltered homelessness), and
Z59.02 (Unsheltered homelessness) from NonCC to CC for FY 2024. As
discussed in the FY 2023 IPPS/LTCH PPS final rule, if SDOH Z codes are
not consistently reported in inpatient claims data, our methodology
utilized to mathematically measure the impact on resource use, as
described previously, may not adequately reflect what additional
resources were expended by the hospital to address these SDOH
circumstances in terms of requiring clinical evaluation, extended
length of hospital stay, increased nursing care or monitoring or both,
and comprehensive discharge planning. We also expect that SDOH Z code
reporting may continue to increase for a number of reasons, for
example, newer SDOH screening performed as a result of new quality
measures in the Hospital Inpatient Quality Reporting program. We may
consider proposed changes for other SDOH codes in the future based on
our analysis of the impact on resource use, per our methodology, as
previously described, and consideration of the guiding principles. We
also continue to be interested in receiving feedback on how we might
otherwise foster the documentation and reporting of the diagnosis codes
describing social and economic circumstances to more accurately reflect
each health care encounter and improve the reliability and validity of
the coded data including in support of efforts to advance health
equity.
Feedback and other suggestions may be submitted by October 20, 2023
and directed to the electronic intake system, Medicare Electronic
Application Request Information SystemTM
(MEARISTM) at: https://mearis.cms.gov/public/home.
Additionally, for this FY 2024 IPPS/LTCH PPS proposed rule, we
received a request to change the severity level designations of three
ICD-10-CM diagnosis codes. The requestor suggested the severity level
of ICD-10-CM diagnosis code K76.72 (Hepatic encephalopathy) be changed
from NonCC to CC or MCC; N14.11 (Contrast-induced nephropathy) be
changed from NonCC to CC; and S06.2XAA (Diffuse traumatic brain injury
with loss of consciousness status unknown, initial encounter) be
changed from CC to MCC.
We note that these three diagnosis codes became effective with
discharges on and after October 1, 2022 (FY 2023) and the current
claims data from the September 2022 update of the FY 2022 MedPAR file
do not yet reflect these new diagnosis codes. The proposed and
finalized severity level designations for these ICD-10-CM diagnosis
codes were displayed in Table 6A- New Diagnosis Codes (associated with
the FY 2023 proposed rule and final rule and available on the CMS
website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS). As discussed earlier in this section, for
new diagnosis codes approved for each fiscal year, consistent with our
annual process for designating a severity level (MCC, CC or NonCC) for
new diagnosis codes, in establishing the severity level of these codes,
we first reviewed the predecessor code designation, followed by review
and consideration of other factors that may be relevant to the severity
level designation, including the severity of illness, treatment
difficulty, complexity of service and the resources utilized in the
diagnosis or treatment of the condition.
Specifically, the predecessor code for K76.72 (Hepatic
encephalopathy) was diagnosis code K72.90 (Hepatic failure, unspecified
without coma) which is designated as a NonCC. When we reviewed and
considered the factors as described previously, we did not believe that
the resources required for hepatic encephalopathy exceeded the
resources required for patients with hepatic failure, unspecified
without coma as both conditions require treatment to rid the body of
toxins. Therefore, our proposed and finalized severity level
designation for hepatic encephalopathy was also a NonCC for FY 2023.
Similarly, the predecessor code for N14.11 (Contrast-induced
nephropathy) was diagnosis code N14.1 (Nephropathy induced by other
drugs, medicaments and biological substances) which was designated as a
NonCC. After review and consideration of the factors as described
previously, we did not believe that the resources required for
contrast-induced nephropathy exceeded the resources required for
patients with nephropathy induced by other drugs, medicaments and
biological substances, as code N14.11 was created as an expansion of
the subcategory to identify contrast dyes as the substance causing
nephropathy. Before the implementation of N14.11, the diagnosis was
coded with N14.1. Therefore, our proposed and finalized severity level
designation for contrast-induced nephropathy was also a NonCC. Lastly,
the predecessor code for S06.2XAA (Diffuse traumatic brain injury with
loss of consciousness status unknown, initial encounter) was diagnosis
code S06.2X9A (Diffuse traumatic brain injury with loss of
consciousness of unspecified duration, initial encounter) which is
designated as a CC. When we reviewed and considered the factors as
described previously, we did not believe that the resources required
for diffuse traumatic brain injury with loss of consciousness status
unknown, initial encounter exceeded the resources required for diffuse
traumatic brain injury with loss of consciousness of unspecified
duration, initial encounter, therefore our proposed and finalized
severity level designation for diffuse traumatic brain injury with loss
of consciousness status unknown, initial encounter was also a CC.
As stated in prior rulemaking (85 FR 58560), generally, the
proposed severity level ultimately depends on clinical judgement and,
where the data is available, the empirical analysis of the additional
resources associated with the secondary diagnosis. The impact of the
secondary diagnosis is dependent on the principal diagnosis reported,
with which it is associated. If the secondary diagnosis is reported
primarily with a principal diagnosis that reflects serious illness with
treatment complexity, then the marginal contribution of the secondary
diagnosis to the overall resource use may actually be relatively small.
We continue to believe that in the absence of claims data, the severity
designation of these three codes as established in FY 2023 rulemaking
is appropriate.
We believe that claims data reflecting the reporting of these new
diagnosis codes are needed for analysis prior to proposing changes to
these three diagnosis codes. As stated earlier in this section, we plan
to continue a comprehensive CC/MCC analysis, using a combination of
mathematical analysis of claims data and the application of nine
guiding principles. We believe it is appropriate to consider these
requests in connection with our continued comprehensive CC/MCC analysis
in future rulemaking, using the available claims data, rather than
proposing to change the designation of these individual ICD-10-CM
diagnosis codes in the absence of such data at this time. We will
consider these individual requests received for changes to severity
level designations as we continue our comprehensive CC/MCC analysis and
will provide more detail in future rulemaking.
d. Proposed Additions and Deletions to the Diagnosis Code Severity
Levels for FY 2024
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
[[Page 26751]]
severity levels list for FY 2024 and are available on the CMS website
at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html:
Table 6I.1--Proposed Additions to the MCC List--FY 2024;
Table 6I.2--Proposed Deletions to the MCC List--FY 2024;
Table 6J.1--Proposed Additions to the CC List--FY 2024; and
Table 6J.2--Proposed Deletions to the CC List--FY 2024
e. Proposed CC Exclusions List for FY 2024
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 40.1 CC Exclusion List is included as
Appendix C in the ICD-10 MS-DRG Definitions Manual, which is available
on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html, and includes two lists
identified as Part 1 and Part 2. Part 1 is the list of all diagnosis
codes that are defined as a CC or MCC when reported as a secondary
diagnosis. For all diagnosis codes on the list, a link is provided to a
collection of diagnosis codes which, when reported as the principal
diagnosis, would cause the CC or MCC diagnosis to be considered as a
NonCC. Part 2 is the list of diagnosis codes designated as an MCC only
for patients discharged alive; otherwise, they are assigned as a NonCC.
We are proposing additional changes to the ICD-10 MS-DRGs Version
41 CC Exclusion List based on the diagnosis and procedure code updates
as discussed in section II.C.13. of this FY 2024 IPPS/LTCH PPS proposed
rule. Therefore, we have developed Table 6G.1.--Proposed Secondary
Diagnosis Order Additions to the CC Exclusions List--FY 2024; Table
6G.2.--Proposed Principal Diagnosis Order Additions to the CC
Exclusions List--FY 2024; Table 6H.1.--Proposed Secondary Diagnosis
Order Deletions to the CC Exclusions List--FY 2024; and Table 6H.2.--
Proposed Principal Diagnosis Order Deletions to the CC Exclusions
List--FY 2024. For Table 6G.1, each secondary diagnosis code proposed
for addition to the CC Exclusion List is shown with an asterisk and the
principal diagnoses proposed to exclude the secondary diagnosis code
are provided in the indented column immediately following it. For Table
6G.2, each of the principal diagnosis codes for which there is a CC
exclusion is shown with an asterisk and the conditions proposed for
addition to the CC Exclusion List that will not count as a CC are
provided in an indented column immediately following the affected
principal diagnosis. For Table 6H.1, each secondary diagnosis code
proposed for deletion from the CC Exclusion List is shown with an
asterisk followed by the principal diagnosis codes that currently
exclude it. For Table 6H.2, each of the principal diagnosis codes is
shown with an asterisk and the proposed deletions to the CC Exclusions
List are provided in an indented column immediately following the
affected principal diagnosis. Tables 6G.1., 6G.2., 6H.1., and 6H.2.
associated with this proposed rule are available on the CMS website at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.
We also note that in our review of the CC Exclusion List, we
identified a total of 668 diagnosis codes currently listed on various
principal diagnosis collection lists that are not able to be reported
as a principal diagnosis based on the ICD-10-CM Official Guidelines for
Coding and Reporting. In addition, these codes are listed on the
Medicare Code Editor (MCE) code edit lists for Unacceptable Principal
Diagnosis or Manifestations not allowed as Principal Diagnosis.
Therefore, we believe it is appropriate to remove these codes from the
affected principal diagnosis collection lists for V41 of the GROUPER.
Because we were unable to reflect these changes in Table 6G.1., 6G.2.,
6H.1., or 6H.2 at the time of the development of this proposed rule, we
are providing a supplementary table, Table 6H.3--Principal Diagnosis
Codes for Removal from CC Exclusion List--FY 2024 listing each of these
668 diagnosis codes, including the code descriptions, the applicable
MCE edit, and the current principal diagnosis collection list(s) where
each code is currently listed and from which the code would be removed
for the final FY 2024 V41 GROUPER. Table 6H.3 associated with this
proposed rule is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.
13. Proposed Changes to the ICD-10-CM and ICD-10-PCS Coding Systems
To identify new, revised and deleted diagnosis and procedure codes,
for FY 2024, 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 proposed rule.
These tables are not published in the Addendum to this proposed
rule, but are available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html
as described in section VI. of the Addendum to this proposed rule. As
discussed in section II.C.16. of the preamble of this proposed rule,
the code titles are adopted as part of the ICD-10 (previously ICD-9-CM)
Coordination and Maintenance Committee meeting process. Therefore,
although we publish the code titles in the IPPS proposed and final
rules, they are not subject to comment in the proposed or final rules.
[[Page 26752]]
We are proposing 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. In addition, the
proposed severity level designations for the new diagnosis codes are
set forth in Table 6A. and the proposed O.R. status for the new
procedure codes are set forth in Table 6B. Consistent with our
established process, we examined the MS-DRG assignment and the
attributes (severity level and O.R. status) of the predecessor
diagnosis or procedure code, as applicable, to inform our proposed
assignments and designations.
Specifically, we review the predecessor code and MS-DRG assignment
most closely associated with the new diagnosis or procedure code, and
in the absence of claims data, we consider other factors that may be
relevant to the MS-DRG assignment, including the severity of illness,
treatment difficulty, complexity of service and the resources utilized
in the diagnosis and/or treatment of the condition. We note that this
process does not automatically result in the new diagnosis or procedure
code being proposed for assignment to the same MS-DRG or to have the
same designation as the predecessor code.
We are making available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html
the following tables associated with this proposed rule:
Table 6A.--New Diagnosis Codes--FY 2024;
Table 6B.--New Procedure Codes--FY 2024;
Table 6C.--Invalid Diagnosis Codes--FY 2024;
Table 6E.--Revised Diagnosis Code Titles--FY 2024;
Table 6G.1.--Proposed Secondary Diagnosis Order Additions to
the CC Exclusions List--FY 2024;
Table 6G.2.--Proposed Principal Diagnosis Order Additions to
the CC Exclusions List--FY 2024;
Table 6H.1.--Proposed Secondary Diagnosis Order Deletions to
the CC Exclusions List--FY 2024;
Table 6H.2.--Proposed Principal Diagnosis Order Deletions to
the CC Exclusions List--FY 2024;
Table 6I.1.--Proposed Additions to the MCC List--FY 2024;
Table 6I.2.-Proposed Deletions to the MCC List--FY 2024;
Table 6J.1.--Proposed Additions to the CC List--FY 2024; and
Table 6J.2.--Proposed Deletions to the CC List--FY 2024.
14. Proposed Changes to the Medicare Code Editor (MCE)
The Medicare Code Editor (MCE) is a software program that detects
and reports errors in the coding of Medicare claims data. Patient
diagnoses, procedure(s), and demographic information are entered into
the Medicare claims processing systems and are subjected to a series of
automated screens. The MCE screens are designed to identify cases that
require further review before classification into an MS-DRG.
As discussed in the FY 2023 IPPS/LTCH PPS final rule (87 FR 48874),
we made available the FY 2023 ICD-10 MCE Version 40 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 40
(and ICD-10 MS-DRGs) are posted on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.
For this FY 2024 IPPS/LTCH PPS proposed rule, we received one MCE
request related to the Sex Conflict edit by the October 20, 2022
deadline, as discussed further in this section of the preamble of this
proposed rule. Additionally, we discuss the proposals we are making
based on our internal review and analysis.
a. External Causes of Morbidity Codes as Principal Diagnosis
In the MCE, the external cause codes (V, W, X, or Y codes) describe
the circumstance causing an injury, not the nature of the injury, and
therefore should not be used as a principal diagnosis. As discussed in
section II.C.12. of the preamble of this proposed 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,
2023. We are proposing to add the ICD-10-CM diagnosis codes shown in
Table 6P.9a associated with this proposed rule and available on the CMS
website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS to the edit code list for the External causes
of morbidity codes as principal diagnosis edit.
b. Age Conflict Edit
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).
(1) Perinatal/Newborn Diagnosis Category
Under the ICD-10 MCE, the Perinatal/Newborn diagnoses category for
the Age conflict edit considers the age range of 0 years only. For that
reason, the diagnosis codes on this Age conflict edit list would be
expected to apply to conditions or disorders which will only occur
during the perinatal or newborn period of age 0.
As discussed in section II.C.12. of the preamble of this proposed
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, 2023. We are proposing to add new ICD-10-CM
diagnosis codes Z05.81 (Observation and evaluation of newborn for
suspected condition related to home physiologic monitoring device ruled
out) and Z05.89 (Observation and evaluation of newborn for other
specified suspected condition ruled out) to the edit code list for the
Perinatal/Newborn diagnoses category under the Age conflict edit.
In addition, as discussed in section II.C.12. of the preamble of
this proposed rule, Table 6C.--Invalid Diagnosis Codes, lists the
diagnosis codes that are no longer effective October 1, 2023. Included
in this table is ICD-10-CM diagnosis code Z05.8 (Observation and
evaluation of newborn for other specified suspected condition ruled
out) that is currently listed on the edit code list for the Perinatal/
Newborn diagnoses
[[Page 26753]]
category under the Age conflict edit. We are proposing to delete this
code from the Perinatal/Newborn diagnoses edit code list.
(2) Maternity Diagnoses
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.C.12. of the preamble of this proposed
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, 2023. We are proposing to add new ICD-10-CM
diagnosis codes to the edit code list for the Maternity diagnoses
category under the Age conflict edit.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP01MY23.096
In addition, as discussed in section II.C.12. of the preamble of
this proposed rule, Table 6C.--Invalid Diagnosis Codes, lists the
diagnosis codes that are no longer effective October 1, 2023. Included
in this table is ICD-10-CM diagnosis code O90.4 (Postpartum acute
kidney failure) that is currently listed on the edit code list for the
Maternity diagnoses category under the Age conflict edit. We are
proposing to delete this code from the Maternity diagnoses edit code
list.
(3) Adult Diagnoses
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.C.12. of the preamble of this proposed
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, 2023. We are proposing to add the following new
ICD-10-CM diagnosis codes to the edit code list for the Adult diagnoses
category under the Age conflict edit.
[[Page 26754]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.097
[[Page 26755]]
c. Sex Conflict Edit
We received a request to reconsider sex conflict edits in
connection with concerns related to claims processing for transgender
individuals. The requestor raised concerns that the current edit is not
clinically accurate and is inconsistent with equitable documentation of
gender at the time of service. The requestor expressed concerns that
automated systems are contributing to administrative burden for
obstetrician-gynecologists because the sex conflict edit requires
physicians to choose the sex assigned at birth only and that hospitals
must include condition code 45 to override the edit for appropriate
payment for certain surgeries or procedures. The requestor described
that claims are inappropriately denied due to the edit singling out
transgender individuals, contributing to continued alienation of
transgender patients. The requestor further shared that obstetrician-
gynecologists have indicated that to provide high-quality, patient-
centered care, they need to be able to document a patient's gender
identity along with their sex.\16\ We note that the requester raises a
number of issues that are related to multiple prospective payment
systems and broader aspects of health care, such as the electronic
health record.
---------------------------------------------------------------------------
\16\ We note that the requester used the phrase ``gender
identity along with their sex''. We believe the requester was
referring to ``sex assigned at birth'' in this context.
---------------------------------------------------------------------------
We share the requester's concern that the original design of the
sex conflict edits is descriptive of a patient's sex assigned at birth
as submitted on a claim, which may not be fully reflective of the
practice of medicine and patient-doctor interactions, as well that CMS
policy and communications about the use of condition code 45 for
institutional claims has not been re-examined in some time. As we state
in the CMS Framework for Health Equity, 2022-2032,\17\ we strive to
identify and remedy systemic barriers to equity so that every one of
the people we serve has a fair and just opportunity to attain their
optimal health regardless of race, ethnicity, disability, sexual
orientation, gender identity, socioeconomic status, geography,
preferred language, or other factors that affect access to care and
health outcomes. CMS is committed to looking holistically at the
concerns raised by the commenter across settings of care and will
consider how to address for future rulemaking or guidance, and we thank
the commenter for continuing to share firsthand experiences.
---------------------------------------------------------------------------
\17\ https://www.cms.gov/files/document/cms-framework-health-equity-2022.pdf.
---------------------------------------------------------------------------
d. Manifestation Code as Principal Diagnosis Edit
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.C.12. of the preamble of this proposed
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, 2023. Included in this table are the following
new ICD-10-CM diagnosis codes that we are proposing to add to the edit
code list for the Manifestation code as principal diagnosis edit,
because the disease itself would be required to be reported first.
[GRAPHIC] [TIFF OMITTED] TP01MY23.098
In addition, as discussed in section II.C.12. of the preamble of
this proposed rule, Table 6C.--Invalid Diagnosis Codes, lists the
diagnosis codes that are no longer effective October 1, 2023. Included
in this table is ICD-10-CM diagnosis code H36 (Retinal disorders in
diseases classified elsewhere) that is currently listed on the edit
code list for the Manifestation code as principal diagnosis edit. We
are proposing to delete this code from the Manifestation code as
principal diagnosis edit code list.
e. Unacceptable Principal Diagnosis Edit
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.C.12. of the preamble of this proposed
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, 2023. We are proposing to add the following new
ICD-10-CM diagnosis codes to the Unacceptable Principal Diagnosis edit
code list.
BILLING CODE 4120-01-P
[[Page 26756]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.099
In addition, as discussed in section II.C.12. of the preamble of
this proposed rule, Table 6C.--Invalid Diagnosis Codes, lists the
diagnosis codes that are no longer effective October 1, 2023. Included
in this table are the following
[[Page 26757]]
ICD-10-CM diagnosis codes that are currently listed on the Unacceptable
Principal Diagnosis edit code list. We are proposing to delete these
codes from the Unacceptable Principal Diagnosis edit code list.
[GRAPHIC] [TIFF OMITTED] TP01MY23.100
f. Unspecified Code
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 44940 through
44943), we finalized the implementation of a new Unspecified code edit,
effective with discharges on and after April 1, 2022. Unspecified codes
exist in the ICD-10-CM classification for circumstances when
documentation in the medical record does not provide the level of
detail needed to support reporting a more specific code. However, in
the inpatient setting, there should generally be very limited and rare
circumstances for which the laterality (right, left, bilateral) of a
condition is unable to be documented and reported.
As discussed in section II.C.12. of the preamble of this proposed
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, 2023. We are proposing to add the following new
ICD-10-CM diagnosis codes to the Unspecified code edit list.
[GRAPHIC] [TIFF OMITTED] TP01MY23.101
[[Page 26758]]
In addition, we identified four diagnosis codes that were
inadvertently omitted from the Unspecified code edit list effective
with discharges on and after April 1, 2022. We therefore are proposing
to also add the following ICD-10-CM diagnosis codes to the Unspecified
code edit list effective with discharges on and after October 1, 2023.
[GRAPHIC] [TIFF OMITTED] TP01MY23.102
g. Future Enhancement
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 new electronic intake system, Medicare Electronic Application
Request Information System (MEARISTM), discussed in section
II.C.1.b. of the preamble of this proposed rule at: https://mearis.cms.gov/public/home, by October 20, 2023.
15. Proposed Changes to Surgical Hierarchies
Some inpatient stays entail multiple surgical procedures, each one
of which, occurring by itself, could result in assignment of the case
to a different MS-DRG within the MDC to which the principal diagnosis
is assigned. Therefore, it is necessary to have a decision rule within
the GROUPER by which these cases are assigned to a single MS-DRG. The
surgical hierarchy, an ordering of surgical classes from most resource-
intensive to least resource-intensive, performs that function.
Application of this hierarchy ensures that cases involving multiple
surgical procedures are assigned to the MS-DRG associated with the most
resource-intensive surgical class.
A surgical class can be composed of one or more MS-DRGs. For
example, in MDC 11, the surgical class ``kidney transplant'' consists
of a single MS-DRG (MS-DRG 652) and the class ``major bladder
procedures'' consists of three MS-DRGs (MS-DRGs 653, 654, and 655).
Consequently, in many cases, the surgical hierarchy has an impact
on more than one MS-DRG. The methodology for determining the most
resource-intensive surgical class involves weighting the average
resources for each MS-DRG by frequency to determine the weighted
average resources for each surgical class. For example, assume surgical
class A includes MS-DRGs 001 and 002 and surgical class B includes MS-
DRGs 003, 004, and 005. Assume also that the average costs of MS-DRG
001 are higher than that of MS-DRG 003, but the average costs of MS-
DRGs 004 and 005 are higher than the average costs of MS-DRG 002. To
determine whether surgical class A should be higher or lower than
surgical class B in the surgical hierarchy, we would weigh the average
costs of each MS-DRG in the class by frequency (that is, by the number
of cases in the MS-DRG) to determine average resource consumption for
the surgical class. The surgical classes would then be ordered from the
class with the highest average resource utilization to that with the
lowest, with the exception of ``other O.R. procedures'' as discussed in
this proposed rule.
This methodology may occasionally result in assignment of a case
involving multiple procedures to the lower-weighted MS-DRG (in the
highest, most resource-intensive surgical class) of the available
alternatives. However, given that the logic underlying the surgical
hierarchy provides that the GROUPER search for the procedure in the
most resource-intensive surgical class, in cases involving multiple
procedures, this result is sometimes unavoidable.
We note that, notwithstanding the foregoing discussion, there are a
few instances when a surgical class with a lower average cost is
ordered above a surgical class with a higher average cost. For example,
the ``other O.R. procedures'' surgical class is uniformly ordered last
in the surgical hierarchy of each MDC in which it occurs, regardless of
the fact that the average costs for the MS-DRG or MS-DRGs in that
surgical class may be higher than those for other surgical classes in
the MDC. The ``other O.R. procedures'' class is a group of procedures
that are only infrequently related to the diagnoses in the MDC, but are
still occasionally performed on patients with cases assigned to the MDC
with these diagnoses. Therefore, assignment to these surgical classes
should only occur if no other surgical class more closely related to
the diagnoses in the MDC is appropriate.
A second example occurs when the difference between the average
costs for two surgical classes is very small. We have found that small
differences generally do not warrant reordering of the hierarchy
because, as a result of reassigning cases on the basis of the hierarchy
change, the average costs are likely to shift such that the higher-
ordered surgical class has lower average costs than the class ordered
below it.
Based on the changes that we are proposing to make for FY 2024, as
discussed in section II.C. of the preamble of this proposed rule, we
are proposing to modify the existing surgical hierarchy for FY 2024 as
follows.
We are proposing to revise the surgical hierarchy for the MDC 04
(Diseases and Disorders of the Respiratory System) MS-DRGs as follows:
In the MDC 04 MS-DRGs, we are proposing to sequence proposed new MS-DRG
173 (Ultrasound Accelerated and Other Thrombolysis with Principal
Diagnosis Pulmonary Embolism) above MDC 04 MS-DRGs 166, 167, and 168
(Other Respiratory System O.R. Procedures with MCC, with CC, and
without CC/MCC, respectively) and below MS-DRGs 163, 164, and 165
(Major Chest Procedures with MCC, with CC, and without CC/MCC,
respectively).
As discussed in section II.C.2.b. of the preamble of this proposed
rule, we are
[[Page 26759]]
proposing to revise the surgical hierarchy for the MDC 05 (Diseases and
Disorders of the Circulatory System) MS-DRGs as follows: In the MDC 05
MS-DRGs, we are proposing to sequence proposed new MS-DRG 212
(Concomitant Aortic and Mitral Valve Procedures) above MS-DRGs 216,
217, 218, 219, 220, and 221 (Cardiac Valve & Other Major Cardiothoracic
Procedure with and without Cardiac Catheterization, with MCC, with CC,
without CC/MCC, respectively) and below MS-DRG 215 (Other Heart Assist
System Implant). As discussed in section II.C.4. of the preamble of
this proposed rule, we are proposing to delete 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). Based on the changes we are proposing to make for
those MS-DRGs in MDC 05, we are proposing to sequence proposed new MS-
DRG 275 (Cardiac Defibrillator Implant with Cardiac Catheterization and
MCC) above proposed new MS-DRG 276 (Cardiac Defibrillator Implant with
MCC) and below MS-DRGs 231, 232, 233, 234, 235 and 236 (Coronary Bypass
with or without PTCA, with or without Cardiac Catheterization or Open
Ablation, with and without MCC, respectively). We are proposing to
sequence proposed new MS-DRG 276 (Cardiac Defibrillator Implant with
MCC) above proposed new MS-DRG 277 (Cardiac Defibrillator Implant
without MCC) and below proposed new MS-DRG 275 (Cardiac Defibrillator
Implant with Cardiac Catheterization and MCC). We are proposing to
sequence proposed new MS-DRG 277 (Cardiac Defibrillator Implant without
MCC) above MS-DRGs 266 and 267 (Endovascular Cardiac Valve Replacement
and Supplement Procedures with MCC and without MCC, respectively) and
below proposed new MS-DRG 276 (Cardiac Defibrillator Implant with MCC).
As discussed in section II.C.4. of the preamble of this proposed
rule, we are proposing to delete MDC 05 MS-DRGs 246 and 247
(Percutaneous Cardiovascular Procedures with Drug-Eluting Stent with
MCC or 4+ Arteries or Stents and without MCC, respectively). We are
also proposing to delete MDC 05 MS-DRGs 248 and 249 (Percutaneous
Cardiovascular Procedures with Non-Drug-Eluting Stent with MCC or 4+
Arteries or Stents and without MCC, respectively). We are proposing to
revise the titles for MS-DRGs 250 and 251 from ``Percutaneous
Cardiovascular Procedures without Coronary Artery Stent with MCC and
without MCC, respectively'' to ``Percutaneous Cardiovascular Procedures
without Intraluminal Device with MCC and without MCC, respectively.''
Based on the changes we are proposing to make for those MS-DRGs in MDC
05, we are proposing to sequence proposed new MS-DRGs 323 and 324
(Coronary Intravascular Lithotripsy with Intraluminal Device with MCC
and without MCC, respectively) above proposed new MS-DRG 325 (Coronary
Intravascular Lithotripsy without Intraluminal Device) and below MS-
DRGs 273 and 274 (Percutaneous and Other Intracardiac Procedures with
MCC and without MCC, respectively). We are proposing to sequence
proposed new MS-DRG 325 (Coronary Intravascular Lithotripsy without
Intraluminal Device) above proposed new MS-DRGs 321 and 322
(Percutaneous Cardiovascular Procedures with Intraluminal Device, with
MCC or 4+ Arteries/Intraluminal Devices and without MCC, respectively)
and below proposed new MS-DRGs 323 and 324 (Coronary Intravascular
Lithotripsy with Intraluminal Device with MCC and without MCC,
respectively). We are proposing to sequence proposed new MS-DRGs 321
and 322 (Percutaneous Cardiovascular Procedures with Intraluminal
Device with MCC or 4+ Arteries/Intraluminal Devices and without MCC,
respectively), above MS-DRGs 250 and 251 (Percutaneous Cardiovascular
Procedures without Intraluminal Device with MCC and without MCC,
respectively) and below proposed new MS-DRG 325 (Coronary Intravascular
Lithotripsy without Intraluminal Device).
In addition, based on the changes that we are proposing to make as
discussed in section II.C.8.a. of the preamble of this proposed rule,
we are also proposing to sequence proposed new MDC 05 MS-DRGs 278 and
279 (Ultrasound Accelerated and Other Thrombolysis of Peripheral
Vascular Structures with MCC and without MCC, respectively) above MDC
05 MS-DRGs 252, 253, and 254 (Other Vascular Procedures with MCC, with
CC, and without CC/MCC, respectively) and below MS-DRGs 250 and 251
(Percutaneous Cardiovascular Procedures without Intraluminal Device
with and without MCC, respectively).
As discussed in section II.C.4. of the preamble of this proposed
rule, we are proposing to delete MS-DRGs 338, 339, and 340
(Appendectomy with Complicated Principal Diagnosis with MCC, with CC,
and without CC/MCC, respectively) and MS-DRGs 341, 342, and 343
(Appendectomy without Complicated Principal Diagnosis with MCC, with
CC, and without CC/MCC, respectively). Based on the changes we are
proposing to make for those MS-DRGs in MDC 06 (Diseases and Disorders
of the Digestive System), we are proposing to revise the surgical
hierarchy for MDC 06 as follows: In MDC 06, we are proposing to
sequence proposed new MS-DRGs 397, 398, and 399 (Appendix Procedures
with MCC, with CC, and without CC/MCC, respectively) above MS-DRGs 344,
345, and 346 (Minor Small and Large Bowel Procedures with MCC, with CC,
and without CC/MCC, respectively) and below MS-DRGs 335, 336, and 337
(Peritoneal Adhesiolysis with MCC, with CC, and without CC/MCC,
respectively).
Lastly, as discussed in section II.C.2.b. of the preamble of this
proposed rule, we are proposing to revise the title for MDC 16
(Diseases and Disorders of Blood, Blood Forming Organs and Immunologic
Disorders) MS-DRGs 799, 800, and 801 from ``Splenectomy with MCC, with
CC, and without CC/MCC, respectively'' to ``Splenic Procedures with
MCC, with CC, and without CC/MCC, respectively.''
Our proposal for Appendix D MS-DRG Surgical Hierarchy by MDC and
MS-DRG of the ICD-10 MS-DRG Definitions Manual Version 41 is
illustrated in the following tables.
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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 Centers for Disease Control and Prevention's (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: http://cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/codes.html. The official
list of ICD-10-CM and ICD-10-PCS codes can be found on the CMS website
at: http://www.cms.gov/Medicare/Coding/ICD10/index.html.
The NCHS has lead responsibility for the ICD-10-CM and ICD-9-CM
diagnosis codes included in the Tabular List and Alphabetic Index for
Diseases, while CMS has lead responsibility for the ICD-10-PCS and ICD-
9-CM procedure codes included in the Tabular List and Alphabetic Index
for Procedures.
The Committee encourages participation in the previously mentioned
process by health-related organizations and other interested parties.
In this regard, the Committee holds public meetings for discussion of
educational issues and proposed coding changes. These meetings provide
an opportunity for representatives of recognized organizations in the
coding field, such as the American Health Information Management
Association (AHIMA), the American Hospital Association (AHA), and
various physician specialty groups, as well as individual physicians,
health information management professionals, and other members of the
public, to contribute ideas on coding matters. After considering the
opinions expressed during 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 2024 at a public meeting held on September 13-14,
2022, and finalized the coding changes after consideration of comments
received at the meetings and in writing by November 14, 2022.
The Committee held its 2023 meeting on March 7-8, 2023. The
deadline for submitting comments on these code proposals was April 7,
2023. 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 2023
would be included in the October 1, 2023 update to the ICD-10-CM
diagnosis and ICD-10-PCS procedure code sets.
As discussed in earlier sections of the preamble of this proposed
rule, there are new, revised, and deleted ICD-10-CM diagnosis codes and
ICD-10-PCS procedure codes that are captured in Table 6A.--New
Diagnosis Codes, Table 6B.--New Procedure Codes, Table 6C.--Invalid
Diagnosis Codes, and Table 6E.--Revised Diagnosis Code Titles for this
proposed rule, which are available on the CMS website at: https://
www.cms.gov/medicare/medicare-fee-for-service-payment/
acuteinpatientpps. The code titles are adopted as part of the ICD-10
Coordination and Maintenance Committee process. Therefore, although we
make the code titles available in these tables for the IPPS proposed
rule, they are not subject to comment in the proposed rule. Because of
the length of these tables, they are not published in the Addendum to
the proposed rule. Rather, they are available via the internet as
discussed in section VI. of the Addendum to the proposed rule.
Recordings for the virtual meeting discussions of the procedure
codes at the Committee's September 13-14, 2022 meeting and the March 7-
8, 2023 meeting can be obtained from the CMS website at: https://www.cms.gov/Medicare/Coding/ICD10/C-and-M-Meeting-Materials. The
materials for the discussions relating to diagnosis codes at the
September 13-14, 2022 meeting and March 7-8, 2023 meeting can be found
at: http://www.cdc.gov/nchs/icd/icd10cm_maintenance.html. These
websites also provide detailed information about the Committee,
including information on requesting a new code, participating in a
Committee meeting, timeline requirements and meeting dates.
We encourage commenters to submit questions and comments on coding
issues involving diagnosis codes via email to: [email protected].
Questions and comments concerning the procedure codes should be
submitted via email to: [email protected].
In an effort to better enable the collection of health-related
social needs (HRSNs), defined as individual-level, adverse social
conditions that negatively impact a person's health or healthcare, are
significant risk factors associated with worse health outcomes as well
as increased healthcare utilization, the Centers for Disease Control
and Prevention's (CDC) National Center for Health Statistics (NCHS) is
implementing 42 new diagnosis codes into the ICD-10-CM classification,
for reporting effective April 1, 2023. The diagnosis codes are as
follows:
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We refer the reader to the CDC web page at https://www.cdc.gov/nchs/icd/Comprehensive-Listing-of-ICD-10-CM-Files.htm for additional
details regarding the implementation of these new diagnosis codes.
We provided the MS-DRG assignments for the 42 diagnosis codes
effective with discharges on and after April 1, 2023, 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. The
assignments for the previously listed diagnosis codes are reflected in
Table 6A.--New Diagnosis Codes (which is available on the CMS website
at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS). As with the other new diagnosis codes and MS-DRG
assignments included in Table 6A in association with this proposed
rule, we are soliciting public comments on the most appropriate MDC,
MS-DRG, and severity level assignments for these codes for FY 2024, as
well as any other options for the GROUPER logic.
In addition, CMS implemented 34 new procedure codes including laser
interstitial thermal therapy (LITT) of various vertebral body sites,
bone marrow transfusions, and the introduction or infusion of
therapeutics, into the ICD-10-PCS classification effective with
discharges on and after April 01, 2023. The procedure codes are as
follows:
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The 34 procedure codes are also reflected in Table 6B--New
Procedure Codes (which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS). As with the other new procedure codes and MS-DRG
assignments included in Table 6B in association with this proposed
rule, we are soliciting public comments on the most appropriate MDC,
MS-DRG, and operating room status assignments for these codes for FY
2024, as well as any other options for the GROUPER logic.
[[Page 26767]]
We note that Change Request (CR) 13034, Transmittal 11746, titled
``April 2023 Update to the Medicare Severity--Diagnosis Related Group
(MS-DRG) Grouper and Medicare Code Editor (MCE) Version 40.1 for the
International Classification of Diseases, Tenth Revision (ICD-10)
Diagnosis Codes for Collection of Health-Related Social Needs (HRSNs)
and New ICD-10 Procedure Coding System (PCS) Codes,'' was issued on
December 15, 2022 (available on the CMS website at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Transmittals/r11746cp), regarding the release of an updated version of
the ICD-10 MS-DRG GROUPER and Medicare Code Editor software, Version
40.1, effective with discharges on and after April 1, 2023, reflecting
the new diagnosis and procedure codes. The updated software, along with
the updated ICD-10 MS-DRG V40.1 Definitions Manual and the Definitions
of Medicare Code Edits V40.1 manual is available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.
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.
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
were considered for an April 1 update if a strong and convincing case
was made by the requestor during the Committee's public meeting. The
request needed to identify the reason why a new code was needed in
April for purposes of the new technology process. Meeting participants
and those reviewing the Committee meeting materials were provided the
opportunity to comment on the expedited request. We refer the reader to
the FY 2022 IPPS/LTCH PPS final rule (86 FR 44950) for further
discussion of the implementation of this prior April 1 update for
purposes of the new technology add-on payment process.
However, as discussed in the FY 2022 IPPS/LTCH PPS final rule (86
FR 44950 through 44956), we adopted an April 1 implementation date, in
addition to the annual October 1 update, beginning with April 1, 2022.
We noted that the intent of this April 1 implementation date is to
allow flexibility in the ICD-10 code update process. With this new
April 1 update, CMS now uses the same process for consideration of all
requests for an April 1 implementation date, including for purposes of
the new technology add-on payment process (that is, the prior process
for consideration of an April 1 implementation date only if a strong
and convincing case was made by the requestor during the meeting no
longer applies). We are continuing to use several aspects of our
existing established process to implement new codes through the April 1
code update, which includes presenting proposals for April 1
consideration at the September ICD-10 Coordination and Maintenance
Committee meeting, requesting public comments, reviewing the public
comments, finalizing codes, and announcing the new codes with their
assignments consistent with the new GROUPER release information. We
note that under our established process, requestors indicate whether
they are submitting their code request for consideration for an April 1
implementation date or an October 1 implementation date. The ICD-10
Coordination and Maintenance Committee makes efforts to accommodate the
requested implementation date for each request submitted. However, the
Committee determines which requests are to be presented for
consideration for an April 1 implementation date or an October 1
implementation date. As discussed earlier in this section of the
preamble of this proposed rule, there were code proposals presented for
an April 1, 2023 implementation at the September 13-14, 2022 Committee
meetings. Following the receipt of public comments, the code proposals
were approved and finalized, therefore, there were new codes
implemented April 1, 2023.
Consistent with the process we outlined for the April 1
implementation date, we announced the new codes in November 2022 and
provided the updated code files and ICD-10-CM Official Guidelines for
Coding and Reporting in January 2023. On January 30, 2023, the Federal
Register (88 FR 5882) notice for the March 7-8, 2023 ICD-10
Coordination and Maintenance Committee meeting was published that
includes the tentative agenda and identifies which topics are related
to a new technology add-on payment application. By February 1, 2023, we
made available the updated V40.1 ICD-10 MS-DRG Grouper software and
related materials on the CMS web page at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.
ICD-9-CM addendum and code title information is published on the
CMS website at https://www.cms.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/addendum. ICD-10-CM and ICD-10-PCS addendum
and code title information is published on the CMS website at https://
www.cms.gov/Medicare/Coding/ICD10. CMS also sends electronic files
containing all ICD-10-CM and ICD-10-PCS coding changes to its Medicare
contractors for use in updating their systems and providing education
to providers. Information on ICD-10-CM diagnosis codes, along with the
Official ICD-10-CM Coding Guidelines, can be found on the CDC website
at https://www.cdc.gov/nchs/icd/Comprehensive-Listing-of-ICD-10-CM-Files.htm. Additionally, information on new, revised, and deleted ICD-
10-CM diagnosis and ICD-10-PCS procedure codes is provided to the AHA
for publication in the Coding Clinic for ICD-10. The AHA also
distributes coding update information to publishers and software
vendors.
[[Page 26768]]
For FY 2023, there are currently 73,674 diagnosis codes and 78,530
procedure codes. As displayed in Table 6A.--New Diagnosis Codes and in
Table 6B.--New Procedure Codes associated with this proposed rule
(available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS), there are 395 new diagnosis
codes and 10 new procedure codes that have been finalized for FY 2024
at the time of the development of this proposed rule. The code titles
are adopted as part of the ICD-10 Coordination and Maintenance
Committee process. Thus, although we publish the code titles in the
IPPS proposed and final rules, they are not subject to comment in the
proposed or final rules. We will continue to provide the October
updates in this manner in the IPPS proposed and final rules.
17. Replaced Devices Offered Without Cost or With a Credit
a. Background
In the FY 2008 IPPS final rule with comment period (72 FR 47246
through 47251), we discussed the topic of Medicare payment for devices
that are replaced without cost or where credit for a replaced device is
furnished to the hospital. We implemented a policy to reduce a
hospital's IPPS payment for certain MS-DRGs where the implantation of a
device that subsequently failed or was recalled determined the base MS-
DRG assignment. At that time, we specified that we will reduce a
hospital's IPPS payment for those MS-DRGs where the hospital received a
credit for a replaced device equal to 50 percent or more of the cost of
the device.
In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51556 through
51557), we clarified this policy to state that the policy applies if
the hospital received a credit equal to 50 percent or more of the cost
of the replacement device and issued instructions to hospitals
accordingly.
b. Proposed Changes for FY 2024
As discussed in section II.C.5. of the preamble of this proposed
rule, for FY 2024, we are proposing to delete MS-DRGs 222, 223, 224,
225, 226, and 227, add new MS-DRG 275 (Cardiac Defibrillator Implant
with Cardiac Catheterization and MCC) and new MS-DRGs 276 and 277
(Cardiac Defibrillator Implant with MCC, and without MCC,
respectively), and to reassign a subset of the procedures currently
assigned to MS-DRGs 222 through 227 to proposed new MS-DRGs 275, 276,
and 277.
As stated in the FY 2016 IPPS/LTCH PPS proposed rule (80 FR 24409),
we generally map new MS-DRGs onto the list when they are formed from
procedures previously assigned to MS-DRGs that are already on the list.
Currently, MS-DRGs 222 through 227 are on the list of MS-DRGs subject
to the policy for payment under the IPPS for replaced devices offered
without cost or with a credit as shown in the following table. A subset
of the procedures currently assigned to MS-DRGs 222 through 227 is
being proposed for assignment to proposed new MS-DRGs 275, 276, and
277. Therefore, we are proposing that if the applicable proposed MS-DRG
changes are finalized, we also would add proposed new MS-DRGs 275, 276,
and 277 to the list of MS-DRGs subject to the policy for payment under
the IPPS for replaced devices offered without cost or with a credit and
make conforming changes to delete MS-DRGs 222 through 227 from the list
of MS-DRGs subject to the policy. We are also proposing to continue to
include the existing MS-DRGs currently subject to the policy as
displayed in the following table.
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The final list of MS-DRGs subject to the IPPS policy for replaced
devices offered without cost or with a credit will be included in the
FY 2024 IPPS/LTCH PPS final rule and also will be issued to providers
in the form of a Change Request (CR).
D. Recalibration of the FY 2024 MS-DRG Relative Weights
1. Data Sources for Developing the Relative Weights
Consistent with our established policy, in developing the MS-DRG
relative weights for FY 2024, we propose 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 2022 MedPAR data used in this
proposed rule include discharges occurring on October 1, 2021, through
September 30, 2022, based on bills received by CMS through December 31,
2022, 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 2022 MedPAR file used in calculating the relative weights
includes data for approximately 6,959,895 Medicare discharges from IPPS
providers. Discharges for Medicare beneficiaries enrolled in a Medicare
Advantage managed care plan are excluded from this analysis. These
discharges are excluded when the MedPAR ``GHO Paid'' indicator field on
the claim record is equal to ``1'' or when the MedPAR DRG payment
field, which represents the total payment for the claim, is equal to
the MedPAR ``Indirect Medical Education (IME)'' payment field,
indicating that the claim was an ``IME only'' claim submitted by a
teaching hospital on behalf of a beneficiary enrolled in a Medicare
Advantage managed care plan. In addition, the December 2022 update of
the FY 2022 MedPAR file complies with version 5010 of the X12 HIPAA
Transaction and Code Set Standards, and includes a variable called
``claim type.'' Claim type ``60'' indicates that the claim was an
inpatient claim paid as fee-for-service. Claim types ``61,'' ``62,''
``63,'' and ``64'' relate to encounter claims, Medicare Advantage IME
claims, and HMO no-pay claims. Therefore, the calculation of the
proposed relative weights for FY 2024 also excludes claims with claim
type values not equal to ``60.'' The data exclude CAHs, including
hospitals that subsequently became CAHs after the period from which the
data were taken. We note that the proposed FY 2024 relative weights are
based on the ICD-10-CM diagnosis codes and ICD-10-PCS procedure codes
from the FY 2022 MedPAR claims data, grouped through the ICD-10 version
of the proposed FY 2024 GROUPER (Version 41).
The second data source used in the cost-based relative weighting
methodology is the Medicare cost report data files from the HCRIS. In
general, we use the HCRIS dataset that is 3 years prior to the IPPS
fiscal year. Specifically, for this proposed rule, we used the December
2022 update of the FY 2021 HCRIS for calculating the FY 2024 cost-based
relative weights. Consistent with our historical practice, for this FY
2024 proposed rule, we are providing the version of the HCRIS from
which we calculated these 19 CCRs on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS. Click on the link on the left side of the screen
titled ``FY 2024 IPPS Proposed Rule Home Page'' or ``Acute Inpatient
Files for Download.''
2. Methodology for Calculation of the Relative Weights
a. General
We calculated the proposed FY 2024 relative weights based on 19
CCRs. The methodology we are proposing to use to calculate the FY 2024
MS-DRG cost-based relative weights based on claims data in the FY 2022
MedPAR file and data from the FY 2021 Medicare cost reports is as
follows:
To the extent possible, all the claims were regrouped
using the proposed FY 2024 MS-DRG classifications discussed in sections
II.B. and II.C. of the preamble of this proposed 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 2022 MedPAR file. (Medicare coverage for heart, heart-
lung, liver and/or intestinal, and lung transplants is limited to those
facilities that have received approval from CMS as transplant centers.)
Organ acquisition costs for kidney, heart, heart-lung,
liver, lung, pancreas, and intestinal (or multivisceral organs)
transplants continue to be paid on a reasonable cost basis.
Because these acquisition costs are paid separately from the
prospective payment rate, it is necessary to subtract the acquisition
charges from the total charges on each transplant bill that showed
acquisition charges before computing the average cost for each MS-DRG
and before eliminating statistical outliers.
Section 108 of the Further Consolidated Appropriations Act, 2020
provides that, 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 shall be
paid on a reasonable cost basis. We refer the reader to the FY 2021
IPPS/LTCH PPS final rule for further discussion of the reasonable cost
basis payment for cost reporting periods beginning on or after October
1, 2020 (85 FR 58835 through 58842). For FY 2022 and subsequent years,
we subtract the hematopoietic stem cell acquisition charges from the
total charges on each transplant bill that showed hematopoietic stem
cell 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, computed tomography (CT) scan charges, and
magnetic resonance imaging (MRI) charges were also deleted.
At least 92.7 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
[[Page 26772]]
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 https://innovation.cms.gov/initiatives/Bundled-Payments/index.html and to section IV.H.4. of the preamble of the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53341 through 53343).
The participation of hospitals in the BPCI initiative concluded on
September 30, 2018. The participation of hospitals in the 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 https://innovation.cms.gov/initiatives/bpci-advanced/. Consistent with our
policy for FY 2023, and consistent with how we have treated hospitals
that participated in the BPCI Initiative, for FY 2024, we continue to
believe it is appropriate to include all applicable data from the
subsection (d) hospitals participating in the BPCI Advanced model in
our IPPS payment modeling and ratesetting calculations because, as
noted previously, these hospitals are still receiving IPPS payments
under section 1886(d) of the Act. Consistent with the FY 2023 IPPS/LTCH
PPS final rule, we are also proposing to include all applicable data
from subsection (d) hospitals participating in the Comprehensive Care
for Joint Replacement (CJR) Model in our IPPS payment modeling and
ratesetting calculations. 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 proposed
national average CCRs developed from the FY 2021 cost report data.
The 19 cost centers that we used in the relative weight calculation
are shown in a supplemental data file, Cost Center HCRIS Lines
Supplemental Data File, posted via the internet on the CMS website for
this proposed rule and available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS. The supplemental
data file shows the lines on the cost report and the corresponding
revenue codes that we used to create the proposed19 national cost
center CCRs. If we receive comments about the groupings in this
supplemental data file, we may consider these comments as we finalize
our policy.
Consistent with historical practice, we account for rare situations
of non-monotonicity in a base MS-DRG and its severity levels, where the
mean cost in the higher severity level is less than the mean cost in
the lower severity level, in determining the relative weights for the
different severity levels. If there are initially non-monotonic
relative weights in the same base DRG and its severity levels, then we
combine the cases that group to the specific non-monotonic MS-DRGs for
purposes of relative weight calculations. For example, if there are two
non-monotonic MS-DRGs, combining the cases across those two
[[Page 26773]]
MS-DRGs results in the same relative weight for both MS-DRGs. The
relative weight calculated using the combined cases for those severity
levels is monotonic, effectively removing any non-monotonicity with the
base DRG and its severity levels. For this FY 2024 proposed rule, this
calculation was applied to address non-monotonicity for cases that
grouped to MS-DRG 016 and MS-DRG 017. In the supplemental file titled
AOR/BOR File, we include statistics for the affected MS-DRGs both
separately and with cases combined.
We are inviting public comments on our proposals related to
recalibration of the proposed FY 2024 relative weights and the changes
in relative weights from FY 2023.
b. Relative Weight Calculation for MS-DRG 018
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58451 through
58453), we created MS-DRG 018 for cases that include procedures
describing Chimeric Antigen Receptor (CAR) T-cell therapies. We also
finalized our proposal to modify our existing relative weight
methodology to ensure that the relative weight for 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 (85 FR 58599 through 58600). Specifically, we stated that clinical
trial claims that group to new MS-DRG 018 would not be included when
calculating the average cost for 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. We stated that 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 was the average sales price of KYMRIAH and YESCARTA,
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 FY 2021 final rule. In addition, we stated 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 cases 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 cases can be identified in the historical data.
We also finalized our proposal to calculate an 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. We calculate
this adjustor by dividing the average cost for cases that we identify
as clinical trial cases by the average cost for cases that we identify
as non-clinical trial cases, 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 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. We stated that to the best of our knowledge, there were no claims
in the historical data used in the calculation of this 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.
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58842), we also
finalized an adjustment to the payment amount for applicable clinical
trial and expanded access use immunotherapy cases that group to MS-DRG
018, and indicated that we would provide instructions for identifying
these claims in separate guidance. Following the issuance of the FY
2021 IPPS/LTCH PPS final rule, we issued guidance \18\ stating that
providers may enter a Billing Note NTE02 ``Expand Acc Use'' on the
electronic claim 837I or a remark ``Expand Acc Use'' on a paper claim
to notify the Medicare administrative contractor (MAC) of expanded
access use of CAR T-cell therapy. In this case, the MAC would add
payer-only condition code ``ZB'' so that Pricer will apply the payment
adjustment in calculating payment for the case. In cases 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 provider may
enter a Billing Note NTE02 ``Diff Prod Clin Trial'' on the electronic
claim 837I or a remark ``Diff Prod Clin Trial'' on a paper claim. In
this case, the MAC would add payer-only condition code ``ZC'' so that
the Pricer will not apply the payment adjustment in calculating payment
for the case.
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\18\ https://www.cms.gov/files/document/r10571cp.pdf.
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In the FY 2022 IPPS/LTCH PPS final rule, we revised MS-DRG 018 to
include cases that report the procedure codes for CAR T-cell and non-
CAR T-cell therapies and other immunotherapies (86 FR 44798 through
44806). We also finalized our proposal to continue to use the proxy of
standardized drug charges of less than $373,000 (86 FR 44965) to
identify clinical trial claims.
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 48894), we once
again finalized our policy to use a proxy of standardized drug charges
of less than $373,000. We also stated that we would continue to monitor
the data with respect to the clinical trial threshold. As in prior
years, we stated that we continue to believe to the best of our
knowledge there were no claims in the historical data (FY 2021 MedPAR)
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 also stated, in response to comments, that we agreed that
the availability of condition code 90 obviates the need for the use of
the remarks field to identify expanded access claims that group to MS-
DRG 018 for the purposes of applying the clinical trial adjustment. We
stated that effective October 1, 2022, providers should submit
condition code 90 to identify expanded access claims that group to MS-
DRG 018, rather than the remarks field, and that the MACs will no
longer flag cases as expanded access claims based on information
submitted in the remarks field for claims submitted on or after October
1, 2022 (87 FR 48896). We also noted that we were in the process of
making modifications to the MedPAR files to include information for
claims with the payer-only condition code ``ZC'' in the future, which
is used by the IPPS Pricer to identify a case where the CAR T-cell,
non-CAR T-cell, or other immunotherapy product is purchased in the
usual manner, but the case involves a clinical trial of a different
product so that the payment adjustment is not applied in calculating
the payment for the case (87 FR 49080).
Following the issuance of the FY 2023 IPPS/LTCH PPS final rule, we
issued
[[Page 26774]]
guidance \19\ stating where there is expanded access use of
immunotherapy, the provider may submit condition code ``90'' on the
claim so that Pricer will apply the payment adjustment in calculating
payment for the case. We stated that MACs would no longer append
Condition Code `ZB' to inpatient claims reporting Billing Note NTE02
``Expand Acc Use'' on the electronic claim 837I or a remark ``Expand
Acc Use'' on a paper claim, effective for claims for discharges that
occur on or after October 1, 2022.
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\19\ https://www.cms.gov/files/document/r11727cp.pdf.
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While we have applied a proxy of standardized drug charges of less
than $373,000 to identify clinical trial claims and expanded access use
cases under our special methodology for the calculation of the relative
weight for MS-DRG 018 to date, we believe that because of changes that
have occurred since CMS initially adopted this policy, it may no longer
be necessary to apply this proxy to identify these claims. In the FY
2021 IPPS/LTCH PPS final rule, we stated that because ICD-10-CM
diagnosis code Z00.6 is required to be included with clinical trial
cases, we expect hospitals to include this code for such cases grouping
to MS-DRG 018 for FY 2021 and all subsequent years, and we believe that
providers have continued to gain experience with the use of ICD-10-CM
diagnosis code Z00.6 to report cases involving a clinical trial of CAR
T-cell therapy. This is supported by our observation that the
percentage of claims reporting standardized drug charges of less than
$373,000 that do not report ICD-10-CM code Z00.6 relative to all claims
that group to MS-DRG 018 fell significantly from the FY 2019 data (used
in the FY 2021 ratesetting) to the FY 2022 data (used in the FY 2024
ratesetting). For example, in the FY 2019 MedPAR data used for the FY
2021 IPPS/LTCH PPS final rule, cases that we identified as clinical
trial cases (using our proxy of standardized drug charges of less than
$373,000) that did not contain ICD-10-CM diagnosis code Z00.6 comprised
18% of all cases that grouped to MS-DRG 018. In the FY 2022 MedPAR data
used for this FY 2024 IPPS/LTCH PPS proposed rule, cases that we
identified as clinical trial cases using our proxy that did not contain
ICD-10-CM diagnosis code Z00.6 comprised 4% of all cases that grouped
to MS-DRG 018. In addition, prior to FY 2022, we were unable to
identify cases in the MedPAR claims data that were provided as part of
expanded access use in developing the relative weights. The December
update of the FY 2022 MedPAR claims data now includes a field that
identifies whether or not the claim includes expanded access use of
immunotherapy. For the FY 2022 MedPAR claims data, this field
identifies whether or not the claim includes condition code ZB. For the
FY 2023 MedPAR data and for subsequent years, this field will identify
whether or not the claim includes condition code 90. This allows us to
exclude these claims, similar to our methodology for clinical trial
cases, in the calculation of the relative weight for MS-DRG 018,
without relying on a proxy. (We note that because the expanded access
indicator was not available prior to the FY 2022 MedPAR, the comparison
of cases identified using the proxy, as described previously, does not
include the 10 cases in the FY 2022 MedPAR data with an expanded access
indicator on the claim, as including these cases would mean we were not
comparing the same group of cases). We further note that the MedPAR
files now also include a variable that indicates whether the claim
includes the payer-only condition code ``ZC'', which identifies a case
involving the clinical trial of a different product where the CAR T-
cell, non-CAR T-cell, or other immunotherapy product is purchased in
the usual manner.
Therefore, in this FY 2024 IPPS/LTCH PPS proposed rule, we are
proposing two changes to our methodology for identifying clinical trial
claims and expanded access use claims in MS-DRG 018. First, we are
proposing to exclude claims with the presence of condition code ``90''
(or, for FY 2024 ratesetting, which is based on the FY 2022 MedPAR
data, the presence of condition code ``ZB'') and claims that contain
ICD-10-CM diagnosis code Z00.6 without payer-only code ``ZC'' that
group to MS-DRG 018 when calculating the average cost for MS-DRG 018.
Second, for the reasons described previously, we are proposing to no
longer use the proxy of standardized drug charges of less than $373,000
to identify clinical trial claims and expanded access use cases when
calculating the average cost for MS-DRG 018. Accordingly, we are
proposing that in calculating the relative weight for MS-DRG 018 for FY
2024, only those claims that group to MS-DRG 018 that (1) contain ICD-
10-CM diagnosis code Z00.6 and do not include payer-only code ``ZC'' or
(2) contain condition code ``ZB'' (or, for subsequent fiscal years,
condition code ``90'') would be excluded from the calculation of the
average cost for MS-DRG 018.
Consistent with this proposal, we are also proposing to modify our
calculation of the 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:
Calculate the average cost for cases assigned to MS-DRG
018 that either (a) contain ICD-10-CM diagnosis code Z00.6 and do not
contain condition code ``ZC'' or (b) contain condition code 90 (or, for
FY 2024 ratesetting, condition code ``ZB'').
Calculate the average cost for all other cases assigned to
MS-DRG 018.
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 applicable clinical trial or expanded access
use cases, then add this adjusted case count to the non-clinical trial
case count prior to calculating the average cost across all MS-DRGs.
Applying this proposed methodology, based on the December 2022
update of the FY 2022 MedPAR file used for this proposed rule, we
estimated that the average costs of cases assigned to MS-DRG 018 that
are identified as clinical trial cases ($89,379) were 28 percent of the
average costs of the cases assigned to MS-DRG 018 that are identified
as non-clinical trial cases ($323,903). Accordingly, as we did for FY
2023, we are proposing to adjust the transfer-adjusted case count for
MS-DRG 018 by applying the proposed adjustor of 0.28 to the applicable
clinical trial and expanded access use immunotherapy cases, and 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. Therefore, in calculating the national average cost per case
for purposes of this proposed rule, each case identified as an
applicable clinical trial or expanded access use immunotherapy case was
adjusted by 0.28. As we did for FY 2023, we are applying this same
adjustor for the applicable cases that group to MS-DRG 018 for purposes
of budget neutrality and outlier simulations. We are also proposing to
update the value of the adjustor based on more recent data for the
final rule.
d. Cap for Relative Weight Reductions
In the FY 2023 IPPS/LTCH PPS final rule, we finalized a permanent
10-percent cap on the reduction in an MS-DRG's relative weight in a
given fiscal year, beginning in FY 2023. We also finalized a budget
neutrality adjustment to the standardized amount for all hospitals to
ensure that application of the permanent 10-percent cap does not
[[Page 26775]]
result in an increase or decrease of estimated aggregate payments. We
refer the reader to the FY 2023 IPPS/LTCH PPS final rule for further
discussion of this policy. In the Addendum to this IPPS/LTCH PPS
proposed rule, we present the proposed budget neutrality adjustment for
reclassification and recalibration of the FY 2024 MS-DRG relative
weights with application of this cap. We are also making available on
the CMS website a supplemental file demonstrating the application of
the permanent 10 percent cap for FY 2024. For a further discussion of
the proposed budget neutrality adjustment for FY 2024, we refer readers
to the Addendum of this proposed rule.
3. Development of Proposed National Average CCRs
We developed the proposed national average CCRs as follows:
Using the FY 2021 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 proposed relative weight.
We then applied the permanent 10-percent cap on the reduction in a MS-
DRG's relative weight in a given fiscal year; specifically for those
MS-DRGs for which the relative weight otherwise would have declined by
more than 10 percent from the FY 2023 relative weight, we set the
proposed FY 2024 relative weight equal to 90 percent of the FY 2023
relative weight. The proposed relative weights for FY 2024 as set forth
in Table 5 associated with this proposed rule and available on the CMS
website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS reflect the application of this cap.
The proposed 19 national average CCRs for FY 2024 are as follows:
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP01MY23.114
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
[[Page 26776]]
number of cases required to compute a reasonable weight. We are
proposing to use that same case threshold in recalibrating the proposed
MS-DRG relative weights for FY 2024. Using data from the FY 2022 MedPAR
file, there were 7 MS-DRGs that contain fewer than 10 cases. For FY
2024, because we do not have sufficient MedPAR data to set accurate and
stable cost relative weights for these low-volume MS-DRGs, we are
proposing to compute relative weights for the low-volume MS-DRGs by
adjusting their final FY 2023 relative weights by the percentage change
in the average weight of the cases in other MS-DRGs from FY 2023 to FY
2024. The crosswalk table is as follows.
[GRAPHIC] [TIFF OMITTED] TP01MY23.115
BILLING CODE 4120-01-C
E. Add-On Payments for New Services and Technologies for FY 2024
1. Background
Sections 1886(d)(5)(K) and (L) of the Act establish a process of
identifying and ensuring adequate payment for new medical services and
technologies (sometimes collectively referred to in this section as
``new technologies'') under the IPPS. Section 1886(d)(5)(K)(vi) of the
Act specifies that a medical service or technology will be considered
new if it meets criteria established by the Secretary after notice and
opportunity for public comment. Section 1886(d)(5)(K)(ii)(I) of the Act
specifies that a new medical service or technology may be considered
for new technology add-on payment if, based on the estimated costs
incurred with respect to discharges involving such service or
technology, the DRG prospective payment rate otherwise applicable to
such discharges under this subsection is inadequate. The regulations at
42 CFR 412.87 implement these provisions and Sec. 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 antimicrobial products may qualify under an alternative
inpatient new technology add-on payment pathway, as set forth in the
regulations at Sec. 412.87(c) and (d).
We note that section 1886(d)(5)(K)(i) of the Act requires that the
Secretary establish a mechanism to recognize the costs of new medical
services and technologies under the payment system established under
that subsection, which establishes the system for paying for the
operating costs of inpatient hospital services. The system of payment
for capital costs is established under section 1886(g) of the Act.
Therefore, as discussed in prior rulemaking (72 FR 47307 through
47308), we do not include capital costs in the add-on payments for a
new medical service or technology or make new technology add-on
payments under the IPPS for capital-related costs.
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 further 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), the FY 2020 IPPS/
LTCH PPS final rule (84 FR 42288 through 42300), and the FY 2021 IPPS/
LTCH PPS final rule (85 FR 58736 through 58742).
a. New Technology Add-On Payment Criteria
(1) Newness Criterion
Under the first criterion, as reflected in Sec. 412.87(b)(2), a
specific medical service or technology will no longer be considered
``new'' for purposes of new medical service or technology add-on
payments after CMS has recalibrated the MS-DRGs, based on available
data, to
[[Page 26777]]
reflect the cost of the technology. 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 whether: (1) a product uses the same or a similar
mechanism of action to achieve a therapeutic outcome; (2) a product is
assigned to the same or a different MS-DRG; and (3) 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).
(2) Cost Criterion
Under the second criterion, Sec. 412.87(b)(3) further provides
that, to be eligible for the add-on payment for new medical services or
technologies, the MS-DRG prospective payment rate otherwise applicable
to discharges involving the new medical service or technology must be
assessed for adequacy. Under the cost criterion, consistent with the
formula specified in section 1886(d)(5)(K)(ii)(I) of the Act, to assess
the adequacy of payment for a new technology paid under the applicable
MS-DRG prospective payment rate, we evaluate whether the charges of the
cases involving a new medical service or technology will exceed a
threshold amount that is the lesser of 75% of the standardized amount
(increased to reflect the difference between cost and charges) or 75%
of one standard deviation beyond the geometric mean standardized charge
for all cases in the MS-DRG to which the new medical service or
technology is assigned (or the case-weighted average of all relevant
MS-DRGs if the new medical service or technology occurs in many
different MS-DRGs). The MS-DRG threshold amounts generally used in
evaluating new technology add-on payment applications for FY 2024 are
presented in a data file that is available, along with the other data
files associated with the FY 2023 IPPS/LTCH PPS final rule and
correction notification, on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.
We note that, under the policy finalized in the FY 2021 IPPS/LTCH
PPS final rule (85 FR 58603 through 58605), beginning with FY 2022, we
use the proposed threshold values associated with the proposed rule for
that fiscal year to evaluate the cost criterion for all applications
for new technology add-on payments and previously approved technologies
that may continue to receive new technology add-on payments, if those
technologies would be assigned to a proposed new MS-DRG for that same
fiscal year.
As finalized in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41275),
beginning with FY 2020, we include the thresholds applicable to the
next fiscal year (previously included in Table 10 of the annual IPPS/
LTCH PPS proposed and final rules) in the data files associated with
the prior fiscal year. Accordingly, the proposed thresholds for
applications for new technology add-on payments for FY 2025 are
presented in a data file that is available on the CMS website, along
with the other data files associated with the FY 2024 proposed rule, by
clicking on the FY 2024 IPPS Proposed Rule Home Page at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index. We note that, for the reasons discussed in
section I.F. of the preamble of this proposed rule, we are proposing to
use the FY 2022 MedPAR claims data for FY 2024 ratesetting. Consistent
with this proposal, for the FY 2025 proposed threshold values, we are
proposing to use the FY 2022 claims data to set the proposed thresholds
for applications for new technology add-on payments for FY 2025.
In the September 7, 2001 final rule that established the new
technology add-on payment regulations (66 FR 46917), we discussed that
applicants should submit a significant sample of data to demonstrate
that the medical service or technology meets the high-cost threshold.
Specifically, applicants should submit a sample of sufficient size to
enable us to undertake an initial validation and analysis of the data.
We also discussed in the September 7, 2001 final rule (66 FR 46917) the
issue of whether the Health Insurance Portability and Accountability
Act (HIPAA) Privacy Rule at 45 CFR parts 160 and 164 applies to claims
information that providers submit with applications for new medical
service or technology add-on payments. We refer readers to the FY 2012
IPPS/LTCH PPS final rule (76 FR 51573) for further information on this
issue.
(3) Substantial Clinical Improvement Criterion
Under the third criterion at Sec. 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 Sec. 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
[[Page 26778]]
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; editorials and
letters to the editor; and public comments. Other appropriate
information sources may be considered.
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 (84 FR
42288 through 42292) 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), that while FDA has regulatory responsibility for
decisions related to marketing authorization (for example, approval,
clearance, etc.), we do not rely upon FDA criteria in our evaluation of
substantial clinical improvement for purposes of determining what
services and technologies qualify for new technology add-on payments
under Medicare. This criterion does not depend on the standard of
safety and effectiveness on which FDA relies but on a demonstration of
substantial clinical improvement in the Medicare population.
b. Alternative Inpatient New Technology Add-On Payment Pathway
Beginning with applications for FY 2021 new technology add-on
payments, under the regulations at Sec. 412.87(c), a medical device
that is part of FDA's Breakthrough Devices Program may qualify for the
new technology add-on payment under an alternative pathway.
Additionally, under the regulations at Sec. 412.87(d) for certain
antimicrobial products, beginning with FY 2021, a drug that is
designated by FDA as a Qualified Infectious Disease Product (QIDP),
and, beginning with FY 2022, a drug that is approved by FDA under the
Limited Population Pathway for Antibacterial and Antifungal Drugs
(LPAD), may also qualify for the new technology add-on payment under an
alternative pathway. We refer the reader to the FY 2020 IPPS/LTCH PPS
final rule (84 FR 42292 through 42297) and the FY 2021 IPPS/LTCH PPS
final rule (85 FR 58737 through 58739) for further discussion on this
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 reviews the application based on the
information provided by the applicant only under the alternative
pathway specified by the applicant at the time of application
submission. However, to receive approval for the new technology add-on
payment under that alternative pathway, the technology must have the
applicable FDA designation and meet all other requirements in the
regulations in Sec. 412.87(c) and (d), as applicable.
(1) Alternative Pathway for Certain Transformative New Devices
For applications received for new technology add-on payments for FY
2021 and subsequent fiscal years, a medical device designated under
FDA's Breakthrough Devices Program that has received FDA marketing
authorization will be considered 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 Sec.
412.87(b)(1) that it represent an advance that substantially improves,
relative to technologies previously available, the diagnosis or
treatment of Medicare beneficiaries. 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) as a Breakthrough Device, for the indication
covered by the Breakthrough Device designation, will need to meet the
requirements of Sec. 412.87(c). We note that in the FY 2021 IPPS/LTCH
PPS final rule (85 FR 58734 through 58736), we clarified 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 the FY 2021 IPPS/
LTCH PPS final rule (85 FR 58734 through 58736) for further discussion
regarding this clarification.
(2) Alternative Pathway for Certain Antimicrobial Products
For applications received for new technology add-on payments for
certain antimicrobial products, beginning with FY 2021, if a technology
is designated by FDA as a QIDP and received FDA marketing
authorization, and, beginning with FY 2022, if a drug is approved under
FDA's LPAD pathway and used for the indication approved under the LPAD
pathway, it will be considered 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
alternative pathway for QIDPs and LPADs, a medical product that has
received FDA marketing authorization and is designated by FDA as a QIDP
or approved under the LPAD pathway will need to meet the requirements
of Sec. 412.87(d). We refer the reader to the FY 2020 IPPS/LTCH PPS
final rule (84 FR 42292 through 42297) and FY 2021 IPPS/LTCH PPS final
rule (85 FR 58737 through 58739) for further discussion on this policy.
We note that, in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58737
through 58739), we clarified that a new medical product seeking
approval for the new technology add-on payment under the alternative
pathway for QIDPs must receive FDA marketing authorization for the
indication covered by the QIDP designation. We also finalized our
policy to expand our alternative new technology add-on payment pathway
for certain antimicrobial products to include products approved under
the LPAD pathway and used for the indication approved under the LPAD
pathway.
[[Page 26779]]
c. Additional Payment for New Medical Service or Technology
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. As noted
previously, we do not include capital costs in the add-on payments for
a new medical service or technology or make new technology add-on
payments under the IPPS for capital-related costs (72 FR 47307 through
47308).
For discharges occurring before October 1, 2019, under Sec.
412.88, if the costs of the discharge (determined by applying operating
cost-to-charge ratios (CCRs) as described in Sec. 412.84(h)) exceed
the full DRG payment (including payments for IME and DSH, but excluding
outlier payments), CMS made an add-on payment equal to the lesser of:
(1) 50% of the costs of the new medical service or technology; or (2)
50% 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 Sec. 412.88(a)(2)(ii).
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 Sec. 412.84(h)) exceed
the full DRG payment (including payments for IME and DSH, but excluding
outlier payments), Medicare will make an add-on payment equal to the
lesser of: (1) 65% of the costs of the new medical service or
technology; or (2) 65% of the amount by which the costs of the case
exceed the standard DRG payment. For a new technology that is 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 Sec.
412.84(h)) exceed the full DRG payment (including payments for IME and
DSH, but excluding outlier payments), Medicare will make an add-on
payment equal to the lesser of: (1) 75% of the costs of the new medical
service or technology; or (2) 75% of the amount by which the costs of
the case exceed the standard DRG payment. For a new technology that is
a medical product approved under FDA's LPAD pathway, beginning with
discharges on or after October 1, 2020, if the costs of a discharge
involving a new technology (determined by applying CCRs as described in
Sec. 412.84(h)) exceed the full DRG payment (including payments for
IME and DSH, but excluding outlier payments), Medicare will make an
add-on payment equal to the lesser of: (1) 75% of the costs of the new
medical service or technology; or (2) 75% of the amount by which the
costs of the case exceed the standard DRG payment. As set forth in
Sec. 412.88(b)(2), unless the discharge qualifies for an outlier
payment, the additional Medicare payment will be limited to the full
MS-DRG payment plus 65% (or 75% for certain antimicrobial products
(QIDPs and LPADs)) of the estimated costs of the new technology or
medical service. We refer the reader to the FY 2020 IPPS/LTCH PPS final
rule (84 FR 42297 through 42300) for further discussion on the increase
in the new technology add-on payment beginning with discharges on or
after October 1, 2019.
We note that, consistent with the prospective nature of the IPPS,
we finalize the new technology add on payment amount for approved or
conditionally approved technologies in the final rule for each fiscal
year and do not make mid-year changes to new technology add-on payment
amounts. Updated cost information may be submitted and included in
rulemaking for the following fiscal year.
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.
d. Evaluation of Eligibility Criteria for New Medical Service or
Technology Applications
In the FY 2009 IPPS final rule (73 FR 48561 through 48563), we
modified our regulation at Sec. 412.87 to codify our longstanding
practice of how CMS evaluates the eligibility criteria for new medical
service or technology add-on payment applications. That is, we first
determine whether a medical service or technology meets the newness
criterion, and only if so, do we then make a determination as to
whether the technology meets the cost threshold and represents a
substantial clinical improvement over existing medical services or
technologies. We specified 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. In the FY 2021 IPPS/LTCH PPS final rule, to more
precisely describe the various types of FDA approvals, clearances and
classifications that we consider under our new technology add-on
payment policy, we finalized a technical clarification to the
regulation to indicate that new technologies must receive FDA marketing
authorization (such as pre-market approval (PMA); 510(k) clearance; the
granting of a De Novo classification request, or approval of a New Drug
Application (NDA)) by July 1 of the year prior to the beginning of the
fiscal year for which the application is being considered. Consistent
with our longstanding policy, we consider FDA marketing authorization
as representing that a product has received FDA approval or clearance
when considering eligibility for the new technology add-on payment
under Sec. 412.87(e)(2) (85 FR 58742).
Additionally, in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58739
through 58742), we finalized our proposal to provide conditional
approval for new technology add-on payment for a technology for which
an application is submitted under the alternative pathway for certain
antimicrobial products at Sec. 412.87(d) that does not receive FDA
marketing authorization by the July 1 deadline specified in Sec.
412.87(e)(2), provided that the technology otherwise meets 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.
As discussed in more detail in section II.E.8. of the preamble of
this proposed rule, beginning with the new technology add-on payment
applications for FY 2025, we are proposing, for technologies that are
not already FDA market authorized, to require applicants to have a
complete and active FDA market authorization request at the time of new
technology add-on payment application
[[Page 26780]]
submission, and to provide documentation of FDA acceptance or filing to
CMS at the time of application submission. We are also proposing that,
beginning with FY 2025 applications, in order to be eligible for
consideration for the new technology add-on payment for the upcoming
fiscal year, an applicant for new technology add-on payments must have
received FDA approval or clearance by May 1 rather than July 1 of the
year prior to the beginning of the fiscal year for which the
application is being considered (except for an application that is
submitted under the alternative pathway for certain antimicrobial
products). Please refer to section II.E.8. of the preamble of this
proposed rule for a full discussion of these proposals.
e. New Technology Liaisons
Many interested parties (including device/biologic/drug developers
or manufacturers, industry consultants, others) engage CMS for
coverage, coding, and payment questions or concerns. In order to
streamline engagement by centralizing the different innovation pathways
within CMS including new technology add-on payments, CMS has
established a team of new technology liaisons that can serve as an
initial resource for interested parties. This team is available to
assist with all of the following:
Help to point interested parties to or provide information
and resources where possible regarding process, requirements, and
timelines.
Coordinate and facilitate opportunities for interested
parties to engage with various CMS components.
Serve as a primary point of contact for interested parties
and provide updates on developments where possible or appropriate.
We received many questions from parties interested in pursuing new
technology add-on payments who may not be entirely familiar with
working with CMS. While we encourage interested parties to first review
our resources available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/newtech, we know that there may
be additional questions about the application process. Interested
parties with further questions about Medicare's coverage, coding, and
payment processes, and about how they can navigate these processes,
whether for new technology add-on payments or otherwise, can contact
the new technology liaison team at [email protected].
f. Application Information for New Medical Services or Technologies
Applicants for add-on payments for new medical services or
technologies for FY 2025 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 described), along with a significant
sample of data to demonstrate that the medical service or technology
meets the high-cost threshold. CMS will review the application based on
the information provided by the applicant under the pathway specified
by the applicant at the time of application submission. Complete
application information, along with final deadlines for submitting a
full application, will be posted as it becomes available on the CMS
website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/newtech.html.
To allow interested parties to identify the new medical services or
technologies under review before the publication of the proposed rule
for FY 2025, once the application deadline has closed, CMS will post on
its website a list of the applications submitted, along with a brief
description of each technology as provided by the applicant.
As discussed in the FY 2023 IPPS/LTCH PPS final rule (87 FR 48986
through 48990), we finalized our proposal to publicly post online new
technology add-on payment applications, including the completed
application forms, certain related materials, and any additional
updated application information submitted subsequent to the initial
application submission (except certain volume, cost and other
information identified by the applicant as confidential), beginning
with the application cycle for FY 2024, at the time the proposed rule
is published. We also finalized that with the exception of information
included in a confidential information section of the application, cost
and volume information, and materials identified by the applicant as
copyrighted and/or not otherwise releasable to the public, the contents
of the application and related materials may be posted publicly, and
that we will not post applications that are withdrawn prior to
publication of the proposed rule. We refer the reader to the FY 2023
IPPS/LTCH PPS final rule (87 FR 48986 through 48990) for further
information regarding this policy.
We note that the burden associated with this information collection
requirement is the time and effort required to collect and submit the
data in the formal request for add-on payments for new medical services
and technologies to CMS. The aforementioned burden is subject to the
PRA and approved under OMB control number 0938-1347, and has an
expiration date of November 30, 2023.
2. Public Input Before Publication of a Notice of Proposed Rulemaking
on Add-On Payments
Section 1886(d)(5)(K)(viii) of the Act, as amended by section
503(b)(2) of Public Law 108-173, provides for a mechanism for public
input before publication of a notice of proposed rulemaking regarding
whether a medical service or technology represents a substantial
clinical improvement. The process for evaluating new medical service
and technology applications requires the Secretary to do all of the
following:
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.
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 2024 prior
to publication of the FY 2024 IPPS/LTCH PPS proposed rule, we published
a notice in the Federal Register on October 3, 2022 (87 FR 59793), and
held a virtual town hall meeting on December 14, 2022. In the
announcement notice for the meeting, we stated that the opinions and
presentations provided during the
[[Page 26781]]
meeting would assist us in our evaluations of applications by allowing
public discussion of the substantial clinical improvement criterion for
the FY 2024 new medical service and technology add-on payment
applications before the publication of the FY 2024 IPPS/LTCH IPPS
proposed rule.
Approximately 180 individuals registered to attend the virtual town
hall meeting. We posted the recordings of the virtual town hall on the
CMS web page at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/newtech.
We considered each applicant's presentation made at the town hall
meeting, as well as written comments received by the December 22, 2022
deadline, in our evaluation of the new technology add-on payment
applications for FY 2024 in the development of this FY 2024 IPPS/LTCH
PPS proposed rule. In response to the published notice and the December
14, 2022 New Technology Town Hall meeting, we received written comments
regarding the applications for FY 2024 new technology add on payments.
As explained earlier and in the Federal Register notice announcing the
New Technology Town Hall meeting (87 FR 59793 through 59795), the
purpose of the meeting was specifically to discuss the substantial
clinical improvement criterion with regard to pending new technology
add-on payment applications for FY 2024. Therefore, we are not
summarizing any written comments in this proposed rule that are
unrelated to the substantial clinical improvement criterion. In section
II.E.6. of the preamble of this proposed rule, we are summarizing
comments regarding individual applications, or, if applicable,
indicating that there were no comments received in response to the New
Technology Town Hall meeting notice or New Technology Town Hall
meeting, at the end of each discussion of the individual applications.
3. ICD-10-PCS Section ``X'' Codes for Certain New Medical Services and
Technologies
As discussed in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49434),
the ICD-10-PCS includes a new section containing the new Section ``X''
codes, which began being used with discharges occurring on or after
October 1, 2015. Decisions regarding changes to ICD-10-PCS Section
``X'' codes will be handled in the same manner as the decisions for all
of the other ICD-10-PCS code changes. That is, proposals to create,
delete, or revise Section ``X'' codes under the ICD-10-PCS structure
will be referred to the ICD-10 Coordination and Maintenance Committee.
In addition, several of the new medical services and technologies that
have been, or may be, approved for new technology add-on payments may
now, and in the future, be assigned a Section ``X'' code within the
structure of the ICD-10-PCS. We posted ICD-10-PCS Guidelines on the CMS
website at: https://www.cms.gov/Medicare/Coding/ICD10, including
guidelines for ICD-10-PCS Section ``X'' codes. We encourage providers
to view the material provided on ICD-10-PCS Section ``X'' codes.
4. New COVID-19 Treatments Add-On Payment (NCTAP)
In response to the COVID-19 public health emergency (PHE), we
established the New COVID-19 Treatments Add-on Payment (NCTAP) under
the IPPS for COVID-19 cases that meet certain criteria (85 FR 71157
through 71158). We believe that as drugs and biological products are
authorized for emergency use or approved by FDA for the treatment of
COVID-19 in the inpatient setting, it is appropriate to increase the
current IPPS payment amounts to mitigate any potential financial
disincentives for hospitals to provide new COVID-19 treatments during
the PHE. Therefore, effective for discharges occurring on or after
November 2, 2020 and until the end of the PHE for COVID-19, we
established the NCTAP to pay hospitals the lesser of (1) 65% of the
operating outlier threshold for the claim or (2) 65% of the amount by
which the costs of the case exceed the standard DRG payment, including
the adjustment to the relative weight under section 3710 of the
Coronavirus Aid, Relief, and Economic Security (CARES) Act, for certain
cases that include the use of a drug or biological product currently
authorized for emergency use or approved for treating COVID-19.
In the FY 2022 IPPS/LTCH PPS final rule, we finalized a change to
our policy to extend NCTAP through the end of the FY in which the PHE
ends for all eligible products in order to continue to mitigate
potential financial disincentives for hospitals to provide these new
treatments, and to minimize any potential payment disruption
immediately following the end of the PHE. We also finalized that, for a
drug or biological product eligible for NCTAP that is also approved for
new technology add-on payments, we will reduce the NCTAP for an
eligible case by the amount of any new technology add-on payments so
that we do not create a financial disincentive between technologies
eligible for both the new technology add-on payment and NCTAP compared
to technologies eligible for NCTAP only (86 FR 45162). If the PHE ends
in May of 2023, as planned by the Department of Health and Human
Services (HHS),20 21 discharges involving eligible products
would continue to be eligible for the NCTAP through September 30, 2023
(that is, through the end of FY 2023). The NCTAP will expire at the end
of FY 2023 and no NCTAP would be made beginning in FY 2024 (that is,
for discharges on or after October 1, 2023).
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\20\ https://www.hhs.gov/about/news/2023/02/09/letter-us-governors-hhs-secretary-xavier-becerra-renewing-covid-19-public-health-emergency.html.
\21\ https://www.hhs.gov/about/news/2023/02/09/fact-sheet-covid-19-public-health-emergency-transition-roadmap.html.
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Further information about NCTAP, including updates and a list of
currently eligible drugs and biologicals, is available on the CMS
website at https://www.cms.gov/medicare/covid-19/new-covid-19-treatments-add-payment-nctap.
5. Proposed FY 2024 Status of Technologies Receiving New Technology
Add-On Payments for FY 2023
In this section of the proposed rule, we discuss the proposed FY
2024 status of 24 technologies approved for FY 2023 new technology add-
on payments, as set forth in the tables that follow. Specifically, we
present our proposals to continue the new technology add-on payment for
FY 2024 for those technologies that were approved for the new
technology add-on payment for FY 2023 and which would still be
considered ``new'' for purposes of new technology add-on payments for
FY 2024. We also present our proposals to discontinue new technology
add-on payments for FY 2024 for those technologies that were approved
for the new technology add-on payment for FY 2023 and which would no
longer be considered ``new'' for purposes of new technology add-on
payments for FY 2024.
Additionally, we note that we conditionally approved
DefenCathTM (a formulation of taurolidine/heparin) for FY
2023 new technology add-on payments under the alternative pathway for
certain antimicrobial products, subject to the technology receiving FDA
marketing authorization by July 1, 2023. As of the time of the
development of this proposed rule, DefenCathTM has not yet
received FDA approval. If DefenCathTM receives FDA marketing
authorization before July 1, 2023, the new technology add-on payment
for cases involving the use of this technology would be made effective
for
[[Page 26782]]
discharges beginning in the first quarter after FDA marketing
authorization is granted. If FDA marketing authorization is received on
or after July 1, 2023, no new technology add-on payments would be made
for cases involving the use of DefenCathTM for FY 2023. If
DefenCathTM receives FDA marketing authorization prior to
July 1, 2023, we are proposing to continue making new technology add-on
payments for DefenCathTM for FY 2024. If
DefenCathTM does not receive FDA marketing authorization by
July 1, 2023, then it would not be eligible for new technology add-on
payments for FY 2023, and therefore would not be eligible for the
continuation of new technology add-on payments for FY 2024. We note
that the applicant for DefenCathTM also submitted an
application for new technology add-on payments for FY 2024 under the
name taurolidine/heparin, in the event that FDA market authorization is
not received by July 1, 2023. We refer the reader to section
II.E.7.b.(1). of the preamble of this proposed rule for discussion of
the FY 2024 application for taurolidine/heparin.
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).
Table II.P.-01 lists the technologies for which we are proposing to
continue making new technology add-on payments for FY 2024 because they
are still considered ``new'' for purposes of new technology add-on
payments. This table also presents the newness start date, new
technology add-on payment start date, 3-year anniversary date of the
product's entry onto the U.S. market, relevant final rule citations
from prior fiscal years, proposed maximum add-on payment amount, and
coding assignments for each technology. We refer readers to the cited
final rules in the following table for a complete discussion of the new
technology add-on payment application, coding and payment amount for
these technologies, including the applicable indications and discussion
of the newness start date.
We are inviting public comments on our proposals to continue new
technology add-on payments for FY 2024 for the technologies listed in
the following table.
BILLING CODE 4120-01-P
[[Page 26783]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.116
Table II.P.-02 lists the technologies for which we are proposing to
discontinue making new technology add-on payments for FY 2024 because
they are no longer ``new'' for purposes of new technology add-on
payments.
[[Page 26784]]
This table also presents the newness start date, new technology add-on
payment start date, the 3-year anniversary date of the product's entry
onto the U.S. market, and relevant final rule citations from prior
fiscal years. We refer readers to the cited final rules in the
following table for a complete discussion of the new technology add-on
payment application, coding and payment amount for these technologies,
including the applicable indications and discussion of the newness
start date.
As discussed in the FY 2023 IPPS/LTCH PPS final rule (87 FR 48939)
and in previous rulemaking, the intent of section 1886(d)(5)(K) of the
Act and regulations under Sec. 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 MS-DRG weights (69 FR
49002). While our policy is, generally, 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, as discussed in prior
rulemaking (77 FR 53348), we have noted that data reflecting the costs
of products that have received an emergency use authorization (EUA)
could become available as soon as the date of the EUA issuance and
prior to receiving FDA approval or clearance (86 FR 45159). With
respect to the Hemolung RAS, which received an EUA on April 22, 2020,
when used for patients with COVID-19, we discussed whether the newness
period for the use of the Hemolung RAS for patients with COVID-19
should begin on the date of its EUA (April 22, 2020), when the product
became available on the market for this indication. We described a
public comment submitted by the applicant for Hemolung RAS which stated
that the newness period for COVID-19 Hemolung RAS cases should begin on
November 15, 2021 (the date of commercial availability of the De Novo
classified device), instead of April 22, 2020 (the date of the Hemolung
RAS EUA). The applicant indicated that it provided the Hemolung RAS to
hospitals free or at cost to swiftly respond to the global pandemic,
and that it did not profit from EUA therapies. The applicant stated
that additionally, during the EUA period, hospitals were not seeking
payment for Hemolung RAS therapy. The applicant stated that, therefore,
cost data collected during the EUA period and prior to FDA clearance do
not accurately reflect the added cost of Hemolung RAS therapy. In our
response, we noted that, while the commenter stated that it provided
the Hemolung RAS to hospitals free or at cost, and that hospitals were
not seeking payment for the Hemolung RAS therapy during the EUA period,
additional information regarding whether hospitals charged for use of
the Hemolung RAS therapy between the date of its EUA and the date of
commercial availability of the De Novo classified device, and how it
impacts whether use of the technology may be reflected in the data,
would be helpful in determining that data reflecting the cost of the
product did not become available until the date of commercial
availability of the De Novo classified device.
For this FY 2024 IPPS/LTCH PPS proposed rule, in the absence of
additional information to support a conclusion that data reflecting the
cost of the Hemolung RAS when used for patients with COVID-19 did not
begin to become available as of the issuance of the EUA on April 22,
2020, we are proposing to discontinue new technology add-on payments
for FY 2024 for Hemolung RAS patients with hypercapnic respiratory
failure related to COVID-19, as the technology will no longer be
considered new for this indication. As discussed in the FY 2023 IPPS/
LTCH PPS final rule, we continue to welcome additional information
regarding whether hospitals charged for use of the Hemolung RAS therapy
between the date of its EUA and the date of commercial availability of
the De Novo classified device, and how it impacts whether use of the
technology may be reflected in the data. We further note, as set forth
in Table II.P.-01 of this section, that we are proposing to continue
the new technology add-on payment in FY 2024 for the use of the
Hemolung RAS for patients with other causes of hypercapnic respiratory
failure unrelated to COVID-19, for which we consider the beginning of
the newness period to commence on the date of commercial availability
of the De Novo classified device (November 15, 2021), as discussed in
the FY 2023 IPPS/LTCH PPS final rule (87 FR 48939). In order to
identify use of Hemolung RAS unrelated to COVID-19, we are proposing to
identify cases eligible for new technology add-on payment with ICD-10-
PCS code 5A0920Z without ICD-10-CM diagnosis code U07.1 (COVID-19).
We are inviting public comments on our proposals to discontinue new
technology add-on payments for FY 2024 for the technologies listed in
the Table II.P.-02.
[[Page 26785]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.117
[[Page 26786]]
6. FY 2024 Applications for New Technology Add-On Payments (Traditional
Pathway)
As discussed previously, in the FY 2023 IPPS/LTCH PPS final rule,
we finalized our policy to publicly post online applications for new
technology add-on payment beginning with FY 2024 applications (87 FR
48986 through 48990). As noted in the FY 2023 IPPS/LTCH PPS final rule,
we are continuing to summarize each application in this proposed rule.
However, while we are continuing to provide discussion of the concerns
or issues we identified with respect to applications submitted under
the traditional pathway, we are providing more succinct information as
part of the summaries in the proposed and final rules regarding the
applicant's assertions as to how the medical service or technology
meets the newness, cost, and substantial clinical improvement criteria.
We refer readers to https://mearis.cms.gov/public/publications/ntap for
the publicly posted FY 2024 new technology add-on payment applications
and supporting information (with the exception of certain cost and
volume information, and information or materials identified by the
applicant as confidential or copyrighted). In addition, we note that we
are making available separate tables listing the ICD-10-CM codes, ICD-
10-PCS codes, and/or MS-DRGs related to the analyses of the cost
criterion for certain technologies for the FY 2024 new technology add-
on payment applications in Table 10 associated with this proposed rule,
available via the internet on the CMS website at https://www.cms.gov/
medicare/medicare-fee-for-service-payment/acuteinpatientpps. Click on
the link on the left side of the screen titled ``FY 2024 IPPS Proposed
Rule Home Page'' or ``Acute Inpatient--Files for Download''. Please see
section VI of the Addendum for additional information regarding tables
associated with the proposed rule.
We received 27 applications for new technology add-on payments for
FY 2024 under the traditional new technology add-on payment pathway. In
accordance with the regulations under Sec. 412.87(e), applicants for
FY 2024 new technology add-on payments must have received 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. Eight applicants
withdrew their applications prior to the issuance of this proposed
rule. We are addressing the remaining 19 applications.
a. CYTALUX[reg] (Pafolacianine), First Indication
On Target Laboratories submitted an application for new technology
add-on payments for CYTALUX[reg] for use in ovarian cancer for FY 2024.
The applicant stated that CYTALUX[reg] is the first targeted
intraoperative molecular imaging agent that illuminates ovarian cancer
in real time, enabling the detection of more cancer for resection.
CYTALUX[reg] is an optical imaging agent comprised of a folic acid
analog conjugated with a fluorescent dye which binds to folate receptor
positive cancer cells and illuminates malignant lesions during surgery.
Per the applicant, CYTALUX[reg] is used in adult patients with ovarian
cancer as an adjunct for intraoperative identification of malignant
lesions. CYTALUX[reg] is to be used with a near-infrared imaging system
(NIR) cleared by the FDA for specific use with CYTALUX[reg]. We note
that On Target Laboratories also submitted a second application for new
technology add-on payments for CYTALUX[reg] for FY 2024 for use in lung
cancer, as discussed separately in this section.
Please refer to the online application posting for CYTALUX[reg],
available at https://mearis.cms.gov/public/publications/ntap/NTP221017X8NAN, for additional detail describing the technology and the
disease treated by the technology.
With respect to the newness criterion, the applicant stated that a
new drug application (NDA) for CYTALUX[reg] was approved by FDA on
November 29, 2021, as an optical imaging agent indicated in adult
patients with ovarian cancer as an adjunct for intraoperative
identification of malignant lesions. According to the applicant,
CYTALUX[reg] had market availability delayed until April 15, 2022, due
to supply/product availability. The recommended dose of CYTALUX[reg] is
a single intravenous infusion of 0.025 mg/kg diluted in 250 mL of 5%
Dextrose Injection, administered prior to surgery over 60 minutes using
a dedicated infusion line.
According to the applicant, there are currently no ICD-10-PCS
procedure codes to distinctly identify CYTALUX[reg]. The applicant
submitted a request for approval for a unique ICD-10-PCS procedure code
for CYTALUX[reg] beginning in FY 2024. The applicant provided a list of
diagnosis codes that may be used to currently identify this indication
for CYTALUX[reg], and differentiate it from the lung cancer indication,
under the ICD-10-CM coding system. Please refer to the online
application posting for the complete list of ICD-10-CM codes provided
by the applicant.
As previously discussed, if a technology meets all three of the
substantial similarity criteria under the newness criterion, it would
be considered substantially similar to an existing technology and would
not be considered ``new'' for the purpose of new technology add-on
payments.
With respect to the substantial similarity criteria, the applicant
believes that CYTALUX[reg] is not substantially similar to other
currently available technologies because there are no other optical
imaging agents with the same active ingredient, nor the same mechanism
of action for the same indication of ovarian cancer, and that
therefore, the technology meets the newness criterion. The following
table summarizes the applicant's assertions regarding the substantial
similarity criteria. Please see the online application posting for
CYTALUX[reg] for the applicant's complete statements in support of its
assertion that CYTALUX[reg] is not substantially similar to other
currently available technologies.
[[Page 26787]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.118
We are inviting public comments on whether CYTALUX[reg] is
substantially similar to existing technologies and whether CYTALUX[reg]
meets the newness criterion.
With respect to the cost criterion, to identify potential cases
representing patients who may be eligible for CYTALUX[reg], the
applicant searched the FY 2021 Inpatient Standard Analytic File (IPSAF)
for cases reporting a combination of ICD-10-CM/PCS codes for ovarian
cancer that may require an adjunct for intraoperative identification of
malignant lesions. Using the inclusion/exclusion criteria described in
the following table, the applicant identified 3,281 claims mapping to
five MS-DRGs. The applicant noted that it limited its search to these
five MS-DRGs as 99% of cases map to these MS-DRGs. Please see Table
10.8.A.--CYTALUX[reg] (ovarian) Codes--FY 2024 associated with this
proposed rule for the complete list of codes that the applicant
indicated were included in its cost analysis. The applicant followed
the order of operations described in the following table and calculated
a final inflated average case-weighted standardized charge per case of
$133,657, which exceeded the average case-weighted threshold amount of
$93,649. Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount,
the applicant asserted that CYTALUX[reg] meets the cost criterion.
[[Page 26788]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.119
We are inviting public comments on whether CYTALUX[reg] meets the
cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that CYTALUX[reg] represents a substantial clinical
improvement over existing technologies because CYTALUX[reg] enables the
surgeon to identify cancer intraoperatively in real time that otherwise
would have been missed, enabling the surgeon to achieve more complete
resection in cytoreductive surgery for ovarian cancer. Per the
applicant, the results of the Phase 3 study confirm that CYTALUX[reg]
serves as an adjunct to the surgeon, helping them to identify
additional cancer which otherwise would not have been identified,
enabling the surgeon to achieve more complete resection, which is the
goal of cytoreductive surgery. The applicant provided two studies to
support these claims as well as eleven background articles. The
background articles included studies to demonstrate the importance of
removing all residual disease (lesions) to improve patients' survival;
studies that showed that lesions can be diffuse and numerous, of
various sizes, and often not readily visible in the surgical field; a
study that showed, when CYTALUX[reg] was used in a murine tumor model
and in early clinical studies, that it enabled identifying occult tumor
nodules and showed potential to eliminate positive tumor margins; a
study demonstrating that the folate receptor was expressed in most
ovarian cancers; and a study and a review supporting the use of
fluorescence in real-time to improve cancer surgery.\22\ The following
table summarizes the applicant's assertions regarding the substantial
clinical improvement criterion. Please see the online posting for
CYTALUX[reg] for the applicant's complete statements regarding the
substantial clinical improvement criterion and the supporting evidence
provided.
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\22\ Background articles are not included in the following table
but can be accessed via the online posting for the technology.
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[[Page 26789]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.120
After review of the information provided by the applicant, we have
the following concerns regarding whether CYTALUX[reg] meets the
substantial clinical improvement criterion. We note that CYTALUX[reg]
showed a false
[[Page 26790]]
positive rate of 24.8% that led to resections in the Phase 3,
randomized, multicenter, single dose, open-label study of this
technology.\23\ While the applicant submitted a separate comment
stating there was no worsening in the safety profile for patients with
false positive results, we continue to question the impact on patient
outcomes when taking additional tissues that were false positives. In
addition, while the applicant provided background citations to support
the assertion that optimal or improved cytoreduction of tumor results
in improved survival in ovarian adenocarcinoma, the Phase 3 study of
CYTALUX[reg] appears to have been designed to assess the efficacy of
the technology rather than clinical outcomes such as survival,
recurrence, or rate of additional procedures. We would be interested in
additional or longer-term data demonstrating that CYTALUX[reg] results
in improved outcomes such as improved survival or a reduced rate of
recurrence to support an assessment of whether CYTALUX[reg] represents
a substantial clinical improvement.
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\23\ Tanyi JL, Randall LM, Chambers SK, Butler KA, Winer IS,
Langstraat CL, Han ES, Vahrmeijer AL, Chon HS, Morgan MA, Powell MA,
Tseng JH, Lopez A, Wenham RM. A Randomized Phase 3 Study of
Pafolacianine Injection (OTL38) for Intraoperative Imaging of Folate
Receptor Positive Ovarian Cancer. J Clin Oncol. 2022. doi:10.1200/
JCO.22.00291.
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We are inviting public comments on whether CYTALUX[reg] meets the
substantial clinical improvement criterion.
In this section, we summarize and respond to written public
comments received in response to the New Technology Town Hall meeting
notice published in the Federal Register regarding the substantial
clinical improvement criterion for CYTALUX[reg].
Comment: In response to a question regarding the impact of taking
additional tissues that were false positive on patient outcomes, the
applicant provided evidence based on results for the 27 patients in the
full analysis set (FAS) from the central laboratory, for whom all NIR
fluorescent lesions were false positive. The significant adverse event
(SAE) rate (two of the 27 patients [7.4%]) and the severe AE rate (four
of the 27 patients [14.8%]) demonstrated that there was no worsening in
the safety profile for this false positive group, in comparison to the
overall rates for this study (see the following table).
[GRAPHIC] [TIFF OMITTED] TP01MY23.121
Response: We thank the applicant for its comments and will take
this information into consideration when deciding whether to approve
new technology add-on payments for CYTALUX[reg].
Comment: In response to a question regarding how many patients in
the study had a complete resection without CYTALUX[reg], the applicant
stated that if subjects did not receive CYTALUX[reg], they were not in
the clinical study, and no data was collected for these subjects. The
applicant asserted that in a post-procedural questionnaire in the
CYTALUX[reg] Phase 3 study for ovarian cancer, investigators self-
reported achieving complete R0 (no gross residual disease) resection in
62.4% (68 of 109) of patients. The applicant added that the post-
procedural questionnaire was only completed for those procedures in
which the patient was randomized to receive NIR imaging with
CYTALUX[reg]. The applicant presented that, in the literature, data for
achieving R0 (no visible disease after surgery) is subjective given
that surgeons self-report results. The literature suggests achievement
of R1 (<1cm residual disease) is between 17-65%. The high recurrence
rate of 70% of women diagnosed with ovarian cancer suggests the
percentage of ovarian cancer surgeries where R0 is achieved is likely
over-estimated. The applicant stated that in the Phase 3 study
conducted for ovarian cancer, 36/109 (33%) of subjects with folate
receptor positive ovarian cancer had one or more cancerous lesions
found with CYTALUX[reg] that were not identified by standard white
light and palpation on tissue that was not planned for resection;
therefore, this data indicates R0 would not have been achieved in any
of these patients without the use of CYTALUX[reg].
Response: We thank the applicant for its comments. We would
appreciate if the applicant could provide references for the cited
literature regarding the achievement of R1 (<1cm residual disease) in
the comment. We will take this information into consideration when
deciding whether to approve new technology add-on payments for
CYTALUX[reg].
b. CYTALUX[reg] (Pafolacianine), Second Indication
On Target Laboratories submitted an application for new technology
add-on payments for CYTALUX[reg] for use in lung cancer for FY 2024.
The applicant stated that CYTALUX[reg] is the first targeted
intraoperative molecular imaging agent that illuminates lung cancer in
real time, enabling the detection of more cancer for resection.
CYTALUX[reg] is an optical imaging agent comprised of a folic acid
analog conjugated with a fluorescent dye which binds to folate receptor
positive cancer cells and illuminates malignant lesions during surgery.
Per the applicant, CYTALUX[reg] is used in adult patients with known or
suspected cancer in the lung as an adjunct for intraoperative
identification of pulmonary lesions.
[[Page 26791]]
CYTALUX[reg] is to be used with a near-infrared imaging system (NIR)
cleared by the FDA for specific use with CYTALUX[reg]. CYTALUX[reg] is
used by surgeons to illuminate cancer in real time during surgery. We
note that On Target Laboratories also submitted a separate application
for new technology add-on payments for CYTALUX[reg] for FY 2024 for use
in ovarian cancer, as discussed previously in this section.
Please refer to the online application posting for CYTALUX[reg],
available at https://mearis.cms.gov/public/publications/ntap/NTP221017ED6BY, for additional detail describing the technology and the
disease treated by the technology.
With respect to the newness criterion, the applicant stated that
CYTALUX[reg] has received FDA approval in a supplemental new drug
application (sNDA), effective December 16, 2022, to include an
additional indication for lung cancer, following approval of the
original NDA for use in ovarian cancer. CYTALUX[reg] is indicated as an
adjunct for intraoperative identification of malignant and non-
malignant pulmonary lesions in adult patients with known or suspected
cancer in the lung. According to the applicant, CYTALUX[reg] will have
market availability delayed until approximately middle of 2023 due to
supply/product availability. The recommended dose of CYTALUX[reg] is a
single intravenous infusion of 0.025 mg/kg diluted in 250 mL of 5%
Dextrose Injection, administered prior to surgery over 60 minutes using
a dedicated infusion line. We note that, as discussed previously, the
applicant stated that CYTALUX[reg] for ovarian cancer became
commercially available on April 15, 2022. We are interested in
additional information regarding whether the versions or formulations
for CYTALUX[reg] for use in lung cancer and ovarian cancer are
different, or further explanation regarding the longer delay for the
market availability for CYTALUX[reg] for lung cancer.
According to the applicant, there are currently no ICD-10-PCS
procedure codes to distinctly identify CYTALUX[reg]. The applicant
submitted a request for approval for a unique ICD-10-PCS procedure code
for CYTALUX[reg] beginning in FY 2024. The applicant provided a list of
diagnosis codes that may be used to currently identify this indication
for CYTALUX[reg], and differentiate it from the ovarian cancer
indication, under the ICD-10-CM coding system. Please refer to the
online application posting for the complete list of ICD-10-CM codes
provided by the applicant.
As previously discussed, if a technology meets all three of the
substantial similarity criteria under the newness criterion, it would
be considered substantially similar to an existing technology and would
not be considered ``new'' for the purpose of new technology add-on
payments.
With respect to the substantial similarity criteria, the applicant
believes that CYTALUX[reg] is not substantially similar to other
currently available technologies because there are no other optical
imaging agents with the same active ingredient, nor same mechanism of
action, for the same indication, and that therefore, the technology
meets the newness criterion. The following table summarizes the
applicant's assertions regarding the substantial similarity criteria.
Please see the online application posting for CYTALUX[reg] for the
applicant's complete statements in support of its assertion that
CYTALUX[reg] is not substantially similar to other currently available
technologies.
[GRAPHIC] [TIFF OMITTED] TP01MY23.122
We are inviting public comments on whether CYTALUX[reg] is
substantially similar to existing technologies and whether CYTALUX[reg]
meets the newness criterion.
With respect to the cost criterion, to identify potential cases
representing patients who may be eligible for CYTALUX[reg], the
applicant searched the FY 2021 Inpatient Standard Analytic File (SAF)
for cases reporting a combination of ICD-10-CM/PCS codes for malignant
or suspected lung lesions. Using the inclusion/exclusion criteria
described in the following table, the applicant identified 15,033
claims mapping to three MS-DRGs. The applicant noted that it limited
its search to these three MS-DRGs as 99% of cases map to these MS-DRGs.
Please see Table 10.9.A.--CYTALUX[reg] (lung) Codes--FY 2024 associated
with this proposed rule for the complete list of codes that the
applicant included in its cost analysis. The applicant followed the
order of operations described in the following table and calculated a
final inflated average case-weighted standardized charge per case of
$122,700, which exceeded the average case-weighted threshold amount of
$101,584. Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount,
the applicant asserted that CYTALUX[reg] meets the cost criterion.
[[Page 26792]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.123
We are inviting public comments on whether CYTALUX[reg] meets the
cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that CYTALUX[reg] represents a substantial clinical
improvement over existing technologies because CYTALUX[reg] enables the
surgeon to visualize cancer intraoperatively, in real time, that
otherwise may have gone undetected. Per the applicant, the use of the
CYTALUX[reg] during pulmonary resection for lung cancer represents a
significant potential advancement over current standards of surgery by
enhancing the intraoperative localization of pulmonary nodules,
improving the ability to remove them with clean margins, and reducing
the probability of leaving otherwise undetected malignant synchronous
lesions behind. The applicant provided six studies to support these
claims and nine background articles. The background articles included
studies about the importance of complete cancer tissue resection to
overall survival, the limitations of thoracoscopic surgery by
localizing the exact location of a pulmonary nodule for resection, the
low 5-year survival for lung cancer patients, and the high rates of
local recurrence after lung cancer surgery; one study demonstrating
that contrasted chest computed tomography (CT) scan is not sufficient
to identify pulmonary nodules that need resection; one study supporting
the need for cleaner margins during resection to reduce local
recurrence of lung cancer; one study supporting the use of the folate
receptor as an appropriate tumor specific marker; one study indicating
that folate-targeted agents may have a place in cancer treatment
before, as well as, after chemotherapy; and a study showing that the
folate receptor is expressed in the majority of lung cancers and that
CYTALUX[reg] targets and binds to folate receptors and thus the
mechanism of action is a viable target for lung cancer.\24\ The
following table summarizes the applicant's assertions regarding the
substantial clinical improvement criterion. Please see the online
posting for CYTALUX[reg] for the applicant's complete statements
regarding the substantial clinical improvement criterion and the
supporting evidence provided.
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\24\ Background articles are not included in the following table
but can be accessed via the online posting for the technology.
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After review of the information provided by the applicant, we have
the following concerns regarding whether CYTALUX[reg] meets the
substantial clinical improvement criterion. We note that CYTALUX[reg]
showed false positive rate of 25.8% that led to resections in the Phase
3, multicenter study of this technology.\25\ While the applicant
submitted a separate comment stating there was no worsening in the
safety profile for patients with false positive results, we continue to
question the impact on patient outcomes when taking additional tissues
that were false positive. We note that the authors discussed in the
results of the phase 3 trial that there was a decreased rate of
subsequent diagnostic intervention. We question if they are referring
to fewer resections in future surgical procedure, and/or if this also
implies a subsequent positive outcome of reduced mortality. While the
studies provided in support of CYTALUX[reg] measure identification of
lesions and changes in the scope of the surgical procedure, the
applicant did not provide data indicating that these endpoints directly
lead to improved clinical outcomes (for example, reduction in
mortality, hospitalizations, subsequent procedures, and/or rate of
recurrence) based on use of CYTALUX[reg]. Rather, improved outcomes
were inferred by relying on the assumption that increased or decreased
scope of resection results in better outcomes. We are interested in
additional information or long-term data measuring the impact of the
technology on treatment outcomes or the management of the patient to
support that CYTALUX[reg] results in an improvement over the standard
of care.
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\25\ Singhal S, Sarkaria I., Martin L, Rice D, Blackmon S, Slade
H. Pafolacianine for Intraoperative Molecular Imaging for Cancer in
the Lung--The ELUCIDATE Trial. (Manuscript in preparation). 2022.
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We are inviting public comments on whether CYTALUX[reg] meets the
substantial clinical improvement criterion.
In this section, we summarize and respond to written public
comments received in response to the New Technology Town Hall meeting
notice published in the Federal Register regarding the substantial
clinical improvement criterion for CYTALUX[reg].
Comment: In response to a question regarding the impact of taking
additional tissues that were false positive on patient outcomes, the
applicant stated that in the CYTALUX[reg] Phase 3 ELUCIDATE lung cancer
trial, participants who had false positive synchronous lesions removed
showed no associated increase in respiratory or pulmonary adverse
events based on the tissue removed. A total of 134 specimens were
excised from the 100 intraoperative molecular imaging (IMI)
participants, with each participant contributing one or more specimens.
All were sent for local histopathology, with 104 specimens found to be
positive for cancer in 89 participants. Among all 134 specimens from
participants with suspected or confirmed cancer, 108 (81%) had
fluoresced under IMI in 78 participants. The estimated sensitivity for
detecting a cancerous tissue was 80/104 or 76.9% (model estimate 76.5%
(95% CI [66.7, 84.2])). There were 28/108 (25.9%) false positives (10
primary nodules, 18 synchronous lesions). Histology on the false
positive tissues was mostly benign or normal lung parenchyma. Where
pathology was identified, it was most often granulomatous disease, with
one fibrous tumor, one meningothelial-like nodule, one anthracotic
nodule and one lipoid pneumonia.
Response: We thank the applicant for its comments and will take
this information into consideration when deciding whether to approve
new technology add-on payments for CYTALUX[reg].
c. DuraGraft[reg]
Marizyme, Inc. submitted an application for new technology add-on
payment for DuraGraft[reg] for FY 2024. According to the applicant,
DuraGraft[reg] is an intraoperative vein-graft preservation solution
used during the harvesting and grafting interval during coronary artery
bypass graft surgery (CABG). The applicant stated that use of
DuraGraft[reg] does not change clinical/surgical practice; it replaces
solutions currently used for flushing and storage of the saphenous vein
grafts (SVG) from harvesting through grafting, including tests for
graft leakage. We note that Somahlution, Inc., acquired by Marizyme in
2020,\26\ submitted and withdrew applications for new technology add-on
payment for DuraGraft[reg] for FY 2018 and FY 2019, as well as
submitted an application again in FY 2020, as summarized in the FY
[[Page 26796]]
2020 IPPS/LTCH PPS proposed rule (84 FR 19305 through 19312). The
applicant withdrew its application again prior to the issuance of the
FY 2020 IPPS/LTCH PPS final rule (84 FR 42180).
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\26\ NASDAQ. Marizyme, Inc. Completes Acquisition of
Somahlution, Inc. and Raises $7.0 Million in Private Placement
[verbar] Nasdaq (accessed 1/23/2023).
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Please refer to the online application posting for DuraGraft[reg],
available at https://mearis.cms.gov/public/publications/ntap/NTP221013TEMTR, for additional detail describing the technology and
intraoperative ischemic injury.
With respect to the newness criterion, the applicant stated that it
is has submitted a De Novo classification request to FDA for
DuraGraft.[reg] Per the applicant, the proposed indication for
DuraGraft[reg] is for flushing and storage of vascular grafts during
CABG surgery. The applicant stated that, effective October 1, 2017, the
following ICD-10-PCS code may be used to uniquely describe procedures
involving the use of DuraGraft[reg]: XY0VX83 (Extracorporeal
introduction of endothelial damage inhibitor to vein graft, new
technology group 3).
As previously discussed, if a technology meets all three of the
substantial similarity criteria under the newness criterion, it would
be considered substantially similar to an existing technology and would
not be considered ``new'' for the purpose of new technology add-on
payment.
With respect to the substantial similarity criteria, the applicant
asserted that DuraGraft[reg] is not substantially similar to other
currently available technologies because DuraGraft[reg] is a first-in-
class product to address vein graft disease (post-CABG) and its
complications. The following table summarizes the applicant's
assertions regarding the substantial similarity criteria. Please see
the online application posting for DuraGraft[reg] for the applicant's
complete statements in support of its assertion that DuraGraft[reg] is
not substantially similar to other currently available technologies.
[GRAPHIC] [TIFF OMITTED] TP01MY23.127
However, we note the following concern with regard to the newness
criterion. As noted in the FY 2020 IPPS/LTCH PPS proposed rule, it
seems that the mechanism of action of DuraGraft[reg] may be the same or
similar to other vein graft storage solutions. Specifically, we
continue to question whether the current solutions used in vein graft
surgical procedures may be the same or similar to DuraGraft[reg] in
composition and treatment indication and, therefore, have the same or
similar mechanism of action.\27\ We are inviting public comments on
whether DuraGraft[reg] is substantially similar to existing
technologies and whether DuraGraft[reg] meets the newness criterion.
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\27\ 84 FR 19307.
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With respect to the cost criterion, to identify potential cases
representing patients who may be eligible for DuraGraft[reg], the
applicant searched the FY 2021 MedPAR file for cases reporting an ICD-
10-PCS code describing common CABG procedures. Using the inclusion/
exclusion criteria described in the following table, the applicant
identified 54,636 cases mapping to 82 MS-DRGs. Please see Table
10.11.A.--DuraGraft[reg] Codes--FY 2024 associated with this proposed
rule for the complete list of MS-DRGs and ICD-10-CM PCS codes that the
applicant indicated were included in its cost analysis. The applicant
followed the order of operations described in the following table and
calculated a final inflated average case-weighted standardized charge
per case of $299,445, which exceeded the average case-weighted
threshold amount of $218,294. Because the final inflated average case-
weighted standardized charge per case exceeded the average case-
weighted threshold amount, the applicant asserted that DuraGraft[reg]
meets the cost criterion.
[[Page 26797]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.128
We are inviting public comments on whether DuraGraft[reg] meets the
cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that DuraGraft[reg] represents a substantial
clinical improvement over existing technologies because there is no
other product or technology that reduces the incidence of peri-
operative myocardial infarction. The applicant provided three studies
to support its assertions and 44 background articles about reducing
major adverse cardiac events (MACE).\28\ The following table summarizes
the applicant's assertions regarding the substantial clinical
improvement criterion. Please see the online posting for DuraGraft[reg]
for the applicant's complete statements regarding the substantial
clinical improvement criterion and the supporting evidence provided.
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\28\ Sources that provide background information are not
included in the table below but can be accessed via the online
application.
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[[Page 26800]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.131
BILLING CODE 4120-01-C
After review of the information provided by the applicant, we have
the following concerns regarding whether DuraGraft[reg] meets the
substantial clinical improvement criterion. First, we note that the
Szalkiewicz and Perrault studies both used a relatively small sample
size (166 and 125 patients respectively) as compared to the number of
potentially eligible patients for this technology and relatively short
follow-up periods (4 days and 12 months respectively).29 30
According to the applicant, about 400,000 CABG procedures were
performed annually in the U.S. for which DuraGraft[reg] can be
used.\31\ The applicant estimated that approximately 60% of these
procedures (or 240,000 procedures annually or 20,000 procedures
monthly) will be performed on Medicare beneficiaries. We are unsure if
the sample was representative of the number of Medicare beneficiaries
potentially eligible for DuraGraft[reg]. Moreover, the sample size in
the Perrault study was further reduced by SVG occlusion, from 125
grafts at the beginning of the study to 118 at 3-month follow up, a 6%
decrease, and to 97 at 12-month follow up, a further reduction of 18%.
We also note that Perrault et al. mentioned that a larger cohort and
longer-term evaluation are needed to validate their findings.
Similarly, Szalkiewicz et al. cautioned that the study was not powered
for clinical outcome events. We are interested in whether similar
results in reduced incidence of peri-operative myocardial infarction
and associated clinical benefits would have been achieved with a larger
patient sample and over a longer follow up period for clinical
outcomes.
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\29\ Szalkiewicz, P., M.Y. Emmert, and P.P. Heinisch, et al.
(2022). Graft Preservation confers myocardial protection during
coronary artery bypass grafting. Frontiers in Cardiovascular
Medicine, July 2022, pp 1-10. DOI 10.3389/fcvm.2022.922357.
\30\ Perrault, L.P., M. Carrier, and P. Voisine, et al. (2021).
Sequential multidetector computed tomography assessments after
venous graft treatment solution in coronary artery bypass grafting.
Journal of Thoracis and Cardiovascular Surgery. Jan. 2021, Vol. 161,
Number 1, 96-106. https://doi.org/10.1016/j.jtcvs.2019.10.115.
\31\ The applicant's estimates were based on Healthcare Cost and
Utilization Project (HCUP) National Inpatient Sample (NIS) data.
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Second, we are concerned that there may be mixed evidence as to
whether there is an association between exposure to DuraGraft[reg] and
clinical outcome improvement. For instance, the Haime study
demonstrated that patients whose SVG was exposed to DuraGraft[reg] and
those whose SVG was exposed to saline had comparable risk for all-cause
mortality.\32\ We further note that in the Perrault study, patients
whose SVGs were stored in DuraGraft[reg] were just as likely to
experience MACE, angina, and arrhythmias as those whose SVGs were
stored in saline (MACE: 0 out of the 125 patients whose SVGs were
stored in saline, 1 out of the 125 patients whose SVGs were stored in
DuraGraft[reg], p = 0.32; angina: 0 out of the 125 patients whose SVGs
were stored in saline, 1 out of the 125 patients whose SVGs were
storied in DuraGraft[reg], p = 0.32; arrhythmia: 0 out of the 125
patients whose SVGs were stored in saline, 1 out of the 125 patients
whose SVGs were storied in DuraGraft[reg], p = 0.32).\33\ The study
also found no significant differences between SVGs stored in
DuraGraft[reg] versus those in saline in maximum graft narrowing or
mean lumen diameter at 1, 3, and 12 months. Similarly, the Szalkielwicz
study did not identify any significant differences between patients
whose SVG was exposed to DuraGraft[reg] and those to saline in median
length of hospital stay, all-cause mortality, and cardiac-related
mortality.
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\32\ Haime, M., R.R. McLean, and K.E. Kurgansky, et al. (2018).
Relationship between intra-operative vein graft treatment with
DuraGraft[reg] or saline and clinical outcomes after coronary artery
bypass grafting, Expert Review of Cardiovascular Therapy, 16:12,
963-970, DOI: 10.1080/14779072.2018.1532289.
\33\ Perrault et al. (2021), op.cit., Table 6, p. 103.
---------------------------------------------------------------------------
Third, the Haime study was conducted among patients of the Veterans
Administration (VA) medical system who were predominantly white (95%)
and male (99%). We questioned whether the results from that study could
be generalized to other patient groups, including nonveterans, women,
or those from other racial or ethnic groups. We continue to question
whether the demographic profiles in some of the studies that the
applicant submitted for FY 2024 were comparable with those of the U.S.
Medicare patients who underwent CABG surgery. For instance, in terms of
patients' gender, the Perrault, Szalkiewica, and Haime studies were all
conducted among CABG patients who were predominantly male (99% in the
Haime study; 91% in the Perrault study; 83% in the Szalkiewicz study).
However, among the
[[Page 26801]]
Medicare fee-for-service beneficiaries who underwent CABG surgery, male
patients accounted for only two-thirds (66%) of this
population.34 35 We are interested in whether the results
from the Haime, Perrault, and Szalkiewicz studies can be replicated
among the Medicare population. The Haime study also noted that because
they used VA data only, information about service utilization outside
the VA system was not available to them. We question whether their
findings would be replicable among the Medicare population.
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\34\ Angraal, S., K. Khera, and Y. Wang, et al. (2018) Sex and
race differences in the utilization and outcome of coronary artery
bypass grafting among Medicare beneficiaries, 2009-2014. Journal of
the American Heart Association. 7:e009014. DOI: 10.1161/
JAHA.118.009014.)
\35\ McNeely, Markwell, Vassileva (2016). Trends in patient
characteristics and outcomes of coronary artery bypass grafting in
2000-2012 Medicare population. Annals of Thoracic Surgery. 102:132-9
(http://dx.doi.org/10.1016/j.athoracsur.2016.01.016).
---------------------------------------------------------------------------
In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19311), we noted
our concern that some of the studies provided by the applicant as
supporting materials do not account for other variables that may have
confounded the association between exposure to DuraGraft[reg] and
clinical outcomes. We continue to question whether potential
confounding factors have been taken into account in assessing the
association between exposure to DuraGraft[reg] and clinical outcome
improvement. Specifically, both the Szalkiewicz and Haime studies were
single-center studies and we question whether site-specific
characteristics could have contributed to differences in clinical
outcomes between patients exposed to DuraGraft[reg] versus those
exposed to saline. Also, Szalkiewicz and his team conducted their study
among patients for on-pump CABG surgery, which accounts for the
majority of CABG surgeries conducted in the U.S.\36\ We are interested
to know whether the study results can be generalized for patients who
undergo off-pump CABG surgery. In addition, Haime and his team
conducted their study in two consecutive phases, during which they
exposed patients' SVGs to heparinized saline from 1996 to 1999, and to
DuraGraft[reg] from 2001 to 2004. Haime and his team stated that
surgical and post-operative protocols did not change substantially
during these periods. However, their study did not mention whether the
team has accounted for changes in generalized surgical techniques or
operating room practices, either of which could have contributed to the
observed outcomes. The Haime team also used propensity score weighting
to minimize differences in age and several clinical characteristics
between patients from the two periods. Theoretically, doing so would
reduce the likelihood that these differences confound the association
between exposure to DuraGraft[reg] and clinical outcomes. However,
propensity scoring can only control for confounding factors that are
measured, that is, captured in the data. Unmeasured confounding factors
could still impact the association between exposure to DuraGraft[reg]
(or heparinized saline) and clinical outcomes. This may be the reason
the research team stated that they would not be able to rule out the
possibility that other changes between these two periods, including
patient selection criteria and intraoperative and post-operative
protocols, might still have confounded the differences in clinical
outcomes. Additionally, according to the VA, only 49% of veterans had
used at least one VA benefit or service.\37\ Veterans may use services
outside of the VA for repeat revascularization to address further
progress of coronary artery disease. Repeat vascularization may be a
confounding factor that impacts the clinical outcomes for patients
exposed to DuraGraft[reg] or heparinized saline. As previously stated,
the Haime study noted that because they used VA data only, information
about service utilization outside the VA system was not available to
them. As a result, it remains unclear whether we can reliably attribute
any changes in clinical outcomes to exposure to DuraGraft[reg].
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\36\ E. Blackstone, and J.F. Sabik, III (August 2017). Changing
the discussion on on-pump versus off-pump CABG. New England Journal
of Medicine. 377: 692-693. DOI: 10.1056/NEJMe1706220.
\37\ United States Department of Veterans Affairs (May 2020). VA
Utilization Profile: FY 2017. National Center for Veterans Analysis
and Statistics (VA_Utilization_Profile_2017.pdf, accessed 12/7/
2022).
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With regard to the Perrault study (2021), where two SVGs from each
patient were randomly assigned to be stored in either DuraGraft[reg] or
saline, and the surgeons and operating room staff were blinded, we are
interested in whether the SVGs in each arm were comparable in wall
thickness or lumen diameter at the baseline. While the Perrault study
(2021) was multi-center and drew patients from 7 sites, a sizable
minority of patients (42%) came from one specific site. We wonder if
the impact of DuraGraft[reg] on clinical outcomes at 12-month follow-up
is confounded by unique characteristics of that specific site. In
addition, the Perrault team noted that the association between
DuraGraft[reg] and clinical outcome improvement may be confounded by
precision of different modalities of MDCT angiography. We agree with
Perrault and his team that further studies on the effects of
confounding factors, like chronic conditions (for example, left main
coronary artery disease,\38\ diabetes control or hypercholesterolemia),
medication use (for example, antiplatelet therapy or lipid-lowering
drugs), graft and anastomosis characteristics (for example, quality,
size, and diameter of target vessel), type of graft use, or surgical
technique (for example, open vs endoscopic harvest) \39\ may provide
further insight.
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\38\ Caliskan, E., M. Misfeld, and S. Sandner, et al. (August
2022) Clinical event rate in patients with and without left main
disease undergoing isolated coronary artery bypass grafting: results
from the European DuraGraft[reg] Registry. European Journal of
Cardiao-Thoracic Surgery. 62(4): ezac 403: https://doi.org/10.1093/ejcts/ezac403.
\39\ Perrault et al. (2021), See prior study described.
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We are inviting public comments on whether DuraGraft[reg] meets the
substantial clinical improvement criterion. In this section, we
summarize and respond to written public comments received in response
to the New Technology Town Hall meeting notice published in the Federal
Register regarding the substantial clinical improvement criterion for
DuraGraft[reg].
Comment: The applicant submitted a public comment in response to
two questions posed at the Town Hall meeting and provided additional
information. With regard to the first question asking for clarification
with respect to any differences between GALA and DuraGraft[reg] and
whether any of the studies cited by the applicant used GALA rather than
DuraGraft[reg], the applicant stated that GALA is a pharmacy-compounded
product that has been used by hospitals for graft storage and is a
precursor product to DuraGraft[reg]. According to the applicant,
DuraGraft[reg] has the same intended composition and product
characteristics (pH, isotonicity, osmolarity, and ionic balance) as
GALA at the time of manufacture. The applicant stated that GALA was
developed by scientists at Harvard University and the West Roxbury
Veterans Administration (VA) Medical Center, and had been used at the
latter as a pharmacy-compounded product. In 2012, the applicant
acquired a license from the VA to exclusively commercialize GALA, but
the product was never sold commercially. With a shelf-life of about a
week, GALA `as is' is rendered not suitable for distribution
[[Page 26802]]
and commercialization.\40\ According to the applicant, GALA's shelf-
life was primarily driven by chemical instability of L-glutathione and
ascorbic acid, which were observed to be rapidly and substantially lost
to oxidation within a few days of GALA compounding. L-glutathione and
ascorbic acid are antioxidant components that play key roles in
protecting vein grafts against ischemic injury and in particular
oxidative damage, which is a primary driver of ischemic injury. The
applicant noted that after obtaining the license for GALA, it addressed
the product's instability issues without changing the composition of
the product at its point of use by separating and configuring GALA's
components into two (versus one) solutions. It observed that GALA's
organic components, in particular L-glutathione and ascorbic acid,
required a different environment for stability compared to the
inorganic salts. The applicant formulated the organic components into
Solution B, a pH 3 solution (optimal pH for chemical stability of the
organic components including L-glutathione and ascorbic acid)
concentrated 20-fold into 13.5 mls. Solution A is a pH 8 solution that
includes all the inorganic salts (237.5 mls). At the point of use in
the operating room, the two solutions are mixed to create a physiologic
pH final solution to preserve vascular grafts. Per the applicant, this
process enables DuraGraft[reg] to achieve chemical stability while
maintaining the same intended composition as GALA. As a result, while
DuraGraft[reg] is provided as a kit containing two separate solutions,
Solution A and B, GALA was instead made as a single solution product.
The applicant mentioned other changes in DuraGraft[reg] (with respect
to GALA), which are limited to manufacturing controls, most notably the
incorporation of oxygen control processes during the manufacturing of
Solution B to prevent loss of components to oxidation, aseptic
processing controls used during the manufacture of both Solutions A and
B, manufacturing of DuraGraft[reg] according to Current Good
Manufacturing Practice (CGMP) regulations \41\ and inclusion of release
specifications for DuraGraft[reg]. The applicant remarked that combined
changes in the manufacturing process and product configuration resulted
in substantial differences in stability between GALA and
DuraGraft[reg]. In particular, L-ascorbic acid and L-glutathione have
half-lives of several days in GALA versus over three years in
DuraGraft[reg]. The applicant confirmed that the GALA was used in the
Haime study (2018).\42\ The applicant did not conduct any studies that
compared the impact of DuraGraft[reg] and GALA on clinical outcomes.
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\40\ The applicant observed that shelf-life did not pose an
issue with use of compounded GALA within the West Roxbury VA Medical
Center, as the product was cycled off the shelves weekly.
\41\ Food and Drug Administration (November 16, 2022) Current
Good Manufacturing Practice (CGMP) Regulations (Current Good
Manufacturing Practice (CGMP) Regulations [verbar] FDA, accessed 1/
4/2023).
\42\ Haime et al. (2018) op.cit.
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With regard to the second question asking whether DuraGraft[reg]
was studied in Medicare patients, the applicant responded that
DuraGraft[reg] has not been studied in U.S. or U.S. Medicare patients.
The applicant further stated that DuraGraft[reg] has been studied in
many European patients aged 65 or greater, which were the prospective
randomized controlled trial published by Perrault et al. (2021) \43\
and the retrospective study measuring postoperative Troponin levels
published by Dr. Szalkiewicz et al. (2022).\44\ The applicant stated
that the ``European Multi-Center Registry To Assess Outcomes In
Patients Undergoing CABG Surgery: Treatment Of Vascular Conduits With
DuraGraft[reg], A Novel Endothelial Damage Inhibitor'' trial is an
ongoing post-market study designed to support a European
(International) CABG registry database used to assess the clinical
outcomes of patients receiving DuraGraft[reg] during CABG surgery and
whose free vascular grafts (both venous and arterial) have been treated
with DuraGraft[reg]. According to the applicant, a total of 2,964
patients were enrolled in the trial, which completed enrollment on
August 31, 2019. There were 45 enrolling centers in the trial in eight
countries: Austria, Germany, Ireland, Italy, Spain, Switzerland,
Turkey, and the United Kingdom. The applicant noted that follow-up data
has been completed out to 30 days and one year, and that data will
continue to be collected annually for up to five years. The applicant
stated that as of August 2022, all patients have completed two full
years of follow-up.
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\43\ Perrault et al. (2021) op.cit.
\44\ Szakielwicz et al. (2022) op.cit.
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The applicant mentioned that the trial enrolled patients undergoing
isolated CABG surgery or combined CABG plus mitral or aortic valve
repair were aged 18 or older, with at least one SVG or radial artery
graft used as a bypass conduit. Of the 2,532 isolated CABG patients,
1,617 patients were aged 65 or older. The applicant asserted that these
patients were relevant to the Medicare population. The applicant also
provided clinical outcomes at 1-year estimated by Kaplan-Meier method
for the isolated CABG patients aged at least 65 and under age 65
according to Cox regression. The applicant stated that the trial is a
single-arm registry, and therefore without a comparator arm. The
applicant identified that adverse event rates in the aged 65 or older
group were higher, as expected based on higher rates of comorbidities.
The European System for Cardiac Operative Risk Evaluation (Version 2;
EuroScore II) values for the aged 65 or older, compared to those under
65, were 2.7 3.6 (1,617) vs. 1.5 2.7 (915), p
< 0.001. The applicant stated that this reflects the near double
expected operative mortality in the Medicare aged patients.
The applicant stated that to compare outcomes with a U.S.
population, it compared isolated CABG patients from the DuraGraft[reg]
Registry in Europe to a propensity-matched control group from the
Society of Thoracic Surgeons (STS) Registry Adult Cardiac Surgery
Database, a clinical outcomes registry with cardiac surgery procedure
records submitted by cardiothoracic surgeons and anesthesiologists
across the U.S. and Canada.\45\ Altogether, 2,400 out of 2,532 patients
were matched in the primary analysis cohort of isolated CABG patients.
The two groups were matched on 35 prespecified variables reflecting
mortality risk in the operative, peri-operative, and follow-up periods,
out to one year. These variables included demographics, cardiac risk
factors, pre-operative cardiac status, coronary anatomy, and surgical
characteristics. According to the applicant, the propensity matched
groups were well balanced on all important demographic, procedural and
anatomic characteristics. The applicant stated that there were no
significant differences in mortality rates between these two groups.
The Hazard Ratio (HR) for DuraGraft[reg] vs. standard of care was 0.88
(95% CI 0.67-1.15), p = 0.347; the estimated cumulative mortality at 1
year was 4.2% (95% CI 3.4-5.0) in the DuraGraft[reg] cohort, compared
to 4.8% (95% CI 3.9-5.7) in the STS Registry. The applicant also
indicated that no difference was observed between mean survival times:
DuraGraft[reg] cohort: 353.25 days, SE = 1.29 (95% CI: 350.72-356.79)
and STS cohort 353.30, SE = 1.25 (95% CI: 350.85-355.75). According to
the applicant, no significant difference was found between the matched
cohorts in the distribution of the selected outcome,
[[Page 26803]]
(that is, all-cause mortality rates through 1-year of follow up
demonstrating the safety of the use of DuraGraft[reg] in European and
U.S. patients in propensity matched cohorts).
---------------------------------------------------------------------------
\45\ The Society of Thoracic Surgeons. What is the Adult Cardiac
Surgery Database? (Frequently Asked Questions and Answers About the
STS National Database and Public Reporting [verbar] STS, accessed 3/
8/2023).
---------------------------------------------------------------------------
The applicant stated that it is currently in discussion with the
STS Registry to perform a match of the DuraGraft[reg] and STS cohorts
to compare subsets of these cohorts matched with data from the Medicare
database to compare rates of MI and repeat revascularization amongst
the two-third of patients from the analysis cohorts that have data
available in the Medicare Database. According to the applicant, this
data will be available in mid-2023.
Response: We thank the applicant for its comment and will take this
information into consideration when deciding whether to approve new
technology add-on payment for the DuraGraft[reg].
d. Elranatamab
Pfizer, Inc. submitted an application for new technology add-on
payments for elranatamab for FY 2024. Per the applicant, elranatamab is
a heterodimeric humanized full-length bispecific antibody against B-
cell maturation antigen (BCMA) and cluster of differentiation (CD)3
which, if FDA approved, will potentially be used for the treatment of
adult patients with relapsed or refractory multiple myeloma (RRMM) who
have received at least three prior therapies, including a proteasome
inhibitor, an immunomodulatory agent, and an anti-CD38 monoclonal
antibody. According to the applicant, elranatamab is proposed to act
through direct bridging of the BCMA cell-surface antigen and the
extracellular CD3 subunit expressed on T-cells.
Please refer to the online application posting for elranatamab,
available at https://mearis.cms.gov/public/publications/ntap/NTP221014RF1AA, for additional detail describing the technology and the
disease treated by the technology.
With respect to the newness criterion, the applicant stated it has
not yet received FDA marketing authorization for elranatamab. According
to the applicant, it is seeking biologics license application (BLA)
approval from FDA for the treatment of adult patients with relapsed or
refractory multiple myeloma who have received at least three prior
therapies, including a proteasome inhibitor (PI), an immunomodulatory
agent (IMiD), and an anti-cluster of differentiation 38 (anti-CD38)
monoclonal antibody before July 1, 2023. According to the applicant,
elranatamab is provided as a solution in a histidine buffer at pH 5.8,
in 40 mg/mL single-dose vials for subcutaneous injection. Elranatamab
therapy begins with priming regimen for the first two injections with
12 mg given on day one and 32 mg on day four of the first cycle. Dosing
thereafter is 76 mg once weekly. Dosing is reassessed after six cycles.
The applicant anticipates that patients could be admitted to receive
the first two step-up doses of elranatamab in the inpatient setting.
According to the applicant, there are currently no ICD-10-PCS
procedure codes to distinctly identify elranatamab. The applicant
submitted a request for approval for a unique ICD-10-PCS procedure code
for elranatamab beginning in FY 2024. The applicant stated that
diagnosis codes C90.00 (Multiple myeloma not having achieved
remission), C90.01 (Multiple myeloma in remission), and C90.02
(Multiple myeloma in relapse) may be used to currently identify the
indication for elranatamab under the ICD-10-CM coding system.
As previously discussed, if a technology meets all three of the
substantial similarity criteria under the newness criterion, it would
be considered substantially similar to an existing technology and would
not be considered ``new'' for the purpose of new technology add-on
payments.
With respect to the substantial similarity criteria, the applicant
asserted that elranatamab is not substantially similar to currently
available technologies (XPOVIO[reg], BLENREP, ABECMA[reg],
CARVYKTITM, and traditional chemotherapy agents) because it
does not use the same or similar mechanism of action when compared to
these technologies to achieve a therapeutic outcome in patients with
multiple myeloma (MM). Elranatamab will be a bispecific antibody
therapy indicated for the treatment of RRMM in patients who have
received at least three prior therapies. Other bispecific antibodies,
excluding TECVAYLITM, that are currently approved by the FDA
are not approved for the treatment of RRMM, and none of them target
BCMA. The applicant further stated that those therapies that are
currently indicated for treatment of RRMM, excluding
TECVAYLITM, use entirely different mechanisms of action. The
applicant also asserted that, for the purposes of the newness
criterion, elranatamab is substantially similar to
TECVAYLITM, which is also the subject of a new technology
add-on payment application for FY 2024, as discussed separately later
in this section, and which received BLA approval from FDA after
submission of the application for new technology add-on payment. The
applicant stated that because TECVAYLITM and elranatamab are
substantially similar for newness purposes, the applicant believes that
a new technology add-on payment should apply to the BCMA-directed
bispecific antibody class for the treatment of RRMM, which would be
TECVAYLITM and elranatamab (if approved). The following
table summarizes the applicant's assertions regarding the substantial
similarity criteria. Please see the online application posting for
elranatamab for the applicant's complete statements in support of its
assertion that elranatamab is substantially similar to
TECVAYLITM, but not to other currently available
technologies. Please also see our discussion of TECVAYLITM's
application for new technology add on payments in section II.E.6.o of
this proposed rule.
BILLING CODE 4120-01-P
[[Page 26804]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.132
With regard to the newness criterion, as stated by the applicant,
elranatamab has a similar mechanism of action to that of
TECVAYLITM, for which we received an application for new
technology add-on payments for FY 2024 for the treatment of adult
patients with relapsed or refractory multiple myeloma after four or
more prior lines of therapy, including an immunomodulatory agent, a
proteasome inhibitor, and an anti-CD38 monoclonal antibody.
TECVAYLITM was approved by FDA for this indication on
October 25, 2022, and became commercially available on November 9,
2022. Per the new technology add on payment application for
TECVAYLITM, the technology's mechanism of action is
described as a bispecific antibody, with distinct binding domains that
simultaneously bind the BCMA target on tumor cells and the CD3 T cell
receptor. Because of the apparent similarity with the bispecific
antibody for elranatamab that uses binding domains that simultaneously
bind the BCMA target on tumor cells and the CD3 T cell receptor, we
believe that the mechanism of action for elranatamab may be the same or
similar to that of TECVAYLITM. We further believe that
elranatamab and TECVAYLITM may treat the same or similar
disease (RRMM) in the same or similar patient population (patients who
have previously received a proteasome inhibitor (PI), an
immunomodulatory agent (IMiD) and an anti-CD38 antibody). Accordingly,
as it appears that elranatamab and TECVAYLITM are purposed
to achieve the same therapeutic outcome using the same or similar
mechanism of action and would be assigned to the same MS-DRG, we
believe that these technologies may be substantially similar to each
other such that they should be considered as a single application for
purposes of new technology add-on payments. We note that if this
technology is substantially similar to TECVAYLITM, we
believe the newness period for this technology would begin on November
9, 2022, the date TECVAYLITM became commercially available.
We are 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
elranatamab and TECVAYLITM are substantially similar to each
other
[[Page 26805]]
and therefore should be considered as a single application for purposes
of new technology add-on payments.
We are inviting public comment on whether elranatamab meets the
newness criterion, including whether elranatamab is substantially
similar to TECVAYLITM and whether these technologies should
be evaluated as a single technology for purposes of new technology add-
on payments.
With respect to the cost criterion, to identify potential cases
representing patients who may be eligible for treatment with
elranatamab, the applicant searched the FY 2021 MedPAR file for cases
reporting a diagnosis of Multiple Myeloma (in any position) and are
assigned to MS-DRG 846, 847, or 848 (Chemotherapy without Acute
Leukemia as Secondary Diagnosis family). The applicant noted that these
case selection criteria were chosen as it is anticipated that patients
could be admitted to receive the first two, step-up doses of
elranatamab in the inpatient setting. Using the inclusion/exclusion
criteria described in the following table, the applicant identified 674
claims mapping to two MS-DRGs, 846 (Chemotherapy without Acute Leukemia
as Secondary Diagnosis with Major Complication or Comorbidity) (MCC))
and 847 (Chemotherapy without Acute Leukemia as Secondary Diagnosis
with Complication or Comorbidity (CC)). The applicant followed the
order of operations described in the following table and calculated a
final inflated average case-weighted standardized charge per case of
$60,579, which exceeded the average case-weighted threshold amount of
$59,054. Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount,
the applicant asserted that elranatamab meets the cost criterion.
[GRAPHIC] [TIFF OMITTED] TP01MY23.133
We are inviting public comments on whether elranatamab meets the
cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that elranatamab represents a substantial clinical
improvement over existing technologies because it is a new therapy for
patients with RRMM who are unresponsive or unable to receive current
therapies as demonstrated by low overall response rates (ORR) and
access issues. The applicant stated that in clinical trials examining
patients with RRMM, the ORR with elranatamab is higher than what is
seen with available therapies based on empirical comparisons of
individual trials. The applicant further stated that elranatamab also
has a manageable safety profile. The applicant provided two studies to
support these claims, as well as 13 background articles about RRMM.\46\
The following table summarizes the applicant's assertions regarding the
substantial clinical improvement criterion. Please see the online
posting for elranatamab for the applicant's complete statements
regarding the substantial clinical improvement criterion and the
supporting evidence provided.
---------------------------------------------------------------------------
\46\ Background articles are not included in the following table
but can be accessed via the online posting for the technology.
---------------------------------------------------------------------------
[[Page 26806]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.134
[[Page 26807]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.135
[[Page 26808]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.136
BILLING CODE 4120-01-C
After review of the information provided by the applicant, we have
the following concerns regarding whether elranatamab meets the
substantial clinical improvement criterion. To support that the
treatment offers an option for a patient population unresponsive to, or
ineligible for, currently available treatment options, the applicant
asserts that BCMA-directed bispecific antibodies will be a new
treatment option for late-line patients with RRMM who are refractory to
or otherwise ineligible or unable to access existing therapies. In
particular, the applicant states the nature of the disease is such that
patients often become refractory to all or some treatment options for
late-line RRMM. The applicant further states that those patients who
are not refractory to these treatment options may be ineligible for
treatment due to renal insufficiency in the case of CAR T-cell therapy
or unable to access therapy for other reasons. To support that
elranatamab would offer a new treatment option for this patient
population, the applicant references the eligibility criteria for
MagnetisMM-3, a phase 2 study to evaluate the safety and efficacy of
elranatamab monotherapy in patients with RRMM. The applicant states
that 65% of patients were 65 years or older, patients with moderate
renal impairment were not excluded, and patients must have been
refractory to at least one PI, one IMiD drug, and one anti-CD38 mAb.
The applicant states that these eligibility criteria indicate
elranatamab was studied in a Medicare eligible population, may be
appropriate for patients with renal impairment, and provides a new
mechanism of action for patients with RRMM who have exhausted all other
viable treatment options. However, to the extent late-line patients
with RRMM who are refractory to or otherwise ineligible or unable to
access CAR T-cell therapies may instead be eligible for XPOVIO[reg],
which is also indicated for RRMM, it is unclear that this is a patient
population unresponsive to, or ineligible for, all other currently
available treatments. We note that this drug was studied in patients 65
years and older, is not contraindicated in renal impairment, and is
also indicated for RRMM and, therefore, may also be a treatment option
for patients with RRMM ineligible or unable to access CAR T-cell
therapies.
The applicant also asserts CAR T-cell therapies are largely
unavailable to Medicare beneficiaries with late-line RRMM due to long
wait times with a median of 6 months.\47\ However, as noted, to the
extent these patients could also be eligible for XPOVIO[reg], which may
be an option for patients unable to access CAR T-cell therapy, it is
unclear that this supports the assertion that elranatamab offers a
treatment option for a patient population unresponsive to, or
ineligible for, currently available treatments, or that longer wait
times would mean that a patient is ineligible for or unresponsive to
CAR T-cell therapy. The applicant further asserts CAR T-cell therapies
are not well-studied in the Medicare population with only 35% and 36%
of patients being 65 years or older in the registrational studies for
ABECMA[reg] and
[[Page 26809]]
CARVYKTITM, respectively.48 49 However, these
percentages do indicate CAR T-cell therapies were studied in late-line
RMMM patients 65 years and older and the studies included patients up
to 78 years old. The applicant also asserts that ``renal impairment is
one of the most common complications of MM,'' and that as a result, a
large portion of RRMM patients may be ineligible for CAR T-cell therapy
because they are ineligible for lymphodepleting chemotherapy, which is
required for administration of CAR T-cell therapy.\50\ However, Hunter
et al. describe two patients with end stage renal disease who were
successfully treated with CAR T-cell therapy; therefore, we question
whether this is an accurate conclusion.\51\
---------------------------------------------------------------------------
\47\ Kourelis T, Bansal R, Patel KK, Berdeja JG, Raje NS, Alsina
M, et al. Ethical challenges with CAR T slot allocation with
idecabtagene vicleucel manufacturing access. Journal of Clinical
Oncology. 2022;40(16_suppl):e20021-e.
\48\ ABECMA (idecabtagene vicleucel), suspension for intravenous
infusion (prescribing information); Celgene corporation and Bristol
Myers Squibb company, Summit, New Jersey 2021.
\49\ CARVYKTITM (ciltacabtagene autoleucel)
suspension for intravenous infusion (prescribing information);
Janssen Biotech, Inc., Horsham, PA. 2022.
\50\ Korbet SM, Schwartz MM. Disease of the Month: Multiple
Myeloma. Journal of the American Society of Nephrology.
2006;17(9):2533-45.
\51\ Hunter, B.D., Hoda, D., Nguyen, A. et al. Successful
administration of chimeric antigen receptor (CAR) T-cell therapy in
patients requiring hemodialysis. Exp Hematol Oncol 11, 10 (2022).
---------------------------------------------------------------------------
To further support that elranatamab offers a treatment option for a
patient population unresponsive to, or ineligible for, currently
available treatments, the applicant asserts that MM is an incurable
malignancy and with each relapse, the ability of a patient to respond
to therapy and the amount of time spent in response shortens and
patients run out of therapy options. The applicant states that almost
all patients with MM eventually relapse and that the treatment of
patients who have received two or more prior lines of therapy is
becoming particularly challenging. The applicant also provides the ORRs
of 26% for XPOVIO[reg] with dexamethasone in patients with triple class
refractory RRMM, 31% for BLENREP in patients with triple class
refractory RRMM, and 29.8% with conventional
chemotherapy.52 53 54 However, the claim is based on the
definition of the disease, RRMM, being relapsed or refractory disease.
XPOVIO[reg], BLENREP, conventional chemotherapy, and elranatamab, if
approved, would all be options for patients with RRMM. We question
which patient population would benefit from elranatamab due to being
ineligible for or unresponsive to all other options indicated for RRMM
without data regarding the benefit of elranatamab in patients
ineligible for or unresponsive to these other therapies.
---------------------------------------------------------------------------
\52\ A. Chari, D.T. Vogl, M. Gavriatopoulou, A.K. Nooka, et al.,
Oral Selinexor-Dexamethasone for Triple-Class Refractory Multiple
Myeloma, N Engl J Med 2019;381:727-38.
\53\ Sagar Lonial, Hans C Lee, Ashraf Badros, et al; Belantamab
mafodotin for relapsed or refractory multiple myeloma (DREAMM-2): a
two-arm, randomised, open-label, phase 2 study Lancet Oncol 2020:
21: 207-21.
\54\ Maria-Victoria Mateos, Katja Weisel, Valerio De Stefano et
al., LocoMMotion: a prospective, non-interventional, multinational
study of real-life current standards of care in patients with
relapsed and/or refractory multiple myeloma. Leukemia (2022)
36:1371-1376.
---------------------------------------------------------------------------
The applicant also asserts that elranatamab significantly improves
outcomes compared to existing therapies for RRMM. The supporting
evidence is based on the ORRs for elranatamab, XPOVIO[reg] with
dexamethasone, BLENREP, and conventional chemotherapy, but does not
consider the ORRs for CAR-T-cell therapies. Therefore, we question
whether elranamatab provides improved outcomes compared to previously
available therapy. Furthermore, the applicant asserts elranatamab has a
manageable safety profile. However, having a manageable safety profile
without a comparison to other therapies for RRMM does not provide
evidence for an improved outcome compared to the other therapy options
for RRMM.
We are inviting public comments on whether elranatamab meets the
substantial clinical improvement criterion.
We did not receive any written comments in response to the New
Technology Town Hall meeting notice published in the Federal Register
regarding the substantial clinical improvement criterion for
elranatamab.
e. epcoritamab
Genmab US, Inc. submitted an application for new technology add-on
payments for epcoritamab for FY 2024. Per the applicant, epcoritamab is
an investigational immunoglobulin G1 (IgG1) bispecific antibody which
directly binds cluster of differentiation (CD)3 expressing T-cells and
CD20 expressing B-cells to potently induce activation and cytotoxic
activity of the T-cells against the malignant B-cells in a process that
is strictly dependent on epcoritamab binding to both targets. According
to the applicant, epcoritamab may be an effective treatment for
patients with relapsed/refractory (R/R) Non-Hodgkin's Lymphoma (NHL),
and more specifically R/R Large B-Cell Lymphoma (LBCL) by co-opting the
patient's own immune system to target the disease.
Please refer to the online application posting for epcoritamab
available at https://mearis.cms.gov/public/publications/ntap/NTP221012JQM0G, for additional detail describing the technology and the
disease treated by the technology.
With respect to the newness criterion, the applicant stated it has
not yet received FDA marketing authorization for epcoritamab. According
to the applicant, it anticipates BLA approval from FDA for the
indication of treatment of adult patients with R/R LBCL after two or
more lines of systemic therapy before July 1, 2023. The applicant
stated that epcoritamab is intended for subcutaneous administration
with patients receiving 0.16 milligram (mg) priming and 0.87 mg
intermediate dose before the first full dose of 48 mg. This is
administered weekly in cycle 1-3, every 2 weeks in cycle 4-9, and every
four weeks in cycle 10 and onward until disease progression. According
to the applicant, in the EPCORE NHL-1 study, all patients were required
per protocol to be hospitalized for 24 hours on the third dose, which
was the first full dose of 48 mg. According to the applicant, the mean
per patient dose, including when provided during or related to
inpatient stays across all 28 injection visits, is 44.61 mg.
According to the applicant, there are currently no ICD-10-PCS
procedure codes to distinctly identify administration of epcoritamab.
The applicant submitted a request for approval for a unique ICD-10-PCS
procedure code for epcoritamab beginning in FY 2024. The applicant
provided a list of diagnosis codes that may be used to currently
identify the indication for epcoritamab under the ICD-10-CM coding
system. Please refer to the online application posting for the complete
list of ICD-10-CM codes provided by the applicant.
As previously discussed, if a technology meets all three of the
substantial similarity criteria under the newness criterion, it would
be considered substantially similar to an existing technology and would
not be considered ``new'' for the purpose of new technology add-on
payments.
With respect to the substantial similarity criteria, the applicant
asserted that epcoritamab is not substantially similar to other
currently available technologies because epcoritamab is an anti-
CD3xCD20 bispecific antibody with a unique mechanism of action that
will be the first of its kind for the treatment of R/R LBCL, and that
therefore, the technology meets the newness criterion. The following
table summarizes the applicant's assertions regarding the substantial
similarity criteria. Please see the online application posting for
epcoritamab for the applicant's
[[Page 26810]]
complete statements in support of its assertion that epcoritamab is not
substantially similar to other currently available technologies.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP01MY23.137
[[Page 26811]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.138
However, we note that epcoritamab may have a similar mechanism of
action to that of glofitimab, for which we received an application for
new technology add-on payments for FY 2024, for the treatment of adult
patients with R/R LBCL/DLBCL after three or more prior lines of
therapy. Glofitimab's mechanism of action is described as bivalent
binding of CD20 on malignant B-cells and CD3 on T-cells, bringing them
into close proximity inducing proliferation and targeted killing of B-
cells. According to glofitamab's application, the 2:1 structure of
glofitimab enables high-avidity, bivalent binding to CD20 that can
result in activity against malignant B-cells even under low effector-
to-target cells. Because of the potential similarity with the mechanism
of binding of the CD3xCD20 bispecific antibody and other actions, we
believe that the mechanism of action for epcoritamab may be the same or
similar to that of glofitimab.
We further believe that epcoritamab and glofitimab may treat the
same or similar disease (LBCL/DLBCL) in the same or similar patient
population (R/R patients who have previously received two or more lines
of therapy), which is also the same disease and population as existing
treatments for R/R LBCL. Accordingly, as it appears that epcoritamab
and glofitimab are purposed to achieve the same therapeutic outcome
using the same or similar mechanism of action and would be assigned to
the same MS-DRG, we believe that these technologies may be
substantially similar to each other such that they should be considered
as a single application for purposes of new technology add-on payments.
We are 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
epcoritamab and glofitimab are substantially similar to each other and
therefore should be considered as a single application for purposes of
new technology add-on payments.
We are inviting public comment on whether epcoritamab meets the
newness criterion, including whether epcoritamab is substantially
similar to glofitimab and whether these technologies should be
evaluated as a single technology for purposes of new technology add-on
payments.
[[Page 26812]]
With respect to the cost criterion, the applicant provided multiple
analyses to demonstrate that it meets the cost criterion. For each
analysis, the applicant searched the FY 2021 MedPAR file using
different ICD-10-CM codes to identify potential cases representing
patients who may be eligible for epcoritamab. Each analysis followed
the order of operations described in the following table.
For the first analysis, the applicant searched for cases that
represent potential patients who are being treated for CRS arising from
the administration of epcoritamab with a diagnosis code for DLBCL. The
applicant used the inclusion/exclusion criteria described in the
following table. Under this analysis, the applicant identified 33
claims mapping to two MS-DRGs. The applicant calculated a final
inflated average case-weighted standardized charge per case of
$114,027, which exceeded the average case-weighted threshold amount of
$59,550.
For the second analysis, the applicant searched for cases reporting
diagnosis codes for CRS. The applicant used the inclusion/exclusion
criteria described in the following table. Under this analysis, the
applicant identified 101 claims mapping to three MS-DRGs. The applicant
calculated a final inflated average case-weighted standardized charge
per case of $88,482, which exceeded the average case-weighted threshold
amount of $56,682. Because the final inflated average case-weighted
standardized charge per case exceeded the average case-weighted
threshold amount in both scenarios, the applicant maintained that
epcoritamab meets the cost criterion.
[[Page 26813]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.139
We are inviting public comments on whether epcoritamab meets the
cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that epcoritamab represents a substantial clinical
improvement over existing technologies because it offers a treatment
option with improved efficacy and safety for R/R LBCL patients
unresponsive to currently available treatments (for example, CAR T-cell
therapies such as KYMRIAH[reg], YESCARTA[reg], and Breyanzi[reg] and
non-CAR T-cell therapies such as POLIVY[reg], ADCETRIS[reg],
XPOVIO[reg], and ZYNLONTA[reg]); and it significantly improves clinical
outcomes among R/R
[[Page 26814]]
LBCL patients as they progress through lines of therapy. The applicant
provided two studies to support these claims, and nine background
articles about other treatments available for R/R DLBCL patients and
clinical outcomes for patients treated with other therapies such as
Breyanzi[reg], ZYNLONTA[reg], YESCARTA[reg], XPOVIO[reg], KYMRIAH[reg],
and POLIVY[reg].\55\ The following table summarizes the applicant's
assertions regarding the substantial clinical improvement criterion.
Please see the online posting for epcoritamab for the applicant's
complete statements regarding the substantial clinical improvement
criterion and the supporting evidence provided.
---------------------------------------------------------------------------
\55\ Background articles are not included in the following table
but can be accessed via the online posting for the technology.
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[[Page 26815]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.140
[[Page 26816]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.141
After review of the information provided by the applicant, we have
the following concerns regarding whether epcoritamab meets the
substantial clinical improvement criterion. With respect to whether the
technology offers a treatment option for a patient population
unresponsive to, or ineligible for, currently available treatments, the
applicant described epcoritamab as having stronger efficacy data in
comparison to other 3L+ treatment options available. We note that the
applicant provided many background studies regarding R/R DLBCL
treatment options. However, they were unable to provide the complete
study of epcoritamab (EPCORE NHL-1) in support of its claim of
epcoritamab's stronger efficacy data in comparison to other 3L+
treatment options, providing only the presentation of partial results
used for the European Hematology Association meeting of 2022.
Therefore, we are limited in our ability to fully evaluate and assess
the supporting evidence for this claim. Furthermore, we note that there
may be other available treatments for this specific population,
including CAR T-cell therapies. We also note that it is unclear which
patient population is ineligible for these available treatment options.
With respect to whether the technology improves clinical outcomes
relative to services or technologies previously available, the
applicant described epcoritamab as having better safety profiles and
efficacy than existing treatments. However, the comparisons are not
matched cases within a comparative study, and we question whether there
are differences between the trials, such as differences in the patient
populations included and the way outcomes are defined, that should be
considered in assessing the comparison of clinical outcomes across
these studies. We would be interested in additional information to
demonstrate that epcoritamab has significantly better efficacy and
safety profiles than other available treatments.
We are inviting public comments on whether epcoritamab meets the
substantial clinical improvement criterion.
We did not receive any written comments in response to the New
Technology Town Hall meeting notice published in the Federal Register
regarding the substantial clinical improvement criterion for
epcoritamab.
f. Glofitamab
Genentech, Inc. submitted an application for new technology add-on
payments for glofitamab for FY 2024. According to the applicant,
glofitamab is a novel full-length, fully humanized, T-cell engaging
bispecific antibody with a novel 2:1 structure (two CD20 binding
domains, one CD3 binding domain [2:1 structure]) for the treatment of
adults with relapsed or refractory (R/R) diffuse large B-cell lymphoma
(DLBCL) after two or more prior therapies. Per the applicant,
glofitamab activates the patient's own immune system to eradicate
malignant B-cells by simultaneously binding CD20 on malignant B-cells
and CD3 on T-cells, bringing them into close proximity inducing
proliferation and targeted killing of B-cells. The applicant stated
that the novel 2:1 structure of glofitamab enables high-avidity,
bivalent binding to CD20 that can result in activity against malignant
B-cells even under low effector-to-target cells.
Please refer to the online application posting for glofitamab
available at https://mearis.cms.gov/public/publications/ntap/NTP221017RK2RD, for additional detail describing the
[[Page 26817]]
technology and the disease treated by the technology.
With respect to the newness criterion, the applicant stated it has
not yet received FDA marketing authorization for glofitamab but is
seeking accelerated approval of a BLA from the FDA for the treatment of
adults with R/R DLBCL after two or more prior therapies. According to
the applicant, glofitamab is administered as an intravenous infusion
through a dedicated infusion line according to a dose step-up schedule
leading to the recommended dosage of 30 mg, after completion of pre-
treatment with obinutuzumab on cycle day 1, where each cycle is 21
days. The applicant recommends treatment for a maximum of 12 cycles or
until the disease progresses to unmanageable toxicity. According to the
applicant, the administration of glofitamab will be treated as part of
an inpatient stay and reimbursed through the DRG when a patient is
admitted within 72 hours of the outpatient administration to treat a
condition that results from the administration such as developing grade
two or higher cytokine release syndrome (CRS). The applicant stated
that, in clinical trials, when Grade 2, 3, or 4 CRS developed, 69% of
the time it occurred after a 2.5 mg dose, 27% of the time it developed
after a 10 mg dose, and 4% after a 30 mg dose. Therefore, according to
the applicant, the expected average dose of glofitamab associated with
an inpatient hospital stay is ((2.5 mg * 0.69) + (10 mg * 0.27) + (30mg
* 0.04)) = 5.625 mg.
According to the applicant, there are currently no ICD-10-PCS
procedure codes to distinctly identify administration of glofitamab.
The applicant submitted a request for approval for a unique ICD-10-PCS
procedure code for glofitamab beginning in FY 2024. The applicant
provided a list of diagnosis codes that may be used to currently
identify the indication for glofitamab under the ICD-10-CM coding
system. Please refer to the online application posting for the complete
list of ICD-10-CM codes provided by the applicant.
As previously discussed, if a technology meets all three of the
substantial similarity criteria under the newness criterion, it would
be considered substantially similar to an existing technology and would
not be considered ``new'' for the purpose of new technology add-on
payments.
With respect to the substantial similarity criteria, the applicant
asserted that glofitamab is not substantially similar to other
currently available technologies because the mechanism of action of
glofitamab is distinct from other available DLBCL therapies and because
glofitamab does not treat the same or similar type of disease or
patient population, and that therefore, the technology meets the
newness criterion. The applicant's assertions regarding substantial
similarity are summarized briefly in the following table. Please see
the online application posting for glofitamab for the applicant's
complete statements in support of its assertion that glofitamab is not
substantially similar to other currently available technologies.
[[Page 26818]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.142
However, we note that glofitamab may have a similar mechanism of
action to that of epcoritamab, for which we received an application for
new technology add-on payments for FY 2024 for the treatment of adult
patients with R/R LBCL after three or more prior lines of therapy.
According to the new technology add-on payment application for
glofitamab, the technology's mechanism of action is described as
bivalent binding of CD20 on malignant B-cells and CD3 on T-cells,
bringing them into close proximity inducing proliferation and targeted
killing of B-
[[Page 26819]]
cells. The applicant stated that the 2:1 structure of glofitamab
enables high-avidity, bivalent binding to CD20 that can result in
activity against malignant B-cells even under low effector-to-target
cells. The immunoglobulin G1 bispecific antibody of epcoritamab
directly binds CD3 expressing T-cells and CD20 expressing B-cells to
potently induce activation and cytotoxic activity of the T-cells
against the malignant B-cells. Because of the potential similarity with
the mechanism of binding and other actions, we believe that the
mechanism of action for glofitamab may be the same or similar to that
of epcoritamab.
While the applicant stated that the use of glofitamab does not
involve treatment of the same or similar patient population when
compared to existing technology, there are existing therapies approved
for LBCL/DLBCL patients with three or more lines of therapy including
CAR-T-cell therapies and others such as POLIVY[reg], XPOVIO[reg], and
ZYNLONTA. We therefore believe that glofitamab may treat the same or
similar patient population as these existing FDA-approved treatments.
We also believe that glofitamab and epcoritamab may treat the same or
similar disease (LBCL/DLBCL) in the same or similar patient population
(R/R patients who have previously received two or more lines of
therapy).
Accordingly, as it appears that glofitamab and epcoritamab are
purposed to achieve the same therapeutic outcome using the same or
similar mechanism of action and would be assigned to the same MS-DRG,
we believe that these technologies may be substantially similar to each
other such that they should be considered as a single application for
purposes of new technology add-on payments. We are 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 glofitamab and epcoritamab
are substantially similar to each other and therefore should be
considered as a single application for purposes of new technology add-
on payments.
We are inviting public comment on whether glofitamab meets the
newness criterion, including whether glofitamab is substantially
similar to epcoritamab and whether these technologies should be
evaluated as a single technology for purposes of new technology add-on
payments.
With respect to the cost criterion, the applicant searched the FY
2021 MedPAR file for potential cases representing patients who may be
eligible for glofitamab, defining two cohorts of patients who may be
eligible for treatment and merging the cases for the cost criterion
analysis.
For the first cohort, the applicant searched for cases representing
potential patients who, as a result of developing CRS following
outpatient administration of glofitamab, require an inpatient admission
within the 3-day payment window following the outpatient
administration. Using the inclusion/exclusion criteria described in the
following table, the applicant identified 101 claims mapping to 3 MS-
DRGs.
For the second cohort, the applicant searched for cases
representing a potential subset of patients who are admitted as
inpatients for the purposes of being administered glofitamab based on
the clinical judgment of their provider. Using the inclusion/exclusion
criteria described in the following table, the applicant identified
4,705 claims mapping to 9 MS-DRGs.
The applicant combined these two cohorts as there was no overlap
between the MS-DRGs of the two cohorts (see the table that follows for
a list of MS-DRGs for each cohort). The applicant followed the order of
operations described in the following table and calculated a final
inflated average case-weighted standardized charge per case of $134,690
which exceeded the average case-weighted threshold amount of $96,417.
Because the final inflated average case-weighted standardized charge
per case exceeded the average case-weighted threshold amount, the
applicant asserted that glofitamab meets the cost criterion.
[[Page 26820]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.143
We are inviting public comments on whether glofitamab meets the
cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that glofitamab represents a substantial clinical
improvement over existing technologies because it offers a treatment
option for R/R DLBCL patients who have progressed after three or more
lines of therapy that engages T-cells in its mechanism of action with
off-the-shelf access and a fixed-treatment duration; and it
significantly improves clinical outcomes among R/R DLBCL patients with
three or more lines of therapy as compared to placebo. The applicant
provided two studies to support these claims, as well as 41 background
articles about current therapies for R/R DLBCL patients including
access and clinical outcomes for this patient population.\56\ The
following table summarizes the applicant's assertions regarding the
substantial clinical improvement. Please see the online posting for
glofitamab for
[[Page 26821]]
the applicant's complete statements regarding the substantial clinical
improvement criterion and the supporting evidence provided.
---------------------------------------------------------------------------
\56\ Background articles are not included in the following table
but can be accessed via the online posting for the technology.
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[[Page 26822]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.145
[[Page 26823]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.146
After review of the information provided by the applicant, we have
the following concerns regarding whether glofitamab meets the
substantial clinical improvement criterion. To support its assertion
that glofitamab offers a treatment option for a patient population
unresponsive to, or ineligible for, currently available treatments, the
applicant asserts that glofitamab expands treatment options for R/R
DLBCL patients who have progressed after other 2L or 3L+ therapies.
However, we note that there are other technologies and treatments
approved for this specific population, as mentioned earlier, such that
it is not clear that this would represent a patient population
unresponsive to, or ineligible for, currently available treatments.
With respect to the applicant's claim that glofitamab reduces mortality
of patients who had progressed after ASCT or CAR T-cell therapy, we
note that the applicant provided several background studies
57 58 59 60 regarding other existing treatments for R/R
DLBCL as well as the main glofitamab study, however, as this conclusion
is based on the comparison of results across these independent studies,
we would be interested in additional information regarding the
comparability of these findings regarding mortality reduction for each
respective technology. With respect to the applicant's claims that
glofitamab is an off-the-shelf therapy without any delay due to
personalized manufacturing, such as CAR T-cell therapy, and that
glofitamab can be made available across various geographies for
patients with DLBCL, we question whether other available therapies,
such as POLIVY[reg], XPOVIO[reg], and ZYNLONTA[reg], that may be used
to treat patients with multiple relapses or who are refractory to other
therapies, also would not have those limitations.
---------------------------------------------------------------------------
\57\ Gisselbrecht C, et al. J Clin Oncol 2010; 28(27):4184-90.
\58\ Schuster SJ, et al. Lancet Oncol 2021;21:1403-15.
\59\ Abramson JS, et al. The Lancet. 2020;396(10254):839-52.
\60\ Locke FL, et al. Lancet Oncol 2019;20:31-42.
---------------------------------------------------------------------------
With respect to the applicant's claims that glofitamab improves
outcomes as compared to existing treatments, including safety and rate
of treatment discontinuations, we note that only one single arm trial
with no comparators was provided in support of this claim. We further
note that the comparisons of the supporting evidence 61 62
provided for other existing technologies to the main glofitamab study
are not matched cases; for example, the studies do not adjust for type
and severity of AEs. Therefore, we question whether these comparisons
can be used to demonstrate a significant difference in safety or
efficacy.
---------------------------------------------------------------------------
\61\ Salles G, et al. Lancet Oncol 2020;21(7):978-88.
\62\ MONJUVI[reg] (tafasitamab) [prescribing information].
Boston, MA: Morphosys US Inc; June 2021.
---------------------------------------------------------------------------
With respect to the applicant's claim that glofitamab is a fixed-
treatment duration therapy, providing patients with time off treatment
and the potential to improve patient quality of life, we note that this
appears to be an inference, as the applicant did not provide any
evidence that a fixed-treatment improves quality of life. According to
the applicant, during the first cycle (each cycle is 21 days), the
patient is required to receive the drug infusion once a week. After
cycle 1, the frequency of infusion is reduced to once a month. While
glofitamab provides a fixed-treatment, it requires weekly up to monthly
infusions in comparison to CAR-T cell therapy, which is a one-time
treatment. We would be interested in additional information regarding
the association between treatment type and duration and quality of
life, particularly how glofitamab's treatment type and duration results
in higher quality of life as compared to the treatment type and
duration of existing technologies.
We are inviting public comments on whether glofitamab meets the
substantial clinical improvement criterion.
We did not receive any written comments in response to the New
Technology Town Hall meeting notice published in the Federal Register
regarding the substantial clinical improvement criterion for
glofitamab.
g. LunsumioTM (Mosunetuzumab)
Genentech, Inc. submitted an application for new technology add-on
payments for LunsumioTM for FY 2024. Per the applicant,
LunsumioTM is a novel, full-length, humanized,
immunoglobulin G1 (IgG1) bispecific antibody that is designed to
concomitantly bind CD3 on T cells and CD20 on B cells, in the treatment
of adults with relapsed/refractory (R/R) follicular lymphoma (FL) who
have received at least 2 (>=2) prior systemic therapies (also referred
to herein as 3L+FL). The applicant further stated that target B cell
killing occurs only upon simultaneous binding to both targets, as it is
a conditional agonist. We note that Genentech, Inc submitted an
application for new technology add-on payments for
LunsumioTM for FY 2023 under the name mosunetuzumab, as
summarized in the FY 2023 IPPS/LTCH PPS proposed rule (87 FR 28261
through 28274), that it withdrew prior to the issuance of the FY 2023
IPPS/LTCH PPS final rule (87 FR 48920).
Please refer to the online application posting for
LunsumioTM, available at https://mearis.cms.gov/public/publications/ntap/NTP221017LJLDM, for additional detail describing the
drug and the disease treated by the technology.
With respect to the newness criterion, LunsumioTM was
granted accelerated approval of its BLA on December 22, 2022 for the
treatment of adult patients with relapsed or refractory follicular
lymphoma after two or more lines of systemic therapy. According to the
[[Page 26824]]
applicant, LunsumioTM was not commercially available
immediately after FDA approval. The applicant stated that
LunsumioTM was made available for sale after the new year
with the first order occurring on January 6, 2023 due to a companywide
holiday shutdown and to provide manufacturing time. We note that, for
the purposes of new technology add-on payments, we do not consider the
date of first sale as an indicator of the entry of a product onto the
U.S. market. According to the applicant, LunsumioTM is sold
in a 1 mg and 30 mg single dose vial and is administered for eight
cycles according to the dosage schedule in the following table unless
patients experience unacceptable toxicity or disease progression. Per
the applicant, most of the inpatient usage of mosunetuzumab will occur
as the result of adverse events, mainly CRS, that develop after
outpatient administration of the drug. The applicant stated that
clinical protocols require that inpatient hospitalization occur for
most Grade 2 CRS patients, and for all patients with Grade 3 or 4 CRS.
In clinical trials, when Grade 2, 3, or 4 CRS developed, 75% of the
time it occurred after a 60 mg dose, 20% of the time it developed after
a 1 mg dose, and 5% after a 2 mg dose. Based on this information, it
seems that the weighted average inpatient dose would be 45.3 mg.
[GRAPHIC] [TIFF OMITTED] TP01MY23.147
According to the applicant, effective October 1, 2022, the
following ICD-10-PCS procedure codes may be used to distinctly identify
administration of LunsumioTM: XW03358 (Introduction of
mosunetuzumab antineoplastic into peripheral vein, percutaneous
approach, new technology group 8), and XW04358 (Introduction of
mosunetuzumab antineoplastic into central vein, percutaneous approach,
new technology group 8). The applicant stated that diagnosis code C82
(Follicular lymphoma) may be used to currently identify the indication
for LunsumioTM under the ICD-10-CM coding system.
As previously discussed, if a technology meets all three of the
substantial similarity criteria under the newness criterion, it would
be considered substantially similar to an existing technology and would
not be considered ``new'' for the purpose of new technology add-on
payments.
With respect to the substantial similarity criteria, the applicant
asserted that LunsumioTM is not substantially similar to
other currently available technologies because it does not use the same
or a similar mechanism of action compared to any existing technology
approved for treatment of 3L+ FL and because the use of
LunsumioTM in 3L+ FL does not involve the treatment of the
same or a similar type of disease or the same or similar patient
population when compared to an existing technology. The following table
summarizes the applicant's assertions regarding the substantial
similarity criteria. Please see the online application posting for
LunsumioTM for the applicant's complete statements in
support of its assertion that LunsumioTM is not
substantially similar to other currently available technologies.
[[Page 26825]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.148
While the applicant indicated that the technology does not involve
the treatment of the same or similar patient population as compared to
existing technology, we note that FL in 3L+ settings is not a new
population because there are FDA approved therapies indicated in the
treatment of patients with r/r FL after two or more lines of systemic
therapy. We believe that LunsumioTM would be used for the
same disease and patient population when compared to other therapies
approved to treat FL in 3L+ settings.
We are inviting public comments on whether LunsumioTM is
substantially similar to existing technologies and whether
LunsumioTM meets the newness criterion.
With respect to the cost criterion, the applicant provided multiple
analyses to demonstrate that it meets the cost criterion. For each
analysis, the applicant searched the FY 2021 MedPAR file using
different ICD-10-CM codes to identify potential cases representing
patients who may be eligible for LunsumioTM. The applicant
explained that it used different codes to identify different cohorts
that may be eligible for the technology. Each analysis followed the
order of
[[Page 26826]]
operations described in the following table.
For the first analysis, the applicant searched for cases reporting
ICD-10-CM diagnosis codes for follicular lymphoma without a
corresponding chemotherapy administration code. The applicant used the
inclusion/exclusion criteria described in the following table. Under
this analysis, the applicant identified 704 claims mapping to 12 MS-
DRGs. The applicant followed the order of operations described in the
following table and calculated a final inflated average case-weighted
standardized charge per case of $104,824, which exceeded the average
case-weighted threshold amount of $96,820.
For the second analysis, the applicant searched for cases reporting
ICD-10-CM diagnosis codes for follicular lymphoma excluding follicular
lymphoma grade 3B (FL3B) without a corresponding chemotherapy
administration code. The applicant used the inclusion/exclusion
criteria described in the following table. Under this analysis, the
applicant identified 687 claims mapping to 12 MS-DRGs. The applicant
followed the order of operations described in the following table and
calculated a final inflated average case-weighted standardized charge
per case of $103,171, which exceeded the average case-weighted
threshold amount of $96,578.
For the third analysis, the applicant searched for cases reporting
ICD-10-CM diagnosis codes for follicular lymphoma with accompanying
chemotherapy administration codes. The applicant used the inclusion/
exclusion criteria described in the following table. Under this
analysis, the applicant identified 844 claims mapping to 13 MS-DRGs.
The applicant followed the order of operations described in the
following table and calculated a final inflated average case-weighted
standardized charge per case of $101,992, which exceeded the average
case-weighted threshold amount of $98,198.
For the fourth analysis, the applicant searched for cases reporting
ICD-10-CM diagnosis codes for follicular lymphoma excluding FL3B with
accompanying chemotherapy administration codes. The applicant used the
inclusion/exclusion criteria described in the following table. Under
this analysis, the applicant identified 813 claims mapping to 13 MS-
DRGs. The applicant followed the order of operations described in the
following table and calculated a final inflated average case-weighted
standardized charge per case of $99,322, which exceeded the average
case-weighted threshold amount of $97,505.
[[Page 26827]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.149
We are inviting public comments on whether LunsumioTM
meets the cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that LunsumioTM represents a substantial
clinical improvement over existing technologies because it will expand
access to patients for whom existing therapies are not adequate and
because it offers patients with 3L+ FL multiple substantial clinical
benefits, including high efficacy with significant tolerability; broad
efficacy across patients with 3L+; and the opportunity to achieve
sustained remission without continuous treatment. The applicant
provided 13 studies to support these claims as well as 34 background
articles. The following table summarizes the applicant's assertions
regarding the substantial clinical improvement criterion. Please see
the online posting for LunsumioTM for the applicant's
complete statements regarding the substantial clinical improvement
criterion and the supporting evidence provided.
[[Page 26828]]
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[[Page 26829]]
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[[Page 26830]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.152
After review of the information provided by the applicant, we have
the following concerns regarding whether LunsumioTM meets
the substantial clinical improvement criterion. We note that the
applicant provided a single-arm, phase II trial of 90 patients, sub-
study analysis, and another single-arm phase I/II trial of 15 patients
to support its claims of substantial clinical improvement. As noted in
the previous table, the studies evaluated complete response rates or
indicators of safety, but did not evaluate survival as a primary
outcome. They were also single-arm, without comparison to other
existing treatments for the patient population. The applicant compared
outcomes of the phase II trial with LunsumioTM to outcomes,
including QOL and AE from background studies of other
technologies.63 64 65 However, we note limitations in
comparing to rates found in other clinical trials that were conducted
in earlier time periods and under different circumstances of patient
enrollment and treatment options. Additionally, the historical rates
were compared directly to those from LunsumioTM, without
more detailed adjustment for patient characteristics. Without a direct
comparison of outcomes between these therapies, we are concerned as to
whether the differences in outcomes identified by the applicant
translate to clinically meaningful differences or improvements for
patients treated with LunsumioTM as compared to historical
rates for other treatments.
---------------------------------------------------------------------------
\63\ Cheah, Y.C. et al. (2022), op.cit.
\64\ Morschhauser, F., H. Tilly, A. Chaidos, et al. (2020)
Tazemetostat for patients with relapsed or refractory follicular
lymphoma: an open-label, single-arm, multicenter, phase 2 trial.
Lancet Oncology. 21(11):1433-1442 . doi:10.1016/S1470-2045(20)30441-
1.
\65\ Budde, L. et al. (2022), op.cit.
---------------------------------------------------------------------------
We are inviting public comments on whether LunsumioTM
meets the substantial clinical improvement criterion.
We did not receive any written comments in response to the New
Technology Town Hall meeting notice published in the Federal Register
regarding the substantial clinical improvement criterion for
LunsumioTM.
h. NexoBridTM (Anacaulase-bcdb)
Vericel Corporation submitted an application for new technology
add-on payments for NexoBridTM for FY 2024. According to the
applicant, NexoBridTM is a novel, non-surgical option for
eschar removal (debridement) in adult patients with deep partial
thickness (DPT) and/or full thickness (FT) thermal burns. Per the
applicant, NexoBridTM is a botanical and biologic product
for topical use consisting of a concentrate of proteolytic enzymes
enriched in bromelain extracted from pineapple stems. We note that
Vericel Corporation submitted an application for new technology add-on
payments for NexoBridTM for FY 2022, as summarized in the FY
2022 IPPS/LTCH PPS proposed rule (86 FR 25286 through 25291), that it
withdrew prior to the issuance of the FY 2022 IPPS/LTCH PPS final rule
(86 FR 44774).
Please refer to the online application posting for
NexoBridTM, available at https://mearis.cms.gov/public/publications/ntap/NTP221017WGWTP, for additional detail describing the
technology and the condition treated by the technology.
With respect to the newness criterion, according to the applicant,
NexoBridTM was granted BLA approval from FDA on December 28,
2022 for eschar removal (debridement) in adults with DPT and/or FT
thermal burns. According to the applicant, NexoBridTM is
expected to be commercially available in Q2 2023 in the U.S. market as
manufacturing preparations are currently underway.
NexoBridTM is applied topically to the wound at 2-gram
lyophilized powder with 20-gram gel vehicle per 1% total body surface
area (TBSA), or 5-gram lyophilized powder with 50-gram gel vehicle per
2.5% TBSA, up to an area of up to 15% TBSA in one application. The
applicant estimated that the average U.S. patient will receive
approximately 2.8 5-gram packs of NexoBridTM per inpatient
stay, based upon the average NexoBridTM-treated area of
6.28% TBSA in the DETECT clinical trial with an expected wastage
assumption of approximately 10%, as well as commercial use of the
technology in Europe.
The applicant stated that effective October 1, 2021, the following
ICD-10-PCS codes may be used to uniquely describe procedures involving
the use of NexoBridTM: XW00X27 (Introduction of Bromelain-
enriched Proteolytic Enzyme into Skin, External Approach, New
Technology Group 7) and XW01X27 (Introduction of Bromelain-enriched
Proteolytic Enzyme into Subcutaneous Tissue, External Approach, New
Technology Group 7).
As previously discussed, if a technology meets all three of the
substantial similarity criteria under the newness criterion, it would
be considered substantially similar to an
[[Page 26831]]
existing technology and would not be considered ``new'' for the purpose
of new technology add-on payments.
With respect to the substantial similarity criteria, the applicant
asserted that NexoBridTM is not substantially similar to
other currently available technologies because NexoBridTM
has a novel mechanism of action and is the first enzymatic technology
to achieve rapid, consistent eschar removal; the applicant further
asserted that the active ingredient in NexoBridTM has never
been approved in any application under section 505(b)(1) of the Federal
Food, Drug, and Cosmetic Act (FD&C Act) of 1938 or section 351(a) of
the Public Health Service (PHS) Act; and no existing technology under
the existing burn DRGs is similar to NexoBridTM, and that
therefore, the technology meets the newness criterion. The following
table summarizes the applicant's assertions regarding the substantial
similarity criteria. Please see the online application posting for
NexoBridTM for the applicant's complete statements in
support of its assertion that NexoBridTM is not
substantially similar to other currently available technologies.
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However, we have the following concerns with regard to the newness
criterion. As discussed in the FY 2022 IPPS/LTCH PPS proposed rule (86
FR 25288), while the applicant discussed the differences between
NexoBridTM and collagenase-based products, we note we did
not receive enough information regarding the specific composition of
the proteolytic enzymes used within the NexoBridTM active
pharmaceutical ingredient and its mechanism of action. Specifically, it
is unclear whether the proteolytic enzymes act similar to existing
collagenase-based enzymatic debridement products since the applicant
claimed that NexoBridTM debrides denatured collagen in the
wound. In addition, the applicant asserted that NexoBridTM
is not assigned to the same MS-DRGs as existing technologies used for
burns, although it seems that NexoBridTM would be assigned
to the same burn MS-DRGs as other enzymatic and surgical debridement
technologies.
We are inviting public comments on whether NexoBridTM is
substantially similar to existing technologies and whether
NexoBridTM meets the newness criterion.
With respect to the cost criterion, the applicant provided multiple
analyses to demonstrate that it meets the cost criterion. For each
analysis, the applicant searched the FY 2021 MedPAR file using
different combinations of ICD-10-CM codes and ICD-10-PCS codes to
identify potential cases representing patients who may be eligible for
NexoBridTM. The applicant explained that it used different
codes to demonstrate two different cohorts that may be eligible for
this technology
[[Page 26832]]
based on the presence of skin replacement. The applicant removed a
different percentage of operating room charges for each cohort and
followed the order of operations described in the following table.
For the first analysis, the applicant searched for claims using a
combination of ICD-10-CM diagnosis codes for second- or third-degree
burns as a primary diagnosis and ICD-10-PCS code(s) for excision or
extraction of skin or subcutaneous tissue and fascia absent of a
replacement procedure. Please see Table 10.15.A.--NexoBridTM
Codes--FY 2024 associated with this proposed rule for the complete list
of codes that the applicant indicated were included in its cost
analysis. Using the inclusion/exclusion criteria described in the
following table, the applicant identified 274 claims mapping to three
MS-DRGs: 935 (Non-Extensive Burns), 934 (Full Thickness Burn without
Skin Graft or Inhalation Injury), and 928 (Full Thickness Burn with
Skin Graft or Inhalation Injury with CC/MCC). The applicant calculated
a final inflated average case-weighted standardized charge per case of
$109,545, which exceeded the average case-weighted threshold amount of
$59,487.
For the second analysis, the applicant searched for claims using a
combination of ICD-10-CM diagnosis codes for second- or third-degree
burns as a primary diagnosis and ICD-10-PCS code(s) for excision or
extraction of skin or subcutaneous tissue and fascia including the
presence of a replacement procedure. Please see Table 10.15.A.--
NexoBridTM Codes--FY 2024 associated with this proposed rule
for the complete list of codes that the applicant indicated were
included in its cost analysis. Using the inclusion/exclusion criteria
described in the following table, the applicant identified 1,084 claims
mapping to four MS-DRGs: 928 (Full Thickness Burn with Skin Graft or
Inhalation Injury with CC/MCC), 929 (Full Thickness Burn with Skin
Graft or Inhalation Injury without CC/MCC), 935 (Non-Extensive Burns),
and 927 (Extensive Burns or Full Thickness Burns with MV >96 Hours with
Skin Graft). The applicant calculated a final inflated average case-
weighted standardized charge per case of $273,666, which exceeded the
average case-weighted threshold amount of $154,855.
Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount in
both scenarios, the applicant maintained that NexoBridTM
meets the cost criterion.
[[Page 26833]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.154
We are inviting public comments on whether NexoBridTM
meets the cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that NexoBridTM represents a substantial
clinical improvement over existing technologies because it is
associated with reduced time to complete eschar removal, prevented burn
depth conversion, reduced overall surgical burden, reduced blood loss,
and reduced incidence of autografting. The applicant asserted that for
these reasons NexoBridTM is a treatment option for a patient
population unresponsive to, or ineligible for, currently available
enzymatic and surgical eschar removal treatments; also, it offers the
ability to diagnose burn wound depth earlier than allowed by currently
available methods and significantly improves clinical outcomes relative
to traditional surgical debridement. The applicant provided 10 studies
to support these claims, as well as one background article about the
[[Page 26834]]
importance of donor site morbidity.\66\ The following table summarizes
the applicant's assertions regarding substantial clinical improvement.
Please see the online posting for NexoBridTM for the
applicant's complete statements regarding the substantial clinical
improvement criterion and the supporting evidence provided.
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\66\ Background articles are not included in the following table
but can be accessed via the online posting for the technology.
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After review of the information provided by the applicant, we have
the following concerns regarding whether NexoBridTM meets
the substantial clinical improvement criterion. As discussed in the FY
2022 IPPS/LTCH PPS proposed rule, we note the applicant's claims of
superiority of NexoBridTM to standard of care debridement
methods are non-specific because the studies cited were not designed to
compare NexoBridTM to a specific non-surgical method or an
enzymatic debridement product. In addition, we are unclear whether
comparing NexoBridTM to a surgical treatment modality is the
most appropriate comparator since mechanical means of debridement have
different clinical indications, risks, and benefits compared to
enzymatic debridement. As discussed in the FY 2022 IPPS/LTCH PPS
proposed rule, we also note studies did not demonstrate that
NexoBridTM selectively debrides eschar and does not injure
viable skin. In addition, it may be difficult to generalize across
studies of NexoBridTM because the wound care and timing of
the debridement and subsequent autografting varies across different
burn centers and studies. Finally, we note that a review of the
provided NexoBridTM studies observed that when compared to
the standard of care, there were variable reports of the cosmetic
outcome of NexoBridTM,67 68 prolonged wound
closure, longer lengths of stay,\69\ and significant pain associated
with NexoBridTM eschar debridement.\70\
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\67\ Schulz, A., Shoham, Y., Rosenberg, L., Rothermund, I.,
Perbix, W., Christian Fuchs, P., Lipensky, A., & Schiefer, J. L.
(2016). Enzymatic Versus Traditional Surgical Debridement of
Severely Burned Hands: A Comparison of Selectivity, Efficacy,
Healing Time, and Three-Month Scar Quality. Journal of Burn Care &
Research, 38(4), e745-e755.
\68\ Schulz, A., Fuchs, P.C., Rothermundt, I., Hoffmann, A.,
Rosenberg, L., Shoham, Y., Oberl[auml]nder, H., & Schiefer, J.
(2017). Enzymatic debridement of deeply burned faces: Healing and
early scarring based on tissue preservation compared to traditional
surgical debridement. Burns, 43(6), 1233-1243.
\69\ Rosenberg, L., Krieger, Y., Bogdanov-Berezovski, A.,
Silberstein, E., Shoham, Y., & Singer, A. J. (2014). A novel rapid
and selective enzymatic debridement agent for burn wound management:
a multi-center RCT. Burns, 40(3), 466-474. https://doi.org/10.1016/j.burns.2013.08.013.
\70\ Palao, R., Aguilera-S[aacute]ez, J., Serracanta, J.,
Collado, J.M., Santos, B.P., & Barret, J.P. (2017). Use of a
selective enzymatic debridement agent (Nexobrid[reg]) for wound
management: Learning curve. World Journal of Dermatology, 6(2), 32-
41.
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We are inviting public comments on whether NexoBridTM
meets the substantial clinical improvement criterion. In this section,
we summarize and respond to written public comments received in
response to the New Technology Town Hall meeting notice published in
the Federal Register regarding the substantial clinical improvement
criterion for NexoBridTM.
Comment: The applicant submitted a comment responding to questions
raised at the Town Hall meeting. In response to a question regarding
that availability of studies comparing NexoBridTM to
collagenase ointment (Santyl[reg]), the applicant stated that no study
currently exists comparing the two. The DETECT NexoBridTM
clinical trial included collagenase ointment in its standard of care
treatment arm, but the data were not stratified in publications since
the study was not powered to conduct this analysis. The applicant
further stated that NexoBridTM and collagenase ointment have
different usage cases. Specifically, collagenase ointment is used
primarily for wound care and is typically applied once or more daily
for several days and requires days to weeks to effectively treat
thermal burns. The applicant stated, in contrast, that
NexoBridTM is intended to be used only once to completely
remove eschar from deep partial and/or full thickness thermal burn
wounds. According to the applicant, in burn patient treatment, it is
not advisable to compare NexoBridTM and collagenase
ointment. The applicant also asserted that NexoBridTM has a
novel mechanism of action and is the first enzymatic agent to have
demonstrated rapid, consistent eschar removal. Currently, there is no
technology or product similar to NexoBridTM for eschar
removal.
The applicant provided an additional study that leveraged a porcine
burn wound model to compare NexoBridTM and collagenase
ointment. In the study, all FT burns that randomly received
NexoBridTM experienced complete eschar removal after a
single application, while none of the collagenase-treated FT wounds
experienced complete eschar removal after 14 days with one daily
treatment. During the study, all NexoBridTM-treated DPT
wounds also experienced complete eschar removal after a single
[[Page 26841]]
application. None of the collagenase-treated DPT wounds experienced
complete removal of eschar after 10 days of treatment; on day 14, 35%
had complete eschar removal, 30% had >50% eschar removed, and 35% had
<50% eschar removed.
Response: We thank the applicant for its comments and will take
this information into consideration when deciding whether to approve
new technology add-on payments for NexoBridTM.
i. Omidubicel
Gamida Cell, Inc. submitted an application for new technology add-
on payments for omidubicel for FY 2024. Per the applicant, omidubicel
is a one-time, patient-specific, cryopreserved allogeneic advanced
cellular therapy consisting of two cell fractions: a cultured fraction
(CF) and a non-cultured fraction (NF) which are both derived from the
same patient-specific cord blood unit. According to the applicant, the
CF consists of allogeneic, hematopoietic CD34+ progenitor cells that
are expanded and enhanced through a proprietary process in the presence
of cytokines and nicotinamide (NAM) technology used to inhibit
differentiation of the hematopoietic progenitor cells, CD34+ cells and
to increase the migration, bone marrow homing and engraftment
efficiency of the hematopoietic progenitor cells (HPCs). The NF
consists of allogeneic, hematopoietic mature myeloid and lymphoid cells
that are washed, formulated into a suspension, and cryopreserved in a
patient specific infusion bag. The resulting number of CD34+ HPCs in
omidubicel and their functional fitness may lead to the long-term
engraftment efficacy and rapid and broad immune reconstitution post-
transplant. According to the applicant, NAM preserves the function and
long-term engraftment ability of cord blood-derived stem cells and may
lead to favorable engraftment and patient outcomes.
Please refer to the online application posting for omidubicel
available at https://mearis.cms.gov/public/publications/ntap/NTP2210100TN9R, for additional detail describing the technology and its
proposed uses.
With respect to the newness criterion, the applicant stated it has
not yet received FDA marketing authorization for omidubicel. According
to the applicant, it anticipates BLA approval from FDA for the
treatment of patients with hematologic malignancies in need of a
hematopoietic stem cell transplant before July 1, 2023. The applicant
noted that a single dose of omidubicel consists of two separate
components: the CF and the NF suspended in Dimethyl sulfoxide (DMSO)
and supplied separately in two cryopreserved bags. CF must be
administered first and contains a minimum of 8.0x10\8\ total viable
cells with a minimum of 8.7% CD34+ cells and a minimum of 9.2x10\7\
CD34+ cells. NF contains a minimum of 4.0x10\8\ total viable cells with
a minimum of 2.4x10\7\ CD3+ cells.
The applicant stated that effective October 1, 2022, the following
ICD-10-PCS codes may be used to uniquely describe the transfusion of
omidubicel: XW143C8 (Transfuse omidubicel in central vein, perc, new
tech 8) and XW133C8 (Transfuse omidubicel in periph vein, perc, new
tech 8). The applicant provided a list of diagnosis codes that may be
used to currently identify the indication for omidubicel under the ICD-
10-CM coding system. Please refer to the online application posting for
the complete list of ICD-10-CM codes provided by the applicant.
As previously discussed, if a technology meets all three of the
substantial similarity criteria under the newness criterion, it would
be considered substantially similar to an existing technology and would
not be considered ``new'' for the purpose of new technology add-on
payments.
With respect to the substantial similarity criteria, the applicant
asserted that omidubicel is not substantially similar to other
currently available technologies because it does not use the same or
similar mechanism of action as existing technology and when approved,
it will be the first and only patient-specific advanced cell therapy
for use as an allogeneic stem cell donor source, and that therefore,
the technology meets the newness criterion. The following table
summarizes the applicant's assertions regarding the substantial
similarity criteria. Please see the online application posting for
omidubicel for the applicant's complete statements in support of its
assertion that omidubicel is not substantially similar to other
currently available technologies.
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However, we have the following concerns with regard to the newness
criterion. While the applicant has discussed how omidubicel is
produced, we are unclear how the mechanism of action for omidubicel is
different than standard HSCT. Although the applicant noted that
omidubicel increases the CD34+ content compared to what is reported by
the cord blood bank before cryopreservation and expansion, we question
whether this relates to mechanism of action and not just development of
the technology. We would appreciate additional information regarding
how the mechanism of action for omidubicel differs from that of
standard of care HSCT. In addition, we note that the applicant asserted
that omidubicel is not assigned to the same MS-DRG as existing
technologies, but also stated that it is assigned to the same MS-DRG as
all allogeneic HCT procedures. We are inviting public comments on
whether omidubicel is substantially
[[Page 26843]]
similar to existing technologies and whether omidubicel meets the
newness criterion.
With respect to the cost criterion, the applicant provided a
primary analysis and two sensitivity analyses to demonstrate that it
meets the cost criterion. For each analysis, the applicant searched the
FY 2021 MedPAR file using the same ICD-10-CM codes, with or without the
addition of ICD-10-PCS codes, to identify potential cases representing
patients who may be eligible for omidubicel. The applicant noted that
it used the pharmacy cost center cost-to-charge ratio (CCR) to
determine the potential charges for the technology in all three
analyses and duplicated each analysis using a CAR T-cell CCR to
determine the potential charges for the technology. See the following
table for an explanation of how the CAR T-cell CCR was calculated.
We note that the applicant used the MS-DRG 018 [Chimeric Antigen
Receptor (CAR) T-cell and other Immunotherapies] threshold for the cost
criterion analyses rather than the threshold for MS-DRG 014 in its
analyses. However, we note that the technology maps to MS-DRG 014 and
the applicant has not made a formal request to map to a different MS-
DRG. Therefore, we are substituting the threshold of MS-DRG 014 for all
the analyses that follow rather than using the threshold of MS-DRG 018.
Each analysis followed the order of operations described in the
following table.
For the first analysis, in identifying the primary cohort, the
applicant identified cases reporting a principal or secondary ICD-10-CM
diagnosis code for blood cancer in MS-DRG 014. The applicant used the
inclusion/exclusion criteria described in the following table. Under
this analysis, the applicant identified 587 claims mapping to MS-DRG
014. The applicant used the pharmacy cost center CCR of 0.184 to
determine the charges for the technology. The applicant calculated a
final inflated average case-weighted standardized charge per case of
$2,133,899 which exceeded the MS-DRG 014 threshold of $296,086. The
applicant duplicated this analysis using the same steps noted
previously but instead used a CAR T-cell CCR of 0.2788. The applicant
calculated a final inflated average case-weighted standardized charge
per case of $1,533,304 which exceeded the MS-DRG 014 threshold of
$296,086.
For the second analysis, the applicant identified cases reporting a
principal or secondary ICD-10-CM diagnosis code for blood cancer in MS-
DRG 014 in combination with ICD-10-PCS codes for patients treated using
an unrelated blood donor source. The applicant used the inclusion/
exclusion criteria described in the following table. Under this
analysis, the applicant identified 314 claims mapping to MS-DRG 014.
The applicant calculated a final inflated average case-weighted
standardized charge per case of $2,111,904 which exceeded the MS-DRG
014 threshold of $296,086. The applicant duplicated this analysis using
the same steps noted previously but instead used a CAR T-cell CCR of
0.2788. The applicant calculated a final inflated average case-weighted
standardized charge per case of $1,511,309 which exceeded the MS-DRG
014 threshold of $296,086.
For the third analysis, the applicant identified cases reporting a
principal or secondary ICD-10-CM diagnosis code for blood cancer in MS-
DRG 014 in combination with ICD-10-PCS codes for patients using a cord
blood donor source. The applicant used the inclusion/exclusion criteria
described in the following table. Under this analysis, the applicant
identified 17 claims mapping to MS-DRG 014. The applicant calculated a
final inflated average case-weighted standardized charge per case of
$2,384,695 which exceeded the MS-DRG 014 threshold of $296,086. The
applicant duplicated this analysis using the same steps noted
previously but instead used a CAR T-cell CCR of 0.2788. The applicant
calculated a final inflated average case-weighted standardized charge
per case of $1,784,100 which exceeded the MS-DRG 014 threshold of
$296,086.
Because the final inflated average case-weighted standardized
charge per case exceeded the MS-DRG 014 threshold in all scenarios, the
applicant asserted that omidubicel meets the cost criterion.
[[Page 26844]]
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We are inviting public comments on whether omidubicel meets the
cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that omidubicel represents a substantial clinical
improvement over existing technologies because the totality of the data
(up to 10-year follow-up) powers the evidence that omidubicel, which
would be the first patient-specific advanced cellular therapy donor
source, meets a high unmet treatment need for a diverse group of
patients with serious, life-threatening hematologic malignancies and
provides high quality stem cells, clinically meaningful and highly
statistically significant clinical improvement, lower healthcare
resource utilization, with an overall favorable benefit/risk profile.
The applicant provided 13 data submissions to support these claims, as
well as 16 background articles about omidubicel.\71\ The following
table summarizes the applicant's assertions regarding the substantial
clinical improvement criterion. Please see the online posting for
omidubicel for the applicant's complete statements regarding the
substantial clinical improvement criterion and the supporting evidence
provided.
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\71\ Background articles are not included in the following table
but can be accessed via the online posting for the technology.
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After review of the information provided by the applicant, we have
the following concerns regarding whether omidubicel meets the
substantial clinical improvement criterion.
With respect to the applicant's claim that Omidubicel as an
allogeneic donor source addresses key barriers to the widespread use of
UCB as a donor source, including limited or inadequate cell dose for
adults and adolescents, we note that the Horwitz et al., 2019 \72\
phase \1/2\ trial of 36 patients compared results to historical
controls. Despite best efforts at matching, this type of comparison
does not account for unobserved differences between participants and
historical controls. The trial authors noted that some study
participants became ineligible during the pre-transplantation work-up
and five withdrew because of logistical issues, but it is unclear if
the historical controls would have been excluded for the same reasons.
Furthermore, the study compared health and socioeconomic status but did
not report social support received by omidubicel recipients compared to
historical controls. These differences could affect non-relapse
mortality. Additionally, the time frames of patient involvement are
different and there may have been advances in supportive care or other
therapies since the timeframe for historical controls (2010-2013).
Finally, we note that in Table 2 of the study, overall survival and
disease-free survival were not statistically significantly different
for omidubicel recipients versus The Center for International Blood and
Marrow Transplant Research (CIBMTR) control at 2 years.
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\72\ Horwitz ME, et al. Phase I/II study of stem-cell
transplantation using a single cord blood unit expanded ex vivo with
nicotinamide. J Clin Oncol 2019;37:367-74.
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Finally, with respect to the applicant's claim that by allowing a
higher degree of donor-recipient mismatch, omidubicel addresses health
disparities in the racial and ethnic minority population, we note that
no substantiating data was presented. The applicant submitted
background articles outlining disparities in utilization as well as
some biologic differences.73 74 75 However, we did not
receive data on improvements in access or outcomes for this patient
population with the use of this technology.
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\73\ Dahlberg A and Milano F. Cord blood transplantation: rewind
to fast forward. Bone Marrow Transplantation (2016), 1-4.
\74\ Be The Match: Five Year Strategic Plan. 2019-2023; adopted
May 2018.
\75\ Joshua TV, et al. Access to hematopoietic stem cell
transplantation: effect of race and sex. Cancer. 2010;116 (14):
3469-3476.
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The Horwitz et al., 2021 \76\ phase 3 study serves as the
applicant's primary reference in support of the assertion that
omidubicel significantly improves clinical outcomes relative to current
available treatments. We note that the baseline characteristics of the
patients were not entirely matched as more patients receiving
omidubicel had myelodysplastic syndrome (MDS) and chronic myeloid
leukemia (CML) rather than other leukemias, such as acute myeloid
leukemia (AML) and acute lymphoblastic leukemia (ALL). This may affect
prognosis and response to therapy. We also note that the trial seems to
be unblinded, which could introduce bias. We also question the utility
of the primary endpoints. While the study demonstrated faster rates of
neutrophil engraftment and platelet recovery, it is unclear whether
this translates to clinical outcomes. The study was not powered to
detect significance in progression-free survival (PFS) and overall
survival (OS). The researchers compared the primary end point of
infectious complications using intent-to-treat (ITT) analysis, but used
cumulative incidence rates for secondary endpoints. It is unclear why
cumulative incidence rates were used for secondary endpoints and not
ITT analysis, and we question if this is because they were
statistically significant. We are unclear of the reason that bacterial
and fungal infections were combined while only grade three viral
infections were reported. We note that the cumulative incidence of all
GvHD trended higher for omidubicel at one year, but was not
statistically significant. The supplementary tables 3 and 4 detailed
emergent adverse events in the two treatment groups and it would be
helpful to know if any of the incidence differences were statistically
significant. We also note that patients in the prospective phase \1/2\
and 3 omidubicel trials 77 78 79 80 were under 65 and that
there is currently no data available for the ages above 65, and we
therefore question the generalizability of the therapy for the Medicare
population.
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\76\ Horwitz ME, et al. Omidubicel vs standard myeloablative
umbilical cord blood transplantation: results of a phase 3
randomized study. Blood. 21 October, 2021;138(16):1429-1440.
\77\ Horwitz ME, et al. Umbilical cord blood expansion with
nicotinamide provides long-term multilineage engraftment. J Clin
Invest 2014;124:3121-8.
\78\ Horwitz ME, et al. Phase I/II study of stem-cell
transplantation using a single cord blood unit expanded ex vivo with
nicotinamide. J Clin Oncol 2019;37:367-74.
\79\ Horwitz ME, et al. Omidubicel vs standard myeloablative
umbilical cord blood transplantation: results of a phase 3
randomized study. Blood. 21 October, 2021;138(16):1429-1440.
\80\ Lin C, et al. Multicenter long-term follow up of allogeneic
hematopoietic stem cell transplantation (allo-HCT) with omidubicel:
a pooled analysis of five prospective clinical trials. Abstract
presented at Society for Hematologic Oncology (SOHO), Fall 2022.
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Noting these potential limitations, while the primary endpoint data
in the phase 3 study demonstrates that patients with high-risk
hematologic malignancies have statistically significant faster recovery
of neutrophils with omidubicel versus unmanipulated UCB transplants, it
is not known whether this will translate to significantly improved
clinical outcomes.
With regard to the applicant's other data sources, we note that the
applicant provided materials demonstrating a steady increase in the
number of haplo-identical donor (haplo) transplants, with a slight
decline in cord blood (CB) transplants \81\ and note that the
comparison of haplo-HCT versus UCB transplant is an area of study \82\
with planned evaluation of progression-free survival, non-relapse
mortality, and overall survival. As such, we are interested in evidence
that demonstrates more clinical data on substantial clinical
improvement over current therapies. We note that the Lin et al., 2022
HRQL study \83\ was a secondary exploratory analysis and that primary
or secondary endpoints were not reported. We further note that
differences in social, family, and emotional scores were not
statistically significant. In addition, the mean age of participants
was 36, and we question the generalizability of these results to the
Medicare population.
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\81\ CIBMTR. Current uses and outcomes of hematopoietic cell
transplantation (HCT) in US, 2021 summary slides, https://www.cibmtr.org/ReferenceCenter/SlidesReports/SummarySlides/Pages/index.aspx.
\82\ Clinicaltrials.gov: NCT 01597778.
\83\ Lin C, et al. Health-related quality of life following
allogeneic hematopoietic stem cell transplantation with omidubicel
versus standard umbilical cord blood. Transplantation and Cellular
Therapy 2022. Doi: https://doi:org/10.101/j.jtct.2022.09.018 Sep
2022.
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We note that the Lin et al., SOHO 2022 study \84\ is a multi-
institutional pooled analysis of long-term outcomes of omidubicel
transplantation from five prospective clinical trials. Although the
individual clinical trials had controls, the pooled analysis had no
control group and therefore no comparisons against standard UCB are
made. Finally, the Majhail et al. 2022 study on resource
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\84\ Lin C, et al. Multicenter long-term follow up of allogeneic
hematopoietic stem cell transplantation (allo-HCT) with omidubicel:
a pooled analysis of five prospective clinical trials. Abstract
presented at Society for Hematologic Oncology (SOHO), Fall 2022.
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[[Page 26853]]
use \85\ for the Horwitz et al. phase 3 trial \86\ stated that the
patients transplanted with omidubicel had significantly shorter
hospital length of stay, reduced stays in the ICU, and reduced
healthcare resource use compared with standard UCB. We are interested
in additional information regarding how the data on resource use was
collected across the various sites.
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\85\ Majhail NS, et al. Hospitalization and healthcare resource
use of omidubicel vs umbilical cord blood (UCB) for hematologic
malignancies in a global randomized Phase III clinical trial. Poster
presented at TCT Meetings of the ASTCT and CIBMTR, April 2022.
\86\ Majhail NS, et al. Hospitalization and healthcare resource
use of omidubicel vs umbilical cord blood (UCB) for hematologic
malignancies in a global randomized Phase III clinical trial. Poster
presented at TCT Meetings of the ASTCT and CIBMTR, April 2022.
---------------------------------------------------------------------------
We are inviting public comments on whether omidubicel meets the
substantial clinical improvement criterion.
In this section, we summarize and respond to written public
comments received in response to the New Technology Town Hall meeting
notice published in the Federal Register regarding the substantial
clinical improvement criterion for omidubicel.
Comment: We received two written comments in response to the New
Technology Town Hall meeting, both related to reimbursement of
omidubicel. Since we only summarize Town Hall comments related to
substantial clinical improvement, these comments are therefore not
summarized.
j. REBYOTATM (Fecal Microbiota, Live-jslm)
Ferring Pharmaceuticals, Inc., an affiliate of the manufacturer,
Rebiotix Inc., submitted an application for new technology add-on
payments for REBYOTATM for FY 2024. Per the applicant,
REBYOTATM is a broad consortium microbiota-based live
biotherapeutic suspension indicated for the prevention of recurrence of
Clostridioides difficile infection (CDI) in individuals 18 years of age
and older, following antibiotic treatment for recurrent CDI.
Please refer to the online application posting for
REBYOTATM, available at https://mearis.cms.gov/public/publications/ntap/NTP221017WUDXM, for additional detail describing the
technology and the disease treated by the technology.
With respect to the newness criterion, the applicant stated that
REBYOTATM received BLA approval from FDA on November 30,
2022 for the prevention of rCDI in individuals 18 years of age and
older, following antibiotic treatment for rCDI. According to the
applicant, REBYOTATM first became commercially available on
January 23, 2023 as the process to create packaging components and then
start the packaging process could not start until FDA approval was
received. Per the applicant, REBYOTATM is administered
rectally 24 to approximately 72 hours after the last dose of
antibiotics for CDI. The applicant stated that each 150mL dose of
REBYOTATM contains between 1x10\8\ and 5x10\10\ colony
forming units (CFU) per mL of fecal microbes including more than
1x10\5\ CFU/mL of Bacteroides, and contains not greater than 5.97 grams
of PEG3350 in saline.
The applicant stated that, effective October 1, 2022, the following
ICD-10-PCS code may be used to uniquely describe procedures involving
the use of REBYOTA: XW0H7X8 (Introduction of broad consortium
microbiota-based live biotherapeutic suspension into lower GI, via
natural or artificial opening, new tech. group 8). The applicant stated
that ICD-10-CM diagnosis codes A04.71 (Enterocolitis due to Clostridium
difficile, recurrent) and A04.72 (Enterocolitis due to Clostridium
difficile, not specified as recurrent) may be used to currently
identify the indication for REBYOTATM under the ICD-10-CM
coding system.
As previously discussed, if a technology meets all three of the
substantial similarity criteria under the newness criterion, it would
be considered substantially similar to an existing technology and would
not be considered ``new'' for the purpose of new technology add-on
payments.
With respect to the substantial similarity criteria, the applicant
stated that REBYOTATM is not substantially similar to other
currently available technologies to reduce rCDI because
REBYOTATM has a new mechanism of action and is approved to
treat a broader patient population than existing therapies (including
standard of care antibiotics (for example, DIFICID[reg], FIRVANQ[reg]),
Fecal Microbiota Transplantation (FMT), and ZINPLAVATM), and
that therefore, the technology meets the newness criterion. The
following table summarizes the applicant's assertions regarding the
substantial similarity criteria. Please see the online application
posting for REBYOTATM for the applicant's complete
statements in support of its assertion that REBYOTATM is not
substantially similar to other currently available technologies.
BILLING CODE 4120-01-P
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We note the following concerns with regard to the newness
criterion. We note that the applicant stated that ZINPLAVATM
is restricted to high-risk patients, and we question whether these
high-risk patients are the same or a similar patient population as that
treated with REBYOTATM, which is indicated for patients who
have already had at least one recurrence of rCDI. In addition, we note
that the indication for ZINPLAVATM does not exclude patients
with a history of CHF and the labeling has no listed contraindications.
Therefore, we seek clarification from the applicant regarding the
differences in patient populations for ZINPLAVATM and
REBYOTATM.
In addition, we note that REBYOTATM may have a similar
mechanism of action to SER-109, another microbiome therapeutic agent
for which we received an application for new technology add-on payments
for FY 2024 to reduce the recurrence of rCDI in adults following
antibiotic treatment for rCDI, inclusive of the first recurrence, as
discussed later in this section. Notably, the exact mechanism of action
for each biologic is not known; however, both appear to act on the gut
microbiome to suppress C. difficile (C.diff.) and thereby prevent rCDI.
Both REBYOTATM and SER-109 appear to lead to compositional
changes in the gastrointestinal microbiome that restore the diversity
of gut flora which enable it to suppress outgrowth of C.diff. and rCDI,
following standard-of-care treatment with antibiotics for rCDI.
Further, both technologies appear to map to the same MS-DRGs as each
other and as existing technologies, and to treat the same or similar
disease (rCDI) in the same or similar patient population (patients who
have previously received standard-of-care antibiotics for CDI or rCDI).
Accordingly, since it appears that REBYOTATM and SER-109 are
purposed to achieve the same therapeutic outcome using a similar
mechanism of action and would be assigned to the same MS-DRG, we
believe that these technologies may be
[[Page 26855]]
substantially similar to each other such that they should be considered
as a single application for purposes of new technology add-on payments,
if SER-109 receives FDA approval by July 1, 2023. We are interested in
information on how these two technologies may differ from each other
with respect to the newness criterion to inform our analysis of whether
REBYOTATM and SER-109 are substantially similar to each
other.
We believe that if these technologies are 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 (83 FR 41286 through 41287). Therefore, 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 the date on which REBYOTATM became commercially
available, January 23, 2023. We note that though, generally, our policy
is to begin the newness period on the date of FDA approval or
clearance, we may consider a documented delay in the technology's
market availability in our determination of newness (87 FR 48977 and 77
FR 53348).
We are inviting public comment on whether REBYOTATM is
substantially similar to existing technologies and meets the newness
criterion, including whether REBYOTATM is substantially
similar to SER-109, and whether these technologies should be evaluated
as a single technology for purposes of new technology add-on payments.
With respect to the cost criterion, the applicant searched the FY
2021 MedPAR file for potential cases representing patients who may be
eligible for REBYOTATM using ICD-10-CM code A04.71
(Enterocolitis due to Clostridium difficile, recurrent). Using the
inclusion/exclusion criteria described in the following table, the
applicant identified 14,653 claims mapping to 398 MS-DRGs. Please see
Table 10.17.A.--REBYOTATM Codes--FY 2024 associated with
this proposed rule for the complete list of MS-DRGs that the applicant
indicated were included in its cost analysis. The applicant followed
the order of operations described in the following table and calculated
a final inflated average case-weighted standardized charge per case of
$156,292, which exceeded the average case-weighted threshold amount of
$71,397. Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount,
the applicant asserted that REBYOTATM meets the cost
criterion.
[GRAPHIC] [TIFF OMITTED] TP01MY23.171
We are inviting public comments on whether REBYOTATM
meets the cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that REBYOTATM 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, and because the use of
REBYOTATM significantly improves clinical outcomes relative
to the treatment options previously available. The applicant provided
eight studies to support these claims, as well as background articles
about occurrence and treatment of CDI and rCDI.\87\ The following table
summarizes the applicant's assertions regarding the substantial
clinical improvement criterion. Please see the online posting for
REBYOTATM for the applicant's
[[Page 26856]]
complete statements regarding the substantial clinical improvement
criterion and the supporting evidence provided.
---------------------------------------------------------------------------
\87\ Background articles are not included in the table in this
section but can be accessed via the online posting for the
technology.
[GRAPHIC] [TIFF OMITTED] TP01MY23.172
[[Page 26857]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.173
[[Page 26858]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.174
[[Page 26859]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.175
After review of the information provided by the applicant, we have
the following concerns regarding whether REBYOTATM meets the
substantial clinical improvement criterion. Regarding the assertion
that
[[Page 26860]]
REBYOTATM is an FDA-approved therapeutic option for some
patients who may not be eligible for treatment with
ZINPLAVATM due to patient population restrictions (for
example, high-risk patients) or contraindications (for example, history
of congestive heart failure [CHF]), and that there is no evidence that
REBYOTATM poses an increased risk of serious AEs in patients
with a history of CHF, the applicant cited a retrospective study of
REBYOTATM reported by Feuerstadt et al.\88\ in which 94
participants with comorbid conditions commonly found in people with
rCDI were treated with REBYOTATM. The analysis showed a
treatment success rate of 82.8%, with no observable difference between
participants who received one dose (83.3%) vs. two doses (82.5%). We
note that the comorbid conditions represented in this population
included: gastroesophageal reflux disease (47.9%); irritable bowel
syndrome (17%); gastritis (11.7%); constipation (8.5%); microscopic
colitis (7.4%); diverticulitis (6.4%); Crohn's disease (5.3%); and
ulcerative colitis (4.3%) but did not include patients with CHF as a
comorbidity. We believe additional information regarding whether
REBYOTATM was tested in patients with CHF to determine
clinical outcomes would be helpful in our evaluation of the applicant's
assertion. The applicant also referenced a poster presentation by Braun
et al.\89\ that presents the safety data from five prospective studies
in which 749 pooled participants received at least one dose of
REBYOTATM, and 83 participants received placebo only to
support its assertion. Additional information demonstrating whether
REBYOTATM is safe for the patient population with CHF would
help to inform an assessment of whether REBYOTATM
demonstrates substantial clinical improvement over existing
technologies.
---------------------------------------------------------------------------
\88\ Feuerstadt P, Harvey A, Bancke L. RBX2660, an
investigational live microbiota-based biotherapeutic, improves
outcomes of Clostridioides difficile infection in a real-world
population: a retrospective study of use under an FDA enforcement
discretion. Abstract for ACG2021.
\89\ Braun T, Guthmueller B, Harvey A. Safety of investigational
microbiota-based live biotherapeutic RBX2660 in individuals with
recurrent Clostridioides difficile infection: data from five
prospective clinical studies. Abstract presented at: 10th Annual
IDWeek; September 29, 2021.
---------------------------------------------------------------------------
Regarding the claim of sustained clinical response, the applicant
referenced an abstract of an open-label trial of REBYOTATM
by Orenstein et al. This trial was a Phase 2 open-label trial where
participants with multiple rCDI received two doses of
REBYOTATM administered 7 + 2 days apart. Researchers
conducted a 2-year analysis of the clinical safety, efficacy, and
durability of REBYOTATM. The absence of rCDI was compared
between the REBYOTATM and a historical control cohort that
received standard-of-care antibiotic therapy. Durability was defined as
continued absence of CDI episodes beyond 8 weeks, and was assessed at
3, 6, 12, and 24 months by assessing changes in stool samples. While
the applicant submitted results from both a phase 2 trial of
REBYOTATM \90\ and the PUNCH CD3 phase 3 trial \91\ to
demonstrate the superiority of REBYOTATM over placebo, we
question whether other treatment options indicated to prevent rCDI,
such as ZINPLAVATM, would be a more appropriate comparator.
Additional information regarding clinical outcomes as a result of
treatment with REBYOTATM compared to ZINPLAVATM,
instead of placebo, would be helpful in our assessment of the
substantial clinical improvement criterion. In summary, while we
understand that there are no head-to-head trials comparing
REBYOTATM to ZINPLAVATM, additional information
would help inform our assessment of whether REBYOTATM
demonstrates a substantial clinical improvement over existing
technologies.
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\90\ Blount KF, Shannon WD, Deych E, Jones C. Restoration of
bacterial microbiome composition and diversity among treatment
responders in a phase 2 trial of REBYOTA: an investigational
microbiome restoration therapeutic. Open Forum Infect Dis.
2019;6(4):ofz095.
\91\ Blount K, Walsh D, Gonzalez C, et al. Treatment success in
reducing recurrent Clostridioides difficile infection with
investigational live biotherapeutic REBYOTATM is
associated with microbiota restoration: consistent evidence from a
phase 3 clinical trial. Abstract presented at: 10th Annual IDWeek;
September29, 2021.
---------------------------------------------------------------------------
We are inviting public comments on whether REBYOTATM
meets the substantial clinical improvement criterion.
We did not receive any written comments in response to the New
Technology Town Hall meeting notice published in the Federal Register
regarding the substantial clinical improvement criterion for
REBYOTATM.
k. Sabizabulin
Veru, Inc. submitted an application for new technology add-on
payments for sabizabulin for FY 2024. Per the applicant, sabizabulin is
a novel oral microtubule disruptor that will be indicated, upon FDA
approval, for treatment of severe SARS-CoV-2 infection in hospitalized
patients with moderate to severe COVID-19 at high risk for Acute
Respiratory Distress Syndrome (ARDS) and death. According to the
applicant, preclinical studies demonstrate that sabizabulin has both
significant antiviral and anti-inflammatory activities by disrupting
microtubule dynamics.
Please refer to the online application posting for sabizabulin,
available at https://mearis.cms.gov/public/publications/ntap/NTP221017FTANY, for additional detail describing the technology and the
disease treated by the technology.
With respect to the newness criterion, the applicant stated it
anticipates Emergency Use Authorization (EUA) and/or NDA approval for
treatment of SARS-CoV-2 infection in hospitalized patients with
moderate to severe COVID-19 infection who are at high risk for ARDS
before July 1, 2023. We note that, as discussed in prior rulemaking, a
product available only through an EUA would not be eligible for new
technology add-on payments. While an EUA is not marketing authorization
within the meaning of Sec. 412.87(e)(2) for purposes of eligibility
for new technology add-on payments, data reflecting the costs of
products that have received an EUA could become available as soon as
the date of the EUA issuance and prior to receiving FDA approval or
clearance (86 FR 45159 through 45160). The applicant stated that the
recommended dosing of sabizabulin will be a 9 mg capsule administered
orally daily for a maximum of 21 days or until the patient is
discharged from the hospital. The applicant estimated the average
number of treatment days for sabizabulin to be 11.4 days, based on the
results of the phase 3 trial (Barnette et al., 2022). From this
estimation, the applicant anticipates an average dose per inpatient
stay of one 9 mg capsule (per day) x 11 days.
According to the applicant, there were no ICD-10-PCS procedure
codes to distinctly identify sabizabulin at the time of application. We
note that, effective April 1, 2023, the following ICD-10-PCS codes can
be used to uniquely describe procedures involving the use of
sabizabulin: XW0DXK8 (Introduction of sabizabulin into mouth and
pharynx, external approach, new technology group 8), XW0G7K8
(Introduction of sabizabulin into upper GI, via natural or artificial
opening, new technology group 8), and XW0H7K8 (Introduction of
sabizabulin into lower GI, via natural or artificial opening, new
technology group 8). The applicant stated that diagnosis code U07.1
(COVID-19) may be used to currently identify the indication for
sabizabulin under the ICD-10-CM coding system.
[[Page 26861]]
As previously discussed, if a technology meets all three of the
substantial similarity criteria under the newness criterion, it would
be considered substantially similar to an existing technology and would
not be considered ``new'' for the purpose of new technology add-on
payments.
With respect to the substantial similarity criteria, the applicant
asserted that sabizabulin is not substantially similar to other
currently available technologies because sabizabulin has a unique
mechanism of action, and that therefore, the technology meets the
newness criterion. The following table summarizes the applicant's
assertions regarding the substantial similarity criteria. Please see
the online application posting for sabizabulin for the applicant's
complete statements in support of its assertion that sabizabulin is not
substantially similar to other currently available technologies.
[GRAPHIC] [TIFF OMITTED] TP01MY23.176
We are inviting public comments on whether sabizabulin is
substantially similar to existing technologies and whether sabizabulin
meets the newness criterion.
With respect to the cost criterion, the applicant provided three
analyses to demonstrate that it meets the cost criterion. The applicant
searched the FY 2021 MedPAR file using the ICD-10-PCS codes described
in the following table, to identify potential cases representing
patients who may be eligible for sabizabulin and then further divided
the potential cases based on existence or absence of intensive care
days. The applicant based the three cost analyses on three cohorts from
a randomized, multicenter placebo-controlled phase 3 clinical trial
demonstrating the efficacy of sabizabulin (Barnette et al., 2022),
including: (1) Cases without mechanical ventilation or intensive care
days; (2) Cases with intensive care days and without mechanical
ventilation; and (3) Cases with mechanical ventilation. Each analysis
followed the order of operations described in the following table.
For the first analysis, the applicant searched for cases reporting
the ICD-10-CM diagnosis of COVID-19 (U07.1) in any position and a high/
low flow oxygen ICD-10-PCS code, without the presence of mechanical
ventilation ICD-10-PCS codes, and without intensive care days. Please
see Table 10.19.A.--Sabizabulin Codes--FY 2024 associated with this
proposed rule for the complete list of ICD-10-PCS codes and MS-DRGs
that the applicant indicated were included in its cost analysis. The
applicant used the inclusion/exclusion criteria described in the
following table. Under this analysis, the applicant identified 16,664
claims mapping to 29 MS-DRGs. The applicant calculated a final inflated
average case-weighted standardized charge per case of $115,916, which
exceeded the average case-weighted threshold amount of $64,866.
For the second analysis, the applicant searched for the same
criteria used for the first analysis, but instead with the presence of
intensive care days. Please see Table 10.19.A.--Sabizabulin Codes--FY
2024 associated with this proposed rule for the complete list of ICD-
10-PCS codes and MS-DRGs that the applicant indicated were included in
its cost analysis. The applicant used the inclusion/exclusion criteria
described in the following table. Under this analysis, the applicant
identified 36,438 claims mapping to 46 MS-DRGs. The applicant
calculated a final inflated average case-weighted standardized charge
per case of $163,327, which exceeded the average case-weighted
threshold amount of $66,501.
For the third analysis, the applicant searched for cases reporting
the ICD-10-CM diagnosis of COVID-19 (U07.1) in any position, with a
mechanical ventilation ICD-10-PCS code and/or
[[Page 26862]]
intensive care day(s). Please see Table 10.19.A.--Sabizabulin Codes--FY
2024 associated with this proposed rule for the complete list of ICD-
10-PCS codes and MS-DRGs that the applicant indicated were included in
its cost analysis. The applicant used the inclusion/exclusion criteria
described in the following table. Under this analysis, the applicant
identified 79,237 claims mapping to 100 MS-DRGs. The applicant
calculated a final inflated average case-weighted standardized charge
per case of $259,462, which exceeded the average case-weighted
threshold amount of $171,026. Because the final inflated average case-
weighted standardized charge per case exceeded the average case-
weighted threshold amount in all analyses, the applicant asserted that
sabizabulin meets the cost criterion.
[GRAPHIC] [TIFF OMITTED] TP01MY23.177
We note that the applicant's inclusion/exclusion criteria and
reasoning for the third analysis are unclear. For the third analysis,
the applicant searched for cases reporting the ICD-10-CM diagnosis of
COVID-19 (U07.1) in any position, with a mechanical ventilation ICD-10-
PCS code and/or intensive care day(s). The inclusion of a mechanical
ventilation ICD-10-PCS code or intensive care days would allow
inclusion of cases without
[[Page 26863]]
mechanical ventilation (but with intensive care days) in the cohort.
However, the study (Barnette et al., 2022) which the analysis is
intended to mirror appears to require mechanical ventilation for all
cases in the third cohort. We would be interested in confirmation or
clarification of the inclusion criteria for the third analysis,
including which cases it is intended to capture. Additionally, we would
be interested in information explaining what ``inhalation charges''
were removed in the third analysis. It is unclear if ``inhalation
charges'' were intended to mean ventilation charges (during the
associated 49% reduction in ventilation days), or otherwise. We are
inviting public comments on whether sabizabulin meets the cost
criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that sabizabulin represents a substantial clinical
improvement over existing technologies because sabizabulin has been
shown to significantly improve clinical outcomes relative to other
COVID-19 treatments because in a randomized, multicenter placebo-
controlled phase 3 clinical trial, sabizabulin was associated with:
reduction of least one clinically significant adverse event (SAE);
fewer days in intensive care unit (ICU) on mechanical ventilation and
in hospital; fewer adverse events (AEs); decreased rate of at least one
subsequent diagnostic or therapeutic intervention; a reduced length of
stay; and reduced recovery time. The following table summarizes the
applicant's assertions regarding substantial clinical improvement.
Please see the online posting for sabizabulin for the applicant's
complete statements regarding the substantial clinical improvement
criterion and the supporting evidence provided.
[[Page 26864]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.178
[[Page 26865]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.179
BILLING CODE 4120-01-C
After review of the information provided by the applicant, we have
the following concerns regarding whether sabizabulin meets the
substantial
[[Page 26866]]
clinical improvement criterion. We note the applicant cites one study
for all six claims, a randomized clinical trial that has a sample size
of 130 patients treated, across five countries (United States, Brazil,
Bulgaria, Argentina, and Mexico), with 204 patients randomly assigned
to either treatment or placebo group. It is unclear whether the same
results can be repeated since other studies were not provided. We
question whether the findings from this study are directly applicable
to the Medicare population, particularly if there were significant
differences between the standards of care in the countries included in
the study and standards of care in the U.S. The study's description of
concurrent COVID-19 therapies does not appear to be consistent with
guidelines in effect in the US \92\ throughout the enrollment period.
For example, only 83.7% of patients in the placebo group received
dexamethasone, the volume of patients who received immunomodulators
appears to be much less than recommended by National Institutes of
Health guidelines, and antiviral therapy was uncommon (as noted by
Peltan and Brown in a NEJM editorial).\93\ A break-out in mortality
rate was provided for the U.S. subgroup within the study, and while the
U.S. subgroup would be expected to have greater consistency with
standards of care for Medicare patients, we question whether the U.S.
subgroup of the original sample was powered to show a statistically
significant difference in outcome. No confidence interval or power
calculations were provided for the U.S. subgroup results, which stated
a 34.4% absolute reduction in mortality at day 60. Further, secondary
outcomes were not provided for the U.S. subgroup. We question whether
the different standards of care contributed to the high rate of
mortality (35% at day 29; 45% at day 60) in the placebo group, and
whether it is appropriate to compare against the results of the placebo
group. The patients in the study underwent random assignment between
May 18, 2021 and January 31, 2022. CDC's reporting for in-hospital
mortality among patients hospitalized primarily for COVID-19 was 15.1%
during the Delta period (July-October 2021), and 13.1% during the early
Omicron period (January-March 2022).\94\ While these may not be direct
comparison groups, it is unclear why there would be a remarkable
difference in the CDC published mortality rates among patients
hospitalized primarily for COVID-19 and the mortality rates of the
placebo group in this study. Rajesh T. Gandhi, MD also noted the
mortality rate to be higher in the study referenced by the applicant
(Barnette KG et al. NEJM Evid 2022 Jul 6) than in other recent trials
\95\ and he asserted that this high rate of mortality may have affected
the results of the study. Dr. Gandhi goes on to say that while the high
rate of mortality may be related to the severity of illness and
underlying risk, it may also be due to chance because of the small
number of participants, and that a larger, more definitive study of
this drug may be warranted.\96\ We further note that the study provided
by the applicant shows a difference in outcomes with remdesivir usage
at 34.7% among the sabizabulin group and 28.8% among the placebo group,
and we question whether higher remdesivir usage rates in the
sabizabulin group may have contributed to greater anti-viral effects.
---------------------------------------------------------------------------
\92\ DOI: https://files.covid19treatmentguidelines.nih.gov/guidelines/archive/covid19treatmentguidelines-04-08-2022.pdf.
\93\ Ithan D. Peltan, M.D., M.Sc. and Samuel M. Brown, M.D.,
M.S. ``What Next? New Drugs, Old Drugs, and New Challenges in
Choosing Treatments for Covid-19,'' August 23, 2022 DOI: https://evidence.nejm.org/doi/full/10.1056/EVIDe2200189.
\94\ Adjei S, Hong K, Molinari NM, et al. Mortality Risk Among
Patients Hospitalized Primarily for COVID-19 During the Omicron and
Delta Variant Pandemic Periods--United States, April 2020-June 2022.
MMWR Morb Mortal Wkly Rep 2022;71:1182-1189. DOI: http://dx.doi.org/10.15585/mmwr.mm7137a4.
\95\ Dr. Gandhi referenced other recent studies with lower
mortality rates. One reference was a review that he wrote on the of
the National Institutes of Health-sponsored Adaptive COVID-19
Treatment Trial (ACTT-1); doi: https://www.jwatch.org/na52072;
another reference was to a study on Remdesivir for the Treatment of
Covid-19; doi: https://www.nejm.org/doi/full/10.1056/nejmoa2007764.
\96\ Rajesh T. Gandhi, MD, NEJM Journal Watch, ``A Possible New
Drug for Treatment of Hospitalized Patients with COVID-19,'' July
21, 2022 DOI: https://www.jwatch.org/na55130/2022/07/21/possible-new-drug-treatment-hospitalized-patients-with.
---------------------------------------------------------------------------
Finally, with regard to the claim about medication adherence, we
note that the study provided was not designed to measure medication
compliance/adherence results, and no data was provided to directly
support greater medication compliance/adherence for sabizabulin, or a
comparison with self-administered medications. We therefore question
how the results in this study support the assertion that sabizabulin
utilization demonstrates greater medication adherence and compliance.
We also note that patients who withdrew consent or refused the protocol
were removed from the study, and we question the impact that may have
had on analyses of medication compliance/adherence.
We are inviting public comments on whether sabizabulin meets the
substantial clinical improvement criterion.
We did not receive any written comments in response to the New
Technology Town Hall meeting notice published in the Federal Register
regarding the substantial clinical improvement criterion for
sabizabulin.
l. SeptiCyte[reg] RAPID
Immunexpress, Inc. submitted an application for new technology add-
on payments for SeptiCyte[reg] RAPID for FY 2024. Per the applicant,
SeptiCyte[reg] RAPID is a gene expression assay used in conjunction
with clinical assessments and other laboratory findings as an aid to
differentiate infection-positive (sepsis) from infection-negative
systemic inflammatory response syndrome (SIRS) in patients suspected of
sepsis on their first day of intensive care unit (ICU) admission.
According to the applicant, the test is performed in a fully integrated
cartridge, which runs on the Biocartis Idylla system, with sample to
answer turnaround time of approximately 60 minutes. The applicant
stated that SeptiCyte[reg] RAPID generates a score (SeptiScore[reg])
ranging from 0 to 15 that falls within one of four discrete
interpretation bands based on the increasing likelihood of infection-
positive systemic inflammation, also known as sepsis.
Please refer to the online application posting for SeptiCyte[reg]
RAPID, available at https://mearis.cms.gov/public/publications/ntap/NTP2210170WWBT, for additional detail describing the technology and
diagnostic indications.
With respect to the newness criterion, according to the applicant,
SeptiCyte[reg] RAPID received 510(k) clearance (K203748) from FDA on
November 29, 2021 for the following indication: SeptiCyte[reg] RAPID is
indicated as a gene expression assay using reverse transcription
polymerase chain reaction to quantify the relative expression levels of
host response genes isolated from whole blood collected in the
PAXgene[reg] Blood RNA Tube. The SeptiCyte[reg] RAPID test is used in
conjunction with clinical assessments and other laboratory findings as
an aid to differentiate infection-positive (sepsis) from infection-
negative systemic inflammation in patients suspected of sepsis on their
first day of ICU admission. The SeptiCyte[reg] RAPID test generates a
score (SeptiScore[reg]) that falls within one of four discrete
Interpretation Bands based on the increasing likelihood of infection-
positive systematic inflammation. SeptiCyte[reg] RAPID is intended for
in-
[[Page 26867]]
vitro diagnostic use on the Biocartis IdyllaTM System. The
applicant stated the SeptiCyte[reg] RAPID was commercially available
immediately after FDA clearance. Per the applicant, Septicyte[reg]
RAPID was cleared based on substantial equivalency to the predicate
device SeptiCyte[reg] LAB (K163260), which received 510(k) clearance
\97\ from the FDA on April 6, 2017. The applicant described differences
between the two versions of the technology including: the automatic
extraction of material from SeptiCyte[reg] RAPID versus the manual
extraction for SeptiCyte[reg] LAB; reverse transcription polymerase
chain reaction (RT-PCR) and dry format for SeptiCyte[reg] RAPID versus
reverse transcription-quantitative polymerase chain reaction (RT-qPCR)
and wet format for SeptiCyte[reg] LAB; use of the Biocartis
IdyllaTM System for SeptiCyte[reg] RAPID versus ABI 7500
Fast Dx for SeptiCyte[reg] LAB; different fluorescent probes and
quenchers between SeptiCyte RAPID and SeptiCyte LAB; and use of MS2
phage internal sample processing control for SeptiCyte RAPID versus
three external controls for SeptiCyte LAB.
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\97\ https://www.accessdata.fda.gov/cdrh_docs/reviews/K163260.pdf.
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The applicant stated that effective October 1, 2022, the following
ICD-10-PCS code may be used to uniquely describe procedures involving
the use of SeptiCyte[reg] RAPID: XXE5X38 (Measurement of Infection,
Whole Blood Nucleic Acid-base Microbial Detection, New Technology Group
5).
As previously discussed, if a technology meets all three of the
substantial similarity criteria under the newness criterion, it would
be considered substantially similar to an existing technology and would
not be considered ``new'' for the purpose of new technology add-on
payments.
With respect to the substantial similarity criteria, the applicant
asserted that SeptiCyte[reg] RAPID is not substantially similar to
other currently available technologies because SeptiCyte[reg] RAPID
differs in mechanism, performance, and turnaround time from all current
sepsis diagnostic tools by leveraging the host's immune response to
systemic inflammation of infectious origin via measurement of the gene
expression ratio between upregulated and downregulated genes, and
therefore, the technology meets the newness criterion. The following
table summarizes the applicant's assertions regarding the substantial
similarity criteria. Please see the online application posting for
SeptiCyte[reg] RAPID for the applicant's complete statements in support
of its assertion that SeptiCyte[reg] RAPID is not substantially similar
to other currently available technologies.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP01MY23.180
We have the following concerns with regard to the newness
criterion. We note that the applicant did not include SeptiCyte[reg]
LAB, the predicate device for SeptiCyte[reg] RAPID which was cleared by
FDA on April 6, 2017, in its discussion of existing technologies. While
the applicant described differences between the two versions of the
technology, it does not appear that these differences materially affect
the mechanism of action of the technology. We note that both devices
utilize a gene expression assay using reverse transcription polymerase
chain reaction to quantify the relative expression levels of host
response genes.\98\ We further note that the applicant also appears to
[[Page 26868]]
consider the devices as similar, as they rely on studies conducted
using the SeptiCyte[reg] LAB to demonstrate substantial clinical
improvement.
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\98\ https://www.accessdata.fda.gov/cdrh_docs/reviews/K163260.pdf.
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We also note that the applicant did not explain how SeptiCyte[reg]
RAPID targets a different disease or patient population compared to
existing sepsis diagnostic testing. Instead, the applicant stated that
SeptiCyte[reg] RAPID does not diagnose the same patient population
compared to existing technology, because it allows for early diagnosis,
guides treatment decisions, and has high accuracy. While this may be
relevant to the assessment of substantial clinical improvement, it does
not appear to be related to newness and we are unclear how the patient
population tested with Septicyte[reg] RAPID differs from other patients
tested for sepsis, including those tested with Septicyte[reg] LAB. As
the applicant states that Septicyte[reg] RAPID maps to the same MS-DRG
as existing technologies, and it appears to have a similar mechanism of
action and is used in the same patient population as SeptiCyte[reg]
LAB, we believe these technologies may be substantially similar to each
other. We note that if Septicyte[reg] RAPID is substantially similar to
SeptiCyte[reg] LAB, we believe the newness period for this technology
would begin on April 6, 2017 with the 510(k) approval date for
SeptiCyte[reg] LAB and, therefore, because the 3-year anniversary date
of the technology's entry onto the U.S. market (April 6, 2020) occurred
in FY 2020, the technology would no longer be considered new and would
not be eligible for new technology add-on payments for FY 2024.
We are inviting public comments on whether SeptiCyte[reg] RAPID is
substantially similar to existing technologies and whether
SeptiCyte[reg] RAPID meets the newness criterion.
With respect to the cost criterion, the applicant searched the FY
2021 MedPAR file for potential cases representing patients who may be
eligible for SeptiCyte[reg] RAPID. The applicant identified three
different types of patient cases where SeptiCyte[reg] RAPID could be
used: patients with sepsis as an admission diagnosis; patients who
develop sepsis after hospital admission; and patients with symptoms
similar to sepsis patients. To identify these patients, the applicant
used MS-DRGs and ICD-10-CM codes. These three groups were combined into
one analysis with no overlap in cases between the three groups. Please
see Table 10.21.A.--SeptiCyte[reg] RAPID Codes--FY 2024 associated with
this proposed rule for the complete list of MS-DRGs and codes provided
by the applicant. Using the inclusion/exclusion criteria described in
the following table, the applicant identified 3,460,256 claims mapping
to 691 MS-DRGs. The applicant followed the order of operations
described in the following table and calculated a final inflated
average case-weighted standardized charge per case of $88,326, which
exceeded the average case-weighted threshold amount of $72,992. Because
the final inflated average case-weighted standardized charge per case
exceeded the average case-weighted threshold amount, the applicant
maintained that SeptiCyte[reg] RAPID meets the cost criterion.
[[Page 26869]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.181
We are inviting public comments on whether SeptiCyte[reg] RAPID
meets the cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that SeptiCyte[reg] RAPID represents a substantial
clinical improvement over existing technologies because SeptiCyte[reg]
RAPID is the only technology to accurately differentiate sepsis versus
non-infectious systemic inflammation in 1 hour, allowing for early,
appropriate intervention in suspected sepsis patients and driving
prompt source control investigation, while outperforming currently used
sepsis diagnostic tools. The applicant asserted that for these reasons
SeptiCyte[reg] RAPID offers the ability to diagnose sepsis earlier than
allowed by currently available diagnostic methods and significantly
improves clinical outcomes relative to current technologies. The
applicant provided eight studies to support these claims, as well as 12
background articles about sepsis clinical guidelines, screening
criteria, and treatment.\99\ The following table summarizes the
applicant's assertions regarding the substantial clinical improvement
criterion. Please see the online posting for SeptiCyte[reg] RAPID for
the applicant's complete statements regarding the substantial clinical
improvement criterion and the supporting evidence provided.
---------------------------------------------------------------------------
\99\ Background articles are not included in the following table
but can be accessed via the online posting for the technology.
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[[Page 26870]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.182
[[Page 26871]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.183
[[Page 26872]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.184
[[Page 26873]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.185
After review of the information provided by the applicant, we have
the following concerns regarding whether SeptiCyte[reg] RAPID meets the
substantial clinical improvement criterion. First, we note that the
applicant submitted two studies 100 101 of SeptiCyte[reg]
LAB, the predicate device, to support its assertions as to why
SeptiCyte[reg] RAPID represents a substantial clinical improvement. The
applicant did not present any clinical data to compare SeptiCyte[reg]
RAPID to SeptiCyte[reg] LAB. Second, the studies provided showed that
SeptiCyte[reg] RAPID is not a definitive test and that resulting
SeptiScores[reg] in Bands 2 and 3 are inconclusive. We note that the
applicant stated that SeptiCyte[reg] RAPID should be used in
conjunction with clinical assessments and other laboratory findings. If
additional diagnostic tests are needed in conjunction with
SeptiCyte[reg] RAPID to determine a diagnosis of sepsis or SIRS, we
question whether SeptiCyte[reg] RAPID can provide an earlier diagnosis
and affects the management of the patient. In addition, the applicant
did not provide evidence for this claim other than the one-hour
turnaround time for SeptiCyte[reg] RAPID to provide test results.
Additionally, we note that the applicant did not provide any clinical
data demonstrating that the SeptiCyte[reg] RAPID affects the management
of the patient, or that it improves clinical outcomes.
---------------------------------------------------------------------------
\100\ Balk, R, Esper AM, Martin GS, et al. Validation of
SeptiCyte[reg] RAPID to discriminate sepsis from non-infectious
systemic inflammation. Submitted for review and publication
September 2022. Available as pre-print at https://doi.org/10.1101/2022.07.20.22277648.
\101\ McHugh, L.C. (2018). Modeling Improved Patient Management
and Hospital Savings with SeptiCyte[reg] LAB in the Diagnosis of
Sepsis at ICU admission. Abstract at IDWeek 2018.
---------------------------------------------------------------------------
We are inviting public comments on whether SeptiCyte[reg] RAPID
meets the substantial clinical improvement criterion.
We did not receive any written comments in response to the New
Technology Town Hall meeting notice published in the Federal Register
regarding the substantial clinical improvement criterion for
SeptiCyte[reg] RAPID.
[[Page 26874]]
m. SER-109
Seres Therapeutics, Inc. submitted an application for new
technology add-on payments for SER-109 for FY 2024. Per the applicant,
SER-109 is an investigational oral microbiome therapeutic administered
to reduce Clostridioides difficile (C. diff) infection (CDI) recurrence
as part of a two-pronged treatment approach of (1) antibiotics to kill
vegetative C. diff bacteria, followed by (2) SER-109 to repair the
microbiome to manage CDI and prevent its recurrence. According to the
applicant, SER-109 is a consortium of purified Firmicutes bacteria
spores collected from healthy stool donors. The applicant stated that
engraftment of spore-producing Firmicutes bacteria is a necessary first
step in microbiome repair, as Firmicutes bacteria produce metabolites,
such as secondary bile acids, which inhibit C. diff spore germination
and vegetative growth.
Please refer to the online application posting for SER-109,
available at https://mearis.cms.gov/public/publications/ntap/NTP221016VHL8B, for additional detail describing the technology and the
disease treated by the technology.
With respect to the newness criterion, the applicant stated it has
not yet received FDA marketing authorization for SER-109 but that it
anticipates BLA approval before July 1, 2023 for the proposed
indication to prevent the recurrence of CDI in adults with rCDI.
According to the applicant, SER-109 will be commercially available
after it receives FDA approval. The applicant stated that the proposed
dose is four capsules taken orally once daily on an empty stomach
before the first meal of the day for 3 consecutive days; recommended
dosage and administration are subject to final FDA approval.
According to the applicant, there are currently no ICD-10-PCS
procedure codes to distinctly identify SER-109. We note that the
applicant submitted a request for approval for a unique ICD-10-PCS
procedure code for SER-109 beginning in FY 2024. The applicant stated
that diagnosis codes A04.71 (Enterocolitis due to Clostridium
difficile, recurrent) and A04.72 (Enterocolitis due to Clostridium
difficile, not otherwise specified as recurrent) may be used to
currently identify the indication for SER-109 under the ICD-10-CM
coding system.
As previously discussed, if a technology meets all three of the
substantial similarity criteria under the newness criterion, it would
be considered substantially similar to an existing technology and would
not be considered ``new'' for the purpose of new technology add-on
payments.
With respect to the substantial similarity criteria, the applicant
stated that SER-109 is not substantially similar to other currently
available technologies because SER-109 does not have the same or
similar mechanism of action as any currently FDA-approved CDI treatment
and does not involve treatment of the same or similar type of disease
or patient population as there are currently no approved therapies
indicated to repair a disrupted microbiome as a treatment intervention
to prevent recurrence in patients with rCDI. Therefore, the applicant
asserted that SER-109 meets the newness criterion. The following table
summarizes the applicant's assertions regarding the substantial
similarity criteria. Please see the online application posting for SER-
109 for the applicant's complete statements in support of its assertion
that SER-109 is not substantially similar to other currently available
technologies.
[[Page 26875]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.186
We note the following concerns with regard to the newness
criterion. The applicant asserted that SER-109 can be administered to
patients with CHF and stated that the use of ZINPLAVATM
(bezlotoxumab) should be reserved in this patient population. We note
that the indication for ZINPLAVATM does not exclude patients
with a history of CHF and the labeling has no listed contraindications.
Therefore, we seek clarification from the applicant regarding the
differences in patient populations for ZINPLAVATM and SER-
109.
In addition, we note that SER-109 may have a substantially similar
mechanism of action as REBYOTATM, another microbiome
therapeutic for which we received an application for new technology
add-on payments for FY 2024 to reduce the recurrence of rCDI in adults
following antibiotic treatment for rCDI, inclusive of the first
recurrence. Notably, the exact mechanism of action for each therapeutic
is not known; however, both appear to act on the gut microbiome to
prevent the increased germination of C. difficile (C. diff) and thereby
prevent rCDI. Both SER-109 and REBYOTATM appear to lead to
compositional changes in the gastrointestinal microbiome that restore
the diversity of gut flora which enable it to suppress outgrowth of C.
diff. and rCDI, following standard-of-care treatment with antibiotics
for rCDI. Further, both technologies appear to map to the same MS-DRGs
as each other and as existing technologies, and to treat the same or
similar disease (rCDI) in the same or similar patient population
(patients who have previously received standard-of-care antibiotics for
CDI or rCDI).
Accordingly, since it appears that SER-109 and REBYOTATM
are
[[Page 26876]]
purposed to achieve the same therapeutic outcome using a similar
mechanism of action and would be assigned to the same MS-DRG, we
believe that these technologies may be substantially similar to each
other such that they should be considered as a single application for
purposes of new technology add-on payments. We note that if this
technology is substantially similar to REBYOTATM, it is
appropriate to use the earliest market availability date submitted as
the beginning of the newness period for both technologies (83 FR 41286
through 41287). Therefore, we believe the newness period for this
technology would begin on January 23, 2023, the date
REBYOTATM became commercially available. We are 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 SER-109 and
REBYOTATM are substantially similar to each other and
therefore should be considered as a single application for purposes of
new technology add-on payments.
We are inviting public comment on whether SER-109 is substantially
similar to existing technologies and meets the newness criterion,
including whether SER-109 is substantially similar to
REBYOTATM, and whether these technologies should be
evaluated as a single technology for purposes of new technology add-on
payments.
With respect to the cost criterion, to identify potential cases
representing patients who may be eligible for SER-109, the applicant
searched the FY 2021 MedPAR file for cases reporting ICD-10-CM code
A04.71 (Enterocolitis due to Clostridium difficile, recurrent). Using
the inclusion/exclusion criteria described in the following table, the
applicant identified 14,497 claims mapping to 392 MS-DRGs. Please see
Table 10.22.A.--SER-109 Codes--FY 2024 associated with this proposed
rule for the complete list of MS-DRGs that the applicant indicated were
included in its cost analysis. The applicant followed the order of
operations described in the following table and calculated a final
inflated average case-weighted standardized charge per case of
$175,157, which exceeded the average case-weighted threshold amount of
$69,830. Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount,
the applicant maintained that SER-109 meets the cost criterion.
[GRAPHIC] [TIFF OMITTED] TP01MY23.187
We are inviting public comments on whether SER-109 meets the cost
criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that SER-109 represents a substantial clinical
improvement over existing technologies because SER-109 treats patients
unresponsive to antibiotic treatment for rCDI and can be used in
patients ineligible for ZINPLAVATM due to CHF. The applicant
also asserts that it improves clinical outcomes by reducing CDI
recurrence, increasing resolution of the disease process by expediting
microbiome repair, and reducing carriage of antimicrobial resistance
genes. The applicant provided 5 studies to support these claims, as
well as 11 background articles about CDI recurrence and risks of
increased exposure to antibiotic therapies in a hospital setting for
rCDI and cardiac risk of prescribing existing treatments, such as
ZINPLAVATM, to patients with pre-existing heart
failure.\102\ The following table summarizes the applicant's assertions
regarding the substantial clinical improvement criterion. Please see
the online posting for SER-109 for the applicant's complete statements
regarding the substantial clinical improvement criterion and the
supporting evidence provided.
---------------------------------------------------------------------------
\102\ Background articles are not included in the following
table but can be accessed via the online posting for the technology.
---------------------------------------------------------------------------
BILLING CODE 4120-01-P
[[Page 26877]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.188
[[Page 26878]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.189
[[Page 26879]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.190
[[Page 26880]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.191
[[Page 26881]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.192
BILLING CODE 4120-01-C
After review of the information provided by the applicant, we have
the following concerns regarding whether SER-109 meets the substantial
clinical improvement criterion. To demonstrate that SER-109 reduces
rates of CDI recurrence compared to standard of care therapies, the
application primarily cites to the ECOSPOR phase II trial and ECOSPOR
III phase III trial. The application also cites a recently-presented
abstract of the open-label single-arm ECOSPOR IV trial which does not
appear to provide a comparison against currently available therapies.
The major limitation of these data is that patients who received
ZINPLAVATM in the prior 3 months were excluded. While the
study provides data comparing the
[[Page 26882]]
effectiveness of SER-109 to antibiotics alone, no data comparing the
treatment of rCDI utilizing antibiotics plus ZINPLAVATM, as
is currently recommended for rCDI, against antibiotics plus SER-109
(with or without ZINPLAVATM) was provided. Without a
comparison against such currently available therapies, we question
whether the information provided by the applicant is sufficient to
support the applicant's statements that SER-109 is well-tolerated and
mitigates the safety concerns of other alternative therapies, and that
SER-109 can be used in patients ineligible for ZINPLAVATM
due to diagnosis of CHF.
With regard to the claim that SER-109 can be used safely in
patients with CHF, the cited trials either did not identify or document
effects on participants with comorbid CHF to support this conclusion.
The ECOSPOR trial specifically excluded patients with poor concurrent
medical risks or clinically significant co-morbid disease such that, in
the opinion of the investigator, the subject should not be enrolled. It
is not clear whether this criterion necessarily excluded individuals
with known pre-existing CHF from the study group; however, it is also
not clear how many individuals diagnosed with CHF prior to or during
the study were identified in the study populations. A lack of
participants with CHF could potentially account for the low incidence
of adverse effects, rather than being attributable to the safety of
SER-109 relative to ZINPLAVATM for patients with CHF. Absent
additional information, it is therefore difficult to confirm that SER-
109 offers a treatment option for patients ineligible for
ZINPLAVATM due to CHF.
According to the applicant, there is an increased resolution of the
disease process because SER-109 expedites microbiome repair during the
window of vulnerability, identified as 1-4 weeks after antibiotic
discontinuation, by ensuring more rapid engraftment of beneficial
Firmicutes bacteria needed to decrease germination of C. diff. spores
and prevent recurrence. For this claim, the applicant cites three
articles: two randomized controlled trials and one unpublished
abstract. While the results of the Phase III randomized controlled
trial \103\ demonstrates the superiority of SER-109 over placebo, we
question whether other treatment options indicated to prevent rCDI,
such as ZINPLAVATM, would be a more appropriate comparator.
Additional information regarding clinical outcomes as a result of
treatment with SER-109 compared to such treatment options, instead of
placebo, would be helpful in our assessment of the substantial clinical
improvement criterion.
---------------------------------------------------------------------------
\103\ Feuerstadt P, Louie TJ, Lashner B, et al., SER-109, an
oral microbiome therapy for recurrent Clostridioides difficile
infection. N Engl J Med 2022;386:220-9. DOI: 10.1056/NEJMoa2106516.
---------------------------------------------------------------------------
With respect to the applicant's claim that SER-109 may reduce the
number of future hospitalizations or physician visits for patients
diagnosed with rCDI, the applicant cites the Feurstadt study to suggest
that reduced rates of rCDI shown in Phase III clinical trials would
likely lead to fewer days in hospital. However, the study does not
address this measure directly; rather, this is an inference by the
applicant. We welcome additional data to support the claim SER-109 may
reduce the number of future hospitalizations or physician visits for
patients with rCDI.
With respect to the claim that SER-109 reduces the abundance of
antimicrobial resistance genes (ARGs) and associated taxa compared to
placebo, which accelerates microbiome recovery from antibiotics, the
applicant cited one unpublished study showing treatment with SER-109
led to a significant decrease in ARG abundance versus placebo, which
was both rapid and sustained through week eight. However, the authors
stated that further studies were needed to determine if the significant
reduction of ARGs is associated with prevention of subsequent
infections with drug resistant bacteria in CDI patients.
We are inviting public comments on whether SER-109 meets the
substantial clinical improvement criterion.
We did not receive any written comments in response to the New
Technology Town Hall meeting notice published in the Federal Register
regarding the substantial clinical improvement criterion for SER-109.
n. SPEVIGO[reg] (Spesolimab)
Boehringer Ingelheim Pharmaceuticals, Inc. (BIPI), submitted an
application for new technology add-on payments for SPEVIGO[reg] for FY
2024. SPEVIGO[reg] is a humanized antagonistic monoclonal
immunoglobulin G1 antibody blocking human IL36R signaling currently
under investigation for the treatment of flares in adult patients with
generalized pustular psoriasis (GPP). We note that the applicant
submitted an application for new technology add-on payments for
SPEVIGO[reg] for FY 2023, under the name spesolimab, as summarized in
the FY 2023 IPPS/LTCH PPS proposed rule (87 FR 28108 through 28746),
but the technology did not meet the deadline of July 1, 2022 for FDA
approval or clearance of the technology and, therefore, was not
eligible for consideration for new technology add-on payments for FY
2023 (87 FR 48920).
Please refer to the online application posting for SPEVIGO[reg],
available at https://mearis.cms.gov/public/publications/ntap/NTP2210146275W, for additional detail describing the technology and the
disease treated by the technology.
With respect to the newness criterion, according to the applicant,
the BLA for SPEVIGO[reg] was approved by FDA on September 1, 2022 for
the treatment of generalized pustular psoriasis (GPP) flares in adults.
According to the applicant, SPEVIGO[reg] is administered as a single
900 mg (2 x 450 mg/7.5 mL vials) intravenous infusion over 90 minutes,
and an additional intravenous 900 mg dose may be administered 1 week
after the initial dose if flare symptoms persist. The applicant
indicated that, while there may be cases where a second dose is needed,
there is insufficient frequency to impact the reported weighted average
of one dose per patient.
The applicant stated that effective October 1, 2022, the following
ICD-10-PCS code may be used to uniquely describe procedures involving
the use of SPEVIGO[reg]: XW03308 (Introduction of spesolimab monoclonal
antibody into peripheral vein, percutaneous approach, new technology
group 8). The applicant stated that L40.1 (Generalized pustular
psoriasis) may be used to currently identify the indication for
SPEVIGO[reg] under the ICD-10-CM coding system.
As previously discussed, if a technology meets all three of the
substantial similarity criteria under the newness criterion, it would
be considered substantially similar to an existing technology and would
not be considered ``new'' for the purposes of new technology add-on
payments.
With respect to the substantial similarity criteria, the applicant
asserted that SPEVIGO[reg] is not substantially similar to other
currently available technologies because, in the absence of an FDA-
approved therapy specifically indicated for GPP, immunomodulatory
therapies, including biologics, are used in the treatment of GPP
despite these medications being approved for plaque psoriasis, which is
a different subtype of psoriasis. Additionally, there is limited
evidence on the efficacy and safety of these therapies in the treatment
of GPP. Due to the rarity of the disease, there are no high-quality
clinical trials providing evidence for treatment options in GPP.
Therefore, the applicant asserts that the technology meets the newness
criterion. The following table summarizes the
[[Page 26883]]
applicant's assertions regarding the substantial similarity criteria.
Please see the online application posting for SPEVIGO[reg] for the
applicant's complete statements in support of its assertion that
SPEVIGO[reg] is not substantially similar to other currently available
technologies.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP01MY23.193
We have the following concerns with regard to the newness
criterion, similar to concerns raised in the FY 2023 IPPS/LTCH PPS
proposed rule (87 FR 28280). First, we note that, when describing
current treatments for the disease, the applicant stated that there are
no FDA-approved therapies specifically indicated for GPP. However, we
question whether there are any treatments that may be indicated for
psoriasis generally that may therefore be considered an on-label use
for subtypes of psoriasis such as GPP, and request additional
information on any such treatments and how they compare to SPEVIGO[reg]
with regard to substantial similarity. We also note that while the
applicant stated that SPEVIGO[reg] has no DRG to which it maps, the
applicant also provided a list of four MS-DRGs that cases eligible for
the use of the technology would map to, and we believe these are the
same MS-DRGs to which other treatments for GPP would map.
We are inviting public comments on whether SPEVIGO[reg] is
substantially similar to existing technologies and whether SPEVIGO[reg]
meets the newness criterion.
With respect to the cost criterion, to identify potential cases
representing patients who may be eligible for SPEVIGO[reg], the
applicant searched the FY 2021 MedPAR file for cases reporting ICD-10-
CM diagnosis code L40.1 (Generalized pustular psoriasis). Using the
inclusion/exclusion criteria described in the following table, the
applicant identified 64 cases mapping to 4 MS-DRGs listed in the table
in this section. The applicant followed the order of operations
described in the following table and calculated a final inflated
average case-weighted standardized charge per case of $387,414, which
exceeded the average case-weighted threshold amount of $46,244. Because
the final inflated average case-weighted standardized charge per case
exceeded the average case-weighted threshold amount, the applicant
asserted that SPEVIGO[reg] meets the cost criterion.
[[Page 26884]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.194
We note the applicant stated that removing charges for prior
technology was not applicable to SPEVIGO[reg]; however, to the extent
patients were treated with other treatments before SPEVIGO[reg], we
question whether it may be appropriate to remove some portion of these
charges to avoid inappropriately inflating the average charge per case.
We are inviting public comments on whether it may be appropriate to
remove charges for the prior technology and whether SPEVIGO[reg] meets
the cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that SPEVIGO[reg] represents a substantial clinical
improvement over existing technologies by being the first FDA approved
drug for GPP, and existing treatments were associated with slow
resolution of GPP flares and complete clearance of pustules and skin
was not always achieved.
The applicant further stated that in clinical trials, SPEVIGO[reg]
was associated with clinically significant improvements in patient-
reported psoriasis symptoms, including fatigue, and significant
decreases in markers of systemic inflammation. The applicant provided
one study to support these claims. The following table summarizes the
applicant's assertions regarding the substantial clinical improvement
criterion. Please see the online posting for SPEVIGO[reg] for the
applicant's complete statements regarding the substantial clinical
improvement criterion and the supporting evidence provided.
[[Page 26885]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.195
After review of the information provided by the applicant, we have
the following concerns regarding whether SPEVIGO[reg] meets the
substantial clinical improvement criterion. With regard to the
Effisayil-1 study, we note that it is not designed to compare
SPEVIGO[reg] to current treatment options. While the applicant states
that SPEVIGO[reg] will be the first GPP treatment targeting the IL-36
pathway, we note that per the applicant, other treatments are available
and we therefore question whether placebo is the most appropriate
comparator. In particular, we note that the Effisayil-1 trial primarily
assessed clearance of skin manifestations, not systemic symptoms which
the applicant notes differentiates GPP from other forms of psoriasis.
We note the applicant has stated in its application that existing
treatments for GPP are not specifically indicated for GPP and that it
would not be appropriate to consider these treatments on-label for GPP.
However, we note that there are treatments that are indicated for
psoriasis generally, such as methotrexate \104\ or retinoids,\105\
which may be considered an on-label use for subtypes of psoriasis such
as GPP.
[[Page 26886]]
Therefore, it is unclear whether there is a patient population
ineligible for or unresponsive to existing technologies that could be
treated with SPEVIGO[reg]. In addition, although the applicant stated
that SPEVIGO[reg] represents a substantial clinical improvement over
existing technologies where complete clearances were not always
achieved, it seems that complete clearance is also not always achieved
with SPEVIGO[reg]. As demonstrated in the Effisayil-1 study cited by
the applicant, 54.3 percent of the patients achieved complete pustular
clearance in the SPEVIGO[reg] arm.
---------------------------------------------------------------------------
\104\ https://www.accessdata.fda.gov/drugsatfda_docs/label/2020/008085Orig1s071lbl.pdf.
\105\ https://www.accessdata.fda.gov/drugsatfda_docs/label/2017/019821s028lbl.pdf.
---------------------------------------------------------------------------
We note that GPP occurs most frequently between the ages of 15-20
years with a smaller peak occurring at 55-60 years.\106\ The mean age
in the Effisayil-1 study was 43.2 years for the SPEVIGO[reg] arm and
42.6 years for the placebo group. Given the age range of patients, we
question the generalizability of the outcomes demonstrated in a study
of otherwise generally healthy patients with GPP to patients with GPP
in the Medicare population who would likely be eligible for Medicare
based on disabilities that could potentially present comorbidities for
which SPEVIGO[reg] would not be appropriate or effective. In addition,
the study administered SPEVIGO[reg] to the placebo group after one
week, after which only outcomes with SPEVIGO[reg] were assessed, and
the study concluded at 12 weeks. Given that the applicant did not
provide any comparative data on existing technologies to demonstrate
improved outcomes with SPEVIGO[reg], in addition to the short duration
of the single study provided and the often variable, remitting, and
intermittent course of the disease in which most flares last between 2
and 5 weeks, we question whether the information we have supports a
finding of substantial clinical improvement. Additional information to
support the applicant's assertion of superiority over existing
technologies would be helpful in better informing our assessment of
this criterion.107 108
---------------------------------------------------------------------------
\106\ \20\ Samotij et al. Generalized pustular psoriasis:
divergence of innate and adaptive immunity. Int J Mol Sci
2021;22(16):9048.
\107\ Krueger et al. Treatment options and goals for patients
with generalized pustular psoriasis. Am J Clin Dermatol
2022:23(suppl 1):51-64.
\108\ Choon et al. Clinical course and characteristics of
generalized pustular psoriasis. Am J Clin Dermatol 2022;23(suppl
1):21-9.
---------------------------------------------------------------------------
We are inviting public comments on whether SPEVIGO[reg] meets the
substantial clinical improvement criterion.
We did not receive any written comments in response to the New
Technology Town Hall meeting notice published in the Federal Register
regarding the substantial clinical improvement criterion for
SPEVIGO[reg].
o. TECVAYLI TM (Teclistamab-cqyv)
Johnson & Johnson Health Care Systems, Inc. submitted an
application for new technology add-on payments for TECVAYLI
TM for FY 2024. According to the applicant, TECVAYLI
TM is the only bispecific antibody approved for the
treatment of multiple myeloma (MM), specifically adult patients with
relapsed or refractory multiple myeloma (RRMM) who have received at
least four prior lines of therapy, including a proteasome inhibitor, an
immunomodulatory agent, and an anti-cluster of differentiation (CD)38
monoclonal antibody. The applicant stated that the structure of
TECVAYLI TM is advantageous versus other bispecific
platforms since its full size is designed to mimic naturally-occurring
immunoglobulin G (IgG) antibodies. We note that Johnson & Johnson
Health Care Systems, Inc. submitted an application for new technology
add-on payments for TECVAYLI TM for FY 2023 under the name
teclistamab, as summarized in the FY 2023 IPPS/LTCH PPS proposed rule
(87 FR 28283 through 28287), and withdrew it prior to the issuance of
the FY 2023 IPPS/LTCH PPS final rule (87 FR 48920).
Please refer to the online application posting for TECVAYLI
TM, available at https://mearis.cms.gov/public/publications/ntap/NTP221017MFYGL, for additional detail describing the technology
and the disease treated by the technology.
With respect to the newness criterion, according to the applicant,
TECVAYLI TM was granted BLA approval from FDA on October 25,
2022 for the treatment of adult patients with RRMM who have received at
least four prior lines of therapy, including a proteasome inhibitor, an
immunomodulatory agent, and an anti-CD38 monoclonal antibody. According
to the applicant, the product became commercially available on November
9, 2022. Commercial availability was delayed because of the need to
complete final supply chain readiness activities. Per the applicant,
patients in the hospital for their initial TECVAYLI TM
treatment will receive three doses subcutaneously--a 0.06 mg/kg loading
dose, a 0.30 mg/kg loading dose, and the first 1.5 mg/kg treatment
dose--during the hospital stay. The applicant stated that patients who
are under 102 kgs will use two 30 mg and one 153 mg vials during their
hospitalization. Patients over 102 kg will use three 30 mg and two 153
mg vials during their hospitalization. According to real world evidence
and clinical studies, 89% of TECVAYLI TM patients will be
less than 102 kg. Due to the risk of CRS and neurologic toxicity,
patients should be hospitalized for 48 hours after administration of
all doses within the step-up dosing schedule. Therefore, according to
the applicant, all three doses will be administered in a single
inpatient hospitalization.
The applicant stated that effective October 1, 2022, the following
ICD-10-PCS code may be used to uniquely describe procedures involving
the use of TECVAYLI TM: XW01348 (Introduction of teclistamab
antineoplastic into subcutaneous tissue, percutaneous approach, new
technology group 8).
As previously discussed, if a technology meets all three of the
substantial similarity criteria under the newness criterion, it would
be considered substantially similar to an existing technology and would
not be considered ``new'' for the purpose of new technology add-on
payments.
With respect to the substantial similarity criteria, the applicant
asserted that TECVAYLI TM is not substantially similar to
other currently available technologies because it has a distinct
mechanism of action, with a novel approach to engage a patient's own T-
cells to generate a myeloma-specific immune response, and is the first
therapy of its type for the treatment of RRMM, and therefore meets the
newness criterion. The following table summarizes the applicant's
assertions regarding the substantial similarity criteria. Please see
the online application posting for TECVAYLI TM for the
applicant's complete statements in support of its assertion that
TECVAYLI TM is not substantially similar to other currently
available technologies.
[[Page 26887]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.196
We note that TECVAYLI TM may have a similar mechanism of
action to that of elranatamab, for which we received an application for
new technology add-on payments for FY 2024 for the treatment of adult
patients with relapsed or refractory multiple myeloma after three or
more prior therapies, including an immunomodulatory agent, a proteasome
inhibitor, and an anti-CD38 monoclonal antibody. Per the application
for elranatamab, elranatamab is substantially similar to TECVAYLI
TM. Elranatamab's mechanism of action is described as a
bispecific antibody, meaning it has two parts, one that recognizes the
cancer cell and one that recognizes and engages the T-cell, and brings
them together to facilitate T-cell killing of the MM cell. For
elranatamab, the two targets are BCMA (which has high specific
expression on normal plasma cells and on MM cells) and CD3 (which is
expressed on T-cells). Elranatamab binds to the CD3 on the T-cells and
binds to the BCMA on the MM cells thereby bringing the cells in close
proximity. The engagement of the CD3 on the T-cell activates the T-
cell, leading to the T-cells releasing cytokines that result in the
killing of the close-proximity MM cell. Because of the apparent
similarity with the bispecific antibody that uses binding domains that
simultaneously bind the BCMA target on tumor cells and the CD3 T cell
receptor, we believe that the mechanism of action for TECVAYLI
TM may be the same or similar to that of elranatamab.
We believe that TECVAYLI TM and elranatamab may also
treat the same or similar disease (RRMM) in the same or similar patient
population (patients who have previously received a proteasome
inhibitor (PI), an immunomodulatory agent (IMiD) and an anti-CD38
antibody). Accordingly, as it appears that TECVAYLI TM and
elranatamab are purposed to achieve the same therapeutic outcome using
the same or similar mechanism of action and would be assigned to the
same MS-DRG, we believe that these technologies may be substantially
similar to each other such that they should be considered as a single
application for purposes of new technology add-on payments if
elranatamab receives FDA approval by July 1, 2023. We are 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 TECVAYLI TM and
elranatamab are substantially similar to each other and therefore
should be considered as a single application for purposes of new
technology add-on payments.
We are inviting public comment on whether TECVAYLI TM
meets the newness criterion, including whether TECVAYLI TM
is substantially similar to elranatamab and whether these technologies
should be evaluated as a single technology for purposes of new
technology add-on payments.
With respect to the cost criterion, to identify potential cases
representing patients who may be eligible for TECVAYLI TM,
the applicant searched the FY 2021 MedPAR file for cases reporting one
of the following ICD-10-
[[Page 26888]]
CM codes in one of the first five diagnosis code positions: C90.00
(Multiple myeloma not having achieved remission), C90.01 (Multiple
myeloma in remission), or C90.02 (Multiple myeloma in relapse). The
applicant provided calculations for 2 cohorts. Based on the clinical
advice of experts, for the first cohort, the applicant limited the
analysis to cases assigned to MS DRGs 846 (Chemotherapy Without Acute
Leukemia as Secondary Diagnosis with MCC), 847 (Chemotherapy Without
Acute Leukemia as Secondary Diagnosis with CC) and 848 (Chemotherapy
Without Acute Leukemia as Secondary Diagnosis without CC/MCC), because
the experts believed that TECVAYLI TM would mostly likely be
administered in cases assigned to these MS DRGs. This analysis was
completed prior to the drug being available. Based on additional
information gathered since TECVAYLI TM was FDA approved, the
applicant included in the second cohort the following MS DRGs in
addition to the MS DRGs included in the first cohort: 840 (Lymphoma and
Non-Acute Leukemia with MCC), 841 (Lymphoma and Non-Acute Leukemia with
CC), and 842 (Lymphoma and Non-Acute Leukemia without CC/MCC). For both
cohorts, no cases were identified for MS DRG 848 (Chemotherapy Without
Acute Leukemia as Secondary Diagnosis without CC/MCC). Using the
inclusion/exclusion criteria described in the following table, the
applicant identified 600 claims for cohort 1 and 4,335 claims for
cohort 2. The applicant followed the order of operations described in
the following table and calculated a final inflated average case-
weighted standardized charge per case of $119,279 for cohort 1 and
$145,374 for cohort 2, both of which exceeded the average case-weighted
threshold amount of $58,291 and $73,551, respectively. Because the
final inflated average case-weighted standardized charge per case
exceeded the average case-weighted threshold amount in both scenarios,
the applicant asserted that TECVAYLI TM meets the cost
criterion.
[[Page 26889]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.197
We are inviting public comments on whether TECVAYLI TM
meets the cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that TECVAYLI TM represents a substantial
clinical improvement over existing technologies because its indication
is less restrictive than some other treatments, making it available to
patients who do not qualify for the other drugs that treat RRMM. In
addition, the applicant stated that TECVAYLI TM may be more
immediately accessible than the BCMA CAR T-cell therapies due to
restrictions in site of care, manufacturing complexities, and other
concerns with respect to the BCMA CAR T-cell therapies. Finally, the
applicant stated that TECVAYLI TM improves clinical outcomes
and results in less serious side effects than other off the shelf RRMM
therapies. The applicant provided one study to support these claims, as
well as 11 background articles about other available treatments for
RRMM.\109\ The following table
[[Page 26890]]
summarizes the applicant's assertions regarding the substantial
clinical improvement criterion. Please see the online posting for
TECVAYLI TM for the applicant's complete statements
regarding the substantial clinical improvement criterion and the
supporting evidence provided.
---------------------------------------------------------------------------
\109\ Background articles are not included in the following
table but can be accessed via the online posting for the technology.
[GRAPHIC] [TIFF OMITTED] TP01MY23.198
After review of the information provided by the applicant, we have
the following concerns regarding whether TECVALI TM meets
the substantial clinical improvement criterion. The applicant claims
that other therapies have indications and side effects that restrict
the treatment population and TECVAYLI TM is available to
some of these restricted patient populations. Regarding this claim, the
applicant discusses restrictions for two other treatment options for
RRMM in its application, XPOVIO [reg] (selinexor) and BLENREP
(belantamab mafodotin-blmf). However, there are two other therapies for
RRMM, ciltacabtagene autoleucel and idecabtagene vicleucel, that the
applicant did not discuss that have a similar indication to TECVAYLI
TM and appear to target a similar population. Therefore, we
question the basis for the applicant's assertion that TECVAYLI
TM will fill a gap for patients unresponsive to or
ineligible for current treatments.
With regard to the claim that TECVAYLI TM may be a
preferred treatment for patients unable to access CAR T-cell therapy,
the applicant provided data on the number of patients who received CAR
T-cell therapy from studies for CD19 CAR T-cell therapies used for B-
cell lymphomas. For example, the applicant provided data from a survey
of CAR T-cell treatment centers across the United States indicating
only 25% of potential patients were reported to receive CD19 CAR T-cell
therapy, with a median wait time of 6 months.\110\ The applicant noted
that the data was for CAR T-cell therapy used to treat B-cell lymphoma,
because these treatments were approved prior to approvals for CAR T-
cell therapies for MM, so there is more accumulated evidence for the
former. However, given that B-cell lymphoma is a different disease than
MM and the T-cell therapies used to treat these two diseases are
different, we question whether the evidence related to B-cell
[[Page 26891]]
lymphoma is applicable to T-cell therapies used to treat MM.
---------------------------------------------------------------------------
\110\ Kourelis T, Bansal R, Patel KK, et al. Ethical challenges
with CAR T slot allocation with idecabtagene vicleucel manufacturing
access. Journal of Clinical Oncology. 2022;40(16_suppl):e20021-
e20021.
---------------------------------------------------------------------------
The applicant claims that CRS is less serious and less frequent for
patients treated with TECVAYLI TM than with BCMA CAR T-cell
therapies. Notably, the applicant compares data from separate, single-
arm, open-label studies of these technologies.111 112 113 In
review, CRS occurrence rates were 72.1%, 95% and 84% for TECVAYLI
TM, ciltacabtagene autoleucel, and idecabtagene vicleucel,
respectively. In addition, only 0.6% of the CRS events for TECVAYLI
TM were of grade 3 or higher, compared to 4% for
ciltacabtagene autoleucel and 5% for idecabtagene vicleucel. This
improved safety claim, however, focuses on only a single metric in the
studies' overall assessment of the safety and efficacy of these three
drugs. The overall response rates reported in the studies were 63%, 97%
and 73% for TECVAYLI TM, ciltacabtagene autoleucel, and
idecabtagene vicleucel respectively. When comparing across studies,
other metrics of efficacy noted in these studies also appear to support
a superiority of the CAR T-cell therapies compared to TECVAYLI
TM in the treatment of patients with RRMM. However, we also
note these comparisons are not matched cases within a comparative
study. Therefore, we question the conclusions drawn by the applicant
regarding the relative efficacy and safety profiles across these
studies.
---------------------------------------------------------------------------
\111\ Moreau P, Garfall AL, van de Donk NWCJ, et al. Teclistamab
in relapsed or refractory multiple myeloma. NEJM. 2022; 387(6): 495-
505.
\112\ Berdeja JG, Madduri D, Usmani SZ, Jakubowiak A, Agha M et
al. (2021) Ciltacabtagene autoleucel, a B-cell maturation antigen-
directed chimeric antigen receptor T-cell therapy in patients with
relapsed or refractory multiple myeloma (CARTITUDE-1): a phase 1b/2
open-label study. Lancet 398 (10297): 314-324.
\113\ Munshi NC, Anderson LD, Jr., Shah N, Madduri D, Berdeja J
et al. (2021) Idecabtagene Vicleucel in Relapsed and Refractory
Multiple Myeloma. N Engl J Med 384 (8): 705-716.
---------------------------------------------------------------------------
The applicant claims that TECVAYLI TM improves clinical
outcomes relative to other off-the-shelf therapies. The applicant
states the overall response rate (ORR) for XPOVIO [reg] and BLENREP
were 25% and 31%, while the ORR for TECVAYLI TM was 63%.
However, this claim does not consider the higher ORR for CAR T-cell
therapies compared to TECVAYLI TM when comparing across
studies, as previously mentioned. While this claim compares TECVAYLI
TM only to other off-the-shelf therapies, which would not
include CAR T-cell therapies, we question whether there is significant
clinical improvement compared to existing therapies, which include CAR
T-cell therapies.
We are inviting public comments on whether TECVAYLI TM
meets the substantial clinical improvement criterion.
We did not receive any written comments in response to the New
Technology Town Hall meeting notice published in the Federal Register
regarding the substantial clinical improvement criterion for TECVAYLI
TM.
p. TERLIVAZ[reg] (Terlipressin)
Mallinckrodt Hospital Products, Inc. submitted an application for
new technology add-on payments for TERLIVAZ[reg] for FY 2024. Per the
applicant, TERLIVAZ[reg] is a pharmacologic therapy administered via IV
bolus for the treatment of hepatorenal syndrome (HRS) with rapid
reduction in kidney function. The applicant stated that TERLIVAZ[reg]
is a V1-receptor synthetic vasopressin analogue that acts as a pro-drug
of lysine-vasopressin and has pharmacologic activity on its own.
According to the applicant, TERLIVAZ[reg] is the first and only FDA-
approved treatment indicated to improve kidney function in adults with
hepatorenal syndrome with rapid reduction in kidney function. We note
that Mallinckrodt Hospital Products, Inc. submitted an application for
new technology add-on payments for TERLIVAZ[reg] for FY 2022 under the
name Mallinckrodt Pharmaceuticals, as summarized in the FY 2022 IPPS/
LTCH PPS proposed rule (86 FR 25339 through 25344), that it withdrew
prior to the issuance of the FY 2022 IPPS/LTCH PPS final rule (86 FR
44979). We note that the applicant also submitted an application for
new technology add-on payments for FY 2023 under the name Mallinckrodt
Pharmaceuticals, as summarized in the FY 2023 IPPS/LTCH PPS proposed
rule (87 FR 28287 through 28296), that it withdrew prior to the
issuance of the FY 2023 IPPS/LTCH PPS final rule (87 FR 48920).
Please refer to the online application posting for TERLIVAZ[reg],
available at https://mearis.cms.gov/public/publications/ntap/NTP221014UR3R2, for additional detail describing the technology and the
disease treated by the technology.
With respect to the newness criterion, according to the applicant,
TERLIVAZ[reg] was granted NDA 505(b) approval from FDA on September 14,
2022 for the improvement of kidney function in adults with hepatorenal
syndrome with rapid reduction in kidney function. According to the
applicant, TERLIVAZ[reg] became commercially available on October 14,
2022. Per the applicant, there was a delay in market availability
because TERLIVAZ[reg] received FDA approval three months earlier than
expected, and the company needed additional time to conduct market
commercialization, including labeling and packaging. Per the applicant,
TERLIVAZ[reg] is administered as an IV bolus injection. The applicant
stated that for the first 3 days, the recommended dosage is 0.85 mg (1
vial) TERLIVAZ[reg] every 6 hours by slow IV bolus injection. The
applicant stated that on day 4, the serum creatinine level is assessed
against the baseline level obtained prior to initiating the treatment.
The applicant noted that if the serum creatinine has decreased by 30%
or more from the baseline, then 0.85 mg TERLIVAZ[reg] can continue to
be administered every 6 hours. The applicant stated that if the serum
creatinine has decreased by less than 30% from the baseline, then
TERLIVAZ[reg] may be increased to 1.7 mg (2 vials) every 6 hours.
According to the applicant, TERLIVAZ[reg] can continue to be
administered until 24 hours after the patient achieves a second
consecutive serum creatinine value of <=1.5mg/dL at least 2 hours apart
or for a maximum of 14 days. The applicant also stated that if, on day
4, serum creatine is at or above the baseline serum creatinine level,
then TERLIVAZ[reg] should be discontinued. According to the applicant,
the mean treatment duration with TERLIVAZ[reg] in the CONFIRM trial was
6.2 days, using 27 vials.
The applicant stated that, effective October 1, 2021, the following
ICD-10-PCS codes may be used to uniquely describe procedures involving
the administration of TERLIVAZ[reg]: XW03367 (Introduction of
terlipressin into peripheral vein, percutaneous approach, new
technology group 7), and XW04367 (Introduction of terlipressin into
central vein, percutaneous approach, new technology group 7). The
applicant stated that diagnosis code K76.7 (Hepatorenal syndrome) may
be used to currently identify the indication for TERLIVAZ[reg] under
the ICD-10-CM coding system.
As previously discussed, if a technology meets all three of the
substantial similarity criteria under the newness criterion, it would
be considered substantially similar to an existing technology and would
not be considered ``new'' for the purpose of new technology add-on
payments.
With respect to the substantial similarity criteria, the applicant
asserted that TERLIVAZ[reg] is not substantially similar to other
currently available
[[Page 26892]]
technologies because it offers a novel mechanism of action that allows
for selective vasoconstrictive effects on the splanchnic vasculature
via activation of V1 vasopressin receptors. The applicant also stated
that TERLIVAZ[reg] is the first and only FDA-approved pharmacologic
therapy to satisfactorily treat patients with HRS and offers efficacy
among patients who fail previous treatment. Therefore, the applicant
asserted that the technology meets the newness criterion. The following
table summarizes the applicant's assertions regarding the substantial
similarity criteria. Please see the online application posting for
TERLIVAZ[reg] for the applicant's complete statements in support of its
assertion that TERLIVAZ[reg] is not substantially similar to other
currently available technologies.
[GRAPHIC] [TIFF OMITTED] TP01MY23.199
Similar to our discussion in the FY 2022 IPPS/LTCH PPS proposed
rule (86 FR 25340), and the FY 2023 IPPS/LTCH PPS proposed rule (87 FR
28290), we note that while TERLIVAZ[reg] may address an unmet need
because it is the first treatment indicated specifically for the
treatment of HRS, the applicant's assertion that TERLIVAZ[reg] does not
involve the treatment of the same/similar type of disease and the same/
similar patient population when compared to an existing technology, on
the basis that there is a subset of patients for whom current
treatments are ineffective and for whom TERLIVAZ[reg] will offer a new
treatment option, does not necessarily speak to the treatment of a new
patient population for HRS.
We are inviting public comments on whether TERLIVAZ[reg] is
substantially similar to existing technologies and whether
TERLIVAZ[reg] meets the newness criterion.
With respect to the cost criterion, the applicant provided multiple
analyses to demonstrate that it meets the cost criterion. To identify
potential cases representing patients who may be eligible for
TERLIVAZ[reg], the applicant searched the FY 2021 MedPAR file for cases
reporting ICD-10-CM code K76.7 (Hepatorenal syndrome). The applicant
used the inclusion/exclusion criteria described in the following table.
Each analysis differed with respect to the position of the ICD-10-CM
code on the
[[Page 26893]]
claim (that is, whether the ICD-10-CM code was the primary and/or
admitting diagnosis code, or was in any position on the claim). Each
analysis also differed with respect to requirements for the presence or
absence of ICU-related charges (identified with the ICU indicator in
the MedPAR with each analysis either including claims with ICU charges
or claims without ICU charges), or whether ICU usage was not a
consideration (the analysis included both claims with and without ICU
charges). The applicant then presented six defined cohort analyses, and
used the factors in the following table to define the cohorts. Please
see Table 10.24.A.--TERLIVAZ[reg] Codes (Analyses 1-6)--FY 2024
associated with this proposed rule for the complete list of MS-DRGs
that the applicant included in its cost analysis for each cohort. The
applicant followed the order of operations described in the following
table.
For the first cohort analysis, the applicant identified 471 claims
mapping to nine MS-DRGs. The applicant calculated a final inflated
average case-weighted standardized charge per case of $279,135, which
exceeded the average case-weighted threshold amount of $77,358.
For the second cohort analysis, the applicant identified 7,273
claims mapping to 183 MS-DRGs. The applicant then calculated a final
inflated average case-weighted standardized charge per case of
$319,685, which exceeded the average case-weighted threshold amount of
$90,714.
For the third cohort analysis, the applicant identified 480 claims
mapping to five MS-DRGs. The applicant then calculated a final inflated
average case-weighted standardized charge per case of $189,783, which
exceeded the average case-weighted threshold amount of $66,195.
For the fourth cohort analysis, the applicant identified 6,497
claims mapping to 173 MS-DRGs. The applicant then calculated a final
inflated average case-weighted standardized charge per case of
$211,960, which exceeded the average case-weighted threshold amount of
$76,483.
For the fifth cohort analysis, the applicant identified 918 claims
mapping to nine MS-DRGs. The applicant then calculated a final inflated
average case-weighted standardized charge per case of $233,361, which
exceeded the average case-weighted threshold amount of $69,919.
For the sixth cohort analysis, the applicant identified 12,801
claims mapping to 217 MS-DRGs. The applicant then calculated a final
inflated average case-weighted standardized charge per case of
$265,448, which exceeded the average case-weighted threshold amount of
$81,949.
Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount for
all scenarios, the applicant asserted that TERLIVAZ[reg] meets the cost
criterion.
[[Page 26894]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.200
We are inviting public comments on whether TERLIVAZ[reg] meets the
cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that TERLIVAZ[reg] represents a substantial clinical
improvement over existing technologies because among HRS patients who
failed previous therapy with available off-label treatments,
TERLIVAZ[reg] has been shown to significantly improve renal function.
Additionally, the applicant stated that TERLIVAZ[reg] remains the
preferred treatment for HRS-acute kidney injury (AKI) according to
several guidelines and guidance based on its significant efficacy, as
shown by randomized clinical trials. The applicant asserted that for
these reasons TERLIVAZ[reg] offers a treatment option for HRS patients
unresponsive to currently available treatments (for example,
norepinephrine, midodrine,
[[Page 26895]]
and octreotide), and it significantly improves clinical outcomes among
HRS patients as compared to placebo as well as currently available
treatments (for example, norepinephrine, midodrine and octreotide). The
applicant provided 14 studies to support these claims. The following
table summarizes the applicant's assertions regarding the substantial
clinical improvement criterion. Please see the online posting for
TERLIVAZ[reg] for the applicant's complete statements regarding the
substantial clinical improvement criterion and the supporting evidence
provided.
[[Page 26896]]
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[[Page 26897]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.202
[[Page 26898]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.203
[[Page 26899]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.204
[[Page 26900]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.205
[[Page 26901]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.206
[[Page 26902]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.207
[[Page 26903]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.208
BILLING CODE 4120-01-C
After review of the information provided by the applicant, we have
the following concerns regarding whether TERLIVAZ[reg] meets the
substantial clinical improvement criterion. With respect to the
applicant's assertion that TERLIVAZ[reg] offers a treatment option for
a patient population unresponsive to currently available treatments
because among patients in the CONFIRM trial, patients that had failed
prior therapy with available options achieved a statistically
significant improvement in renal function with TERLIVAZ[reg], we note
that the applicant provided evidence from data on file for the clinical
study report of the CONFIRM trial. We note that this data on file
appears to be a post-hoc analysis of the trial. As this was a post-hoc
analysis, we are cautious about drawing conclusions from this analysis
alone without additional outcome data.
We also note that the applicant asserts that the primary endpoint
of the CONFIRM trial, verified HRS reversal, is a clinically
significant and appropriate measure of improvement in renal function.
However, as we noted in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR
25344) and FY 2023 IPPS/LTCH proposed rule (87 FR 28295), in the
CONFIRM trial, while the proportion of patients with verified HRS
reversal without HRS recurrence by Day 30 was numerically greater in
the TERLIVAZ[reg] group than placebo, the difference between groups was
not statistically significant (26% vs 17%, p=0.08).\114\ We also noted
that the potential for HRS recurrence among patients treated with
TERLIVAZ[reg] after 30 days is unclear. We question whether a
statistically significant difference in verified HRS reversal in the
TERLIVAZ[reg] group at 14 days is sufficient to provide evidence of the
durability of improvement in renal function.
---------------------------------------------------------------------------
\114\ Wong F, Pappas, S.C, Curry M.P, et al. Terlipressin plus
Albumin for the Treatment of Type 1 Hepatorenal Syndrome. New
England Journal of Medicine. 2021;384(9):818-828. doi: 10.1056/
NEJMoa2008290.
---------------------------------------------------------------------------
With respect to the applicant's assertion that TERLIVAZ[reg]
significantly improves clinical outcomes, we note that the applicant
provided evidence from data on file for the clinical study report of
the CONFIRM trial that appear to consist of post-hoc analyses of
patient subgroups, for example, improvement in renal function for
patients with alcoholic hepatitis at baseline, and reduction in RTT
requirements in patients who received a liver transplant. Similar to
our earlier concern, we question if we are able to draw conclusions
from these post-hoc analyses alone without additional outcome data.
We also note that the poster presentation for Mujtaba et al. is a
post-hoc analysis of a subpopulation of patients aged >=65 years from
the CONFIRM trial, which was not powered to assess differences in
clinical outcomes between the TERLIVAZ[reg] and placebo groups in this
subpopulation. As such, we note that differences between the
TERLIVAZ[reg] and placebo groups in verified HRS reversal, HRS
reversal, durability of HRS reversal, verified HRS reversal without HRS
recurrence by Day 30, and length of study site hospital stay in days
were not statistically significant. We also note that the difference in
RRT requirements through 90 days in the CONFIRM study among surviving
patients aged >=65 years
[[Page 26904]]
was not statistically significant. Although the results numerically
favored the TERLIVAZ[reg] group, for those reasons, we question whether
this analysis provides sufficient evidence of improved clinical
outcomes in the Medicare population.
Finally, regarding the study conducted by Arora et al., we noted in
the FY 2022 IPPS/LTCH PPS (86 FR 25344) and FY 2023 IPPS/LTCH PPS (87
FR 28296) proposed rules that this study included patients with a
diagnosis of ACLF as well as HRS-AKI, which may have contributed to the
differences observed between the TERLIVAZ[reg] arm and the
norepinephrine arm in this study.\115\
---------------------------------------------------------------------------
\115\ Arora V, Maiwall R, Rajan V, et al. Terlipressin Is
Superior to Noradrenaline in the Management of Acute Kidney Injury
in Acute on Chronic Liver Failure. Hepatology. 2020;71(2):600-610.
---------------------------------------------------------------------------
We are inviting public comments on whether TERLIVAZ[reg] meets the
substantial clinical improvement criterion.
We did not receive any written comments in response to the New
Technology Town Hall meeting notice published in the Federal Register
regarding the substantial clinical improvement criterion for
TERLIVAZ[reg].
q. VANFLYTA[reg] (Quizartinib)
Daiichi Sankyo, Inc. submitted an application for new technology
add-on payments for VANFLYTA[reg] for FY 2024. Per the applicant,
VANFLYTA[reg] is a kinase inhibitor intended to be indicated for use in
combination with standard cytarabine and anthracycline induction
chemotherapy and standard cytarabine consolidation chemotherapy, and as
continuation monotherapy following consolidation, for the treatment of
adult patients with newly diagnosed acute myeloid leukemia (AML) that
is Feline McDonough Sarcoma (FMS)-like tyrosine kinase 3 internal
tandem duplication (FLT3-ITD) positive as detected by an FDA-authorized
test. The applicant asserted that, while other treatments for FLT3 AML
are available, VANFLYTA[reg] is the only treatment to exclusively
target the FLT3-ITD mutation, thereby inhibiting further downstream
FLT3 receptor signaling and blocking FLT3-ITD-dependent cell
proliferation. According to the applicant, VANFLYTA[reg] also does not
target other kinases; this may mean that patients experience fewer off-
target effects when undergoing therapy with VANFLYTA[reg].
Please refer to the online application posting for VANFLYTA[reg],
available at https://mearis.cms.gov/public/publications/ntap/NTP221017FK1AQ, for additional detail describing the technology and the
disease treated by the technology.
With respect to the newness criterion, the applicant stated it has
not yet received FDA marketing authorization for VANFLYTA[reg].
According to the applicant, it anticipates NDA approval from FDA before
July 1, 2023 for the following proposed indication: a kinase inhibitor
indicated in combination with standard cytarabine and anthracycline
induction and standard cytarabine consolidation chemotherapy, and as
continuation monotherapy following consolidation, for the treatment of
adult patients with newly diagnosed AML that is FLT3-ITD positive as
detected by an FDA-authorized test. According to the applicant,
VANFLYTA[reg] will be available on the market immediately after FDA
approval. The applicant stated that VANFLYTA[reg] should be
administered in combination with standard chemotherapy at a dose of
35.4 mg once daily for two weeks in each cycle of induction. For
patients who achieved complete remission (CR) or complete remission
with incomplete hematologic recovery (CRi), VANFLYTA[reg] should be
administered at 35.4 mg once daily for two weeks in each cycle of
consolidation chemotherapy followed by VANFLYTA[reg] continuation
monotherapy initiated at 26.5 mg once daily. After two weeks, the
continuation dose should be increased to 53 mg once daily if the QT
interval \116\ corrected by Fridericia's formula (QTcF) is less than or
equal to 450 ms. Continuation monotherapy may be continued for up to 36
cycles.
---------------------------------------------------------------------------
\116\ The QT interval is the time between specific points in a
heartbeat, as seen on an electrocardiogram (EKG).
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The applicant provided an estimated average inpatient cost per stay
for VANFLYTA[reg]. The applicant did not have data to provide relative
frequencies for induction versus consolidation inpatient treatments so
provided the following cost calculation. The daily VANFLYTA[reg] dose
used was based on 80% of patients receiving the full daily dose and 20%
of patients receiving the reduced dose. An average weighted induction
cycle cost was calculated based on trial data that indicated 75% of
patients would receive one cycle of induction inpatient and 25% of
patients would receive two cycles of induction inpatient. The average
consolidation cycle cost was calculated separately from induction and
assumed a 9-day inpatient stay. The cost was adjusted based on 65% of
consolidation cycles being administered inpatient and 35% of
consolidation cycles being administered outpatient (the inpatient cost
for outpatient therapy was $0). The adjusted number was multiplied by
two since the average patient receives 2 cycles of consolidation. This
was multiplied by 0.75 due to 75% of patients continuing with treatment
to receive consolidation therapy after induction. This final
consolidation therapy cost was added to the induction cycle cost to
come up with the applicant's weighted average inpatient cost per stay.
Since the estimated average inpatient cost per stay would be used
to determine the new technology add-on payment amount for
VANFLYTA[reg], if approved, we note the following concerns with regards
to the applicant's average cost calculation. We believe the final costs
for induction and consolidation should be averaged rather than summed
since induction and consolidation cycles would likely be separate
hospitalizations. We are inviting public comments on whether the
applicant's average cost calculation is appropriate for calculating the
new technology add-on payment amount if VANFLYTA[reg] is approved.
According to the applicant, there are currently no ICD-10-PCS codes
to distinctly identify VANFLYTA[reg]. We note that the applicant
submitted a request for approval for a unique ICD-10-PCS procedure code
for VANFLYTA[reg] beginning in FY 2024. The applicant stated that ICD-
10-CM diagnosis codes C92.00 (Acute myeloblastic leukemia not having
achieved remission), C92.50 (Acute myelomonocytic leukemia not having
achieved remission), C92.60 (Acute myeloid leukemia with 11q23-
abnormality not having achieved remission), C92.A0 (Acute myeloid
leukemia with multilineage dysplasia not having achieved remission),
and C93.00 (Acute monoblastic-monocytic leukemia not having achieved
remission) may be used to currently identify the indication for
VANFLYTA[reg] under the ICD-10-CM coding system.
As previously discussed, if a technology meets all three of the
substantial similarity criteria under the newness criterion, it would
be considered substantially similar to an existing technology and would
not be considered ``new'' for the purpose of new technology add-on
payments.
With respect to the substantial similarity criteria, the applicant
asserted that VANFLYTA[reg] is not substantially similar to other
currently available technologies because VANFLYTA[reg] is the first
drug to be expressly developed
[[Page 26905]]
as a FLT3 inhibitor, not a multi-kinase inhibitor, and specifically
optimized to inhibit the FLT3-ITD AML, thereby targeting the
subpopulation of newly diagnosed patients with the worst prognosis
(higher risk of relapse and worse overall survival). Additionally, the
applicant stated that VANFLYTA[reg], if approved, would be the only AML
drug indicated for continuation monotherapy following consolidation
chemotherapy (for up to 3 years), based on showing activity as a single
agent for that use, and that therefore, the technology meets the
newness criterion. The following table summarizes the applicant's
assertions regarding the substantial similarity criteria. Please see
the online application posting for VANFLYTA[reg] for the applicant's
complete statements in support of its assertion that VANFLYTA[reg] is
not substantially similar to other currently available technologies.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP01MY23.209
We have the following concerns regarding the newness criterion.
While the applicant stated that VANFLYTA[reg] is more selective than
existing technology since it targets only FLT3-ITD, we note that, as
stated by the applicant, RYDAPT[reg] also targets this same mutation
and we therefore question whether the mechanisms of action for
VANFLYTA[reg] and RYDAPT[reg] are the same or similar. We also note
that while the applicant stated that VANFLYTA[reg] is not assigned to
the same MS-DRG as existing technology, per the applicant,
VANFLYTA[reg] would likely be mapped to three existing MS-DRGs for AML
and therefore it appears that use of VANFLYTA[reg] is not
[[Page 26906]]
expected to change the MS-DRG assignment from that of existing
technologies.
The applicant asserted that the technology would not involve the
treatment of the same or similar type of disease and patient population
when compared to existing technology. However, VANFLYTA[reg], if
approved, would appear to be indicated for a patient population
included within the patient population indicated for RYDAPT[reg].
RYDAPT[reg] is indicated for adult patients with newly diagnosed AML
who are FLT3 mutation-positive, which would be similar to
VANFLYTA[reg]'s proposed patient population of adult patients with
newly diagnosed AML that is FLT3-ITD positive. In addition, the patient
population for XOSPATA[reg], adult patients with relapsed or refractory
AML with the FLT3 mutation, may be considered similar to that for
VANFLYTA[reg] since both patient populations are adults with AML that
have a FLT3 mutation. While the applicant notes a potential unique
patient population with regard to the proposed continuation monotherapy
indication, this would not relate to the new technology add-on payment
given this treatment would occur on an outpatient basis.
We are inviting public comments on whether VANFLYTA[reg] is
substantially similar to existing technologies and whether
VANFLYTA[reg] meets the newness criterion.
With respect to the cost criterion, the applicant submitted
analyses based on two cohorts, a consolidation dosing scenario and an
induction dosing scenario, to demonstrate that VANFLYTA[reg] meets the
cost criterion. To identify potential cases representing patients who
may be eligible for VANFLYTA[reg], the applicant searched the CY 2021
Limited Data Set (LDS) Standard Analytic File (SAF) for cases reporting
one of the ICD-10-CM diagnosis codes listed in the table that follows
in the primary or secondary location of the discharge claim. Using the
inclusion/exclusion criteria described in the following table, the
applicant identified 6,084 claims mapping to six MS-DRGs. The applicant
followed the order of operations described in the following table and
calculated a final inflated average case-weighted standardized charge
per case of $168,129 using consolidation dosing and $171,567 using
induction dosing, both of which exceeded the average case-weighted
threshold amount of $105,003. Because the final inflated average case-
weighted standardized charge per case exceeded the average case-
weighted threshold amount, the applicant asserted that VANFLYTA[reg]
meets the cost criterion.
[[Page 26907]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.210
[[Page 26908]]
We are inviting public comments on whether VANFLYTA[reg] meets the
cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that VANFLYTA[reg] represents a substantial clinical
improvement for Medicare beneficiaries and offers a treatment option
for newly diagnosed patients with FLT3-ITD+ AML, the most treatment-
resistant AML subtype, and patients receiving VANFLYTA[reg] plus
standard induction and consolidation therapy, and then continuation
monotherapy for up to three years, had significantly reduced rates of
relapse and overall improved survival, regardless of whether they
received a hematopoietic stem cell transplantation (HSCT) when compared
to the placebo group. The applicant referenced multiple sources
regarding one study to support these claims, as well as five background
articles about AML and RYDAPT[reg], a drug indicated for adult patients
with newly diagnosed AML who are FLT3 mutation-positive.\117\ The
following table summarizes the applicant's assertions regarding the
substantial clinical improvement criterion. Please see the online
posting for VANFLYTA[reg] for the applicant's complete statements
regarding the substantial clinical improvement criterion and the
supporting evidence provided.
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\117\ Background articles are not included in the following
table but can be accessed via the online posting for the technology.
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BILLING CODE 4120-01-P
[[Page 26909]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.211
After review of the information provided by the applicant, we have
the following concerns regarding whether VANFLYTA[reg] meets the
substantial clinical improvement criterion. We note the applicant
provided only the results
[[Page 26910]]
of a single phase 3 trial testing VANFLYTA[reg] in the form of
presentation slides and an abstract. We further note that the visual
abstract reference \118\ provided by the applicant does not appear to
include all data that the applicant cited as outcomes to support the
claims for a reduced rate of relapse and reduced mortality rate with
VANFLYTA[reg] and we are therefore unable to fully evaluate the
supporting evidence for these assertions. While TEAEs, grade 3 or
higher TEAEs, TEAEs associated with fatal outcome, and serious adverse
events (SAEs) appeared similar to placebo, there was a higher rate of
drug discontinuation (20.4% versus 8.6%), dose interruption (34.0%
versus 20.1%), and dose reduction (18.9% versus 6.3%) due to TEAEs for
VANFLYTA[reg] compared to placebo and we would appreciate additional
information regarding these differences.
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\118\ Erba H, et al. Abstract S100. EHA 2022; June 9-17, 2022;
Vienna, AT NCT02668653 (Visual Abstract, https://aml-hub.com/medical-information/va).
---------------------------------------------------------------------------
With regard to the claim that clinical trial participants are more
representative of the Medicare population compared to the competitor
drug (RYDAPT[reg]), we note the QUANTUM First trial allowed inclusion
of patients age 18 years to 75 years, while the Cancer and Leukemia
Group B (CALGB) 10603 (RATIFY) trial, which compared RYDAPT[reg] to
placebo, included patients aged 18 years to 59 years. The applicant
stated that in the QUANTUM First trial, 39.9% of the subjects were 60
years of age or older. This claim was provided in support of the
assertion that the use of the new technology significantly improves
clinical outcomes relative to technologies previously available.
However, we question this assertion because age eligibility in a trial
is not a clinical outcome, and eligibility may not correlate with
improved outcomes.
With regard to the claim of a reduced rate of relapse compared to
RYDAPT[reg], the applicant stated that a phase 3 trial demonstrated
that the cumulative incidence of relapse (CIR) at 2 years was 40% for
RYDAPT[reg] \119\ and in the QUANTUM First trial, the CIR at 2 years
was 31.2% for VANFLYTA[reg] and 43.3% with placebo. However, we note
that this was based on comparing two separate phase 3 trials, which can
involve numerous confounding variables, and the applicant did not
provide support related to clinical trial design or statistical
analysis to explain why the potential effect of confounding variables
should not be a concern for purposes of this comparison. Additional
data was also provided to indicate reduced rate of relapse of patients
receiving VANFLYTA[reg] compared to placebo in the QUANTUM First trial.
However, the applicant did not provide these outcomes for the
comparator drug, RYDAPT[reg]. Therefore, we question whether the
evidence presented is sufficient to show a reduced rate of relapse with
VANFLYTA[reg] compared to RYDAPT[reg].
---------------------------------------------------------------------------
\119\ Leukemia. 2021 September. 35(9)2539-2551.
---------------------------------------------------------------------------
With regard to the claim that VANFLYTA[reg] reduced mortality rate
regardless of receiving an allo-HSCT or not, we note that the evidence
provided in support was based on data from the QUANTUM First trial,
which compared VANFLYTA[reg] to placebo rather than to RYDAPT[reg] and
we question whether this type of comparison can provide evidence to
support a finding of improved outcomes compared to previously available
therapy. Additionally, the overall survival data analyzed separately
based on allo-HSCT status, as well as relapse rate data from QUANTUM
First were both based on post-hoc analyses. We are cautious about
drawing conclusions from these post-hoc analyses alone without
additional outcome data.
We are inviting public comments on whether VANFLYTA[reg] meets the
substantial clinical improvement criterion.
We did not receive any written comments in response to the New
Technology Town Hall meeting notice published in the Federal Register
regarding the substantial clinical improvement criterion for
VANFLYTA[reg].
r. VEST
Vascular Graft Solutions, Ltd. (VGS) submitted an application for
new technology add-on payment for VEST for FY 2024. Per the applicant,
VEST is an external support device which can be fitted over the
saphenous vein when used as a bypass conduit in coronary artery bypass
grafting (CABG) surgery. The applicant stated that VEST is the only
technology that has been proven to prevent common vein graft failures
as a result of graft kinking and vein graft disease (intimal
hyperplasia). According to the applicant, VEST is designed to improve
the long-term clinical outcome of CABG by reducing clinical events that
are associated with graft failure.
Please refer to the online application posting for VEST, available
at https://mearis.cms.gov/public/publications/ntap/NTP221017VRFLQ, for
additional detail describing the technology and the disease treated by
the technology.
With respect to the newness criterion, the applicant stated that it
is seeking premarket approval from FDA for the indication to prevent
vein graft intimal hyperplasia (IH) by providing permanent support to
saphenous vein grafts which are being used as conduits in patients who
undergo coronary artery bypass graft procedures, and anticipates
receiving FDA marketing authorization before July 1, 2023. According to
the applicant, VEST is expected to be commercially available once
approved.
According to the applicant, there are currently no ICD-10-PCS
procedure codes to distinctly identify VEST. The applicant submitted a
request for approval for a unique ICD-10-PCS procedure code for VEST
beginning in FY 2024.
As previously discussed, if a technology meets all three of the
substantial similarity criteria under the newness criterion, it would
be considered substantially similar to an existing technology and would
not be considered ``new'' for the purpose of new technology add-on
payment.
With respect to the substantial similarity criteria, the applicant
asserted that VEST is not substantially similar to other currently
available technologies because there is no other technology with a
similar mechanism of action with which VEST can be compared, and that
therefore, the technology meets the newness criterion. The following
table summarizes the applicant's assertions regarding the substantial
similarity criterion. Please see the online application posting for
VEST for the applicant's complete statements in support of its
assertion that VEST is not substantially similar to other currently
available technologies.
[[Page 26911]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.212
We are inviting public comments on whether VEST is substantially
similar to existing technologies and whether VEST meets the newness
criterion.
With respect to the cost criterion, the applicant provided two
analyses to demonstrate that VEST meets the cost criterion, the first
using 100 percent of all identified cases, and the second using 78
percent of all identified cases, based on the four MS-DRGs with the
highest number of claims. The applicant searched the FY 2021 MedPAR
file for potential cases representing patients who may be eligible for
VEST using a list of ICD-10-PCS codes (cases representing any CABG
procedure that involves a saphenous vein graft (SVG)). Please see Table
10.27.A.--VEST Codes--FY 2024 associated with this proposed rule for
the complete list of codes that the applicant included in its cost
analysis. The applicant used the inclusion/exclusion criteria described
in the following table.
For the first analysis, the applicant used 100% of all cases
identified. The applicant followed the order of operations described in
the following table. The applicant identified 54,217 claims mapping to
82 MS-DRGs listed in Table 10.27.A.--VEST Codes--FY 2024 associated
with this proposed rule. The applicant calculated a final inflated
average case-weighted standardized charge per case of $293,241, which
exceeded the average case-weighted threshold amount of $218,560.
For the second analysis, the applicant used 78% of all cases
identified, limited to the four MS-DRGs with the highest number of
claims. The applicant followed the order of operations described in the
following table. The applicant identified 42,550 claims mapping to the
four MS-DRGs listed in the following table. The applicant calculated a
final inflated average case-weighted standardized charge per case of
$256,817, which exceeded the average case-weighted threshold amount of
$202,357.
Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount in
both scenarios, the applicant asserted that VEST meets the cost
criterion.
[[Page 26912]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.213
We are inviting public comments on whether VEST meets the cost
criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that VEST represents a substantial clinical
improvement over existing technologies because the strong clinical
evidence showing the effect of VEST on the clinical outcome of CABG
(multiple studies of different types with different, follow-up
durations and with substantial endpoints) confirms the effect of VEST
on (1) reducing incidence of cardiac events and the need for further
interventions as a result of vein graft disease; (2) reducing graft
failure rates as a result of kinking; and (3) mitigating vein graft
disease. The applicant provided five studies to support these claims.
The following table summarizes the applicant's assertions regarding the
substantial clinical improvement criterion. Please see the online
posting for VEST for the applicant's complete statements regarding the
substantial clinical improvement criterion and the supporting evidence
provided.
[[Page 26913]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.214
[[Page 26914]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.215
BILLING CODE 4120-01-C
After review of the information provided by the applicant, we have
the following concerns regarding whether VEST meets the substantial
clinical improvement criterion. Firstly, we question whether the
evidence provided demonstrates that use of VEST results in clinical
improvement or if any outcomes are only inferred. For example, the
Taggart study (2022) \122\ examined the differences in Fitzgibbon
patency scale and IH between patients randomized to have their SVG
stented with VEST (treatment group) and those with their SVG unstented
(control group). The team found statistically significant differences
between the two groups in IH, but not in patency, pulsatility,
interoperative pulse rates, or occlusion rates. While the team found a
difference in need for re-vascularization in the hypothesized
direction, that is, a higher need for the non-stented (control) group,
it is unclear whether the difference reached statistical significance.
The Goldstein study (2022) \123\ measured the association between
indicators of graft health, like IH, lumen uniformity, graft stenosis,
and graft perfusion, on MACCE at three-year follow up. Although the
team demonstrated significant association between graft health and
MACCE, they did not examine the impact of VEST on MACCE. As a result,
we are unclear about the strength of direct association between VEST
and clinical outcome improvement, or whether any outcomes are inferred
from surrogate endpoints.
---------------------------------------------------------------------------
\120\ Mohr, F.W.M. Morice, A.P. Kappetein, et al. (2013),
Coronary artery bypass graft surgery versus percutaneous coronary
intervention in patients with three-vessel disease and left main
coronary disease: 5-year follow-up of the randomized, clinical
SYNTAX trial.The Lancet.
\121\ Head, S.J. P.M. Davierwala, P.W. Serruys, et al. (2014)
Coronary artery by pass grafting vs. percutaneous coronary
intervention for patients with three-vessel disease: final five-year
follow-up of the SYNTAX trial. European Heart Journal. 35:2821-2830.
\122\ Taggart et al. (2022), op.cit.
\123\ Goldstein, D.J., Chang, H.L., Mack, M. J (2022). Intimal
Hyperplasia, Saphenous Vein Graft Disease and Clinical Outcomes:
Insights from the CTSN VEST Randomized Trial, The Journal of
Thoracic and Cardiovascular Surgery. https://doi.org/10.1016/j.jtcvs.2022.10.034.
---------------------------------------------------------------------------
Secondly, we question whether the impact of VEST on clinical
outcomes shown in the cited studies may have been confounded by
demographic, clinical, or surgical factors (such as endoscopic
harvesting methods,\124\ graft harvesting techniques, on- versus off-
pump,125 126 or use of no-touch procedures,\127\ etc.). For
example, in the Dushaj study \128\ we note that differences remained
between the treatment (stented with VEST) and control (non-stented)
groups in terms of demographic and clinical baseline characteristics
post-randomization. In particular, compared to patients in the control
group, those stented with VEST tended to be younger, were more likely
to be male, current smokers, to have diabetes, chronic obstructive
pulmonary disease (COPD), diffuse peripheral vascular disease (PVD),
have a history of MI, lower left ventricular systolic dysfunction
(LVEF), and have undergone PCI previously. There also remained
significant differences between the two groups in terms of SVG patency
and number of arterial grafts undergoing stenting at baseline. We
question whether these differences in baseline characteristics may have
confounded the association between exposure to VEST and clinical
improvement. The Dushaj study may also be limited by potential bias due
to single site design, making it difficult to account for confounding
variables that
[[Page 26915]]
may impact post-surgery outcomes such as cardiac rehabilitation
referral rates \129\ or clinical staff expertise.\130\ The Goldstein
study (2022) \131\ was a two-arm, within-subject trial in which CABG
patients with at least two SVGs were randomized to have one externally-
stented with VEST and the other not stented. It is unclear whether the
randomization technique has achieved balance of SVG attributes (for
example, lumen diameter uniformity, graft stenosis, thrombolysis in
myocardial infarction flow) between SVGs assigned to the stented group
versus those to the non-stented group at the baseline. We are therefore
uncertain whether the randomization technique minimized imbalance
between the stented and non-stented groups, which could confound any
association between VEST and clinical outcomes. We further note that
the De-Toit study (2021) \132\ used a historical control to compare the
impact of VEST on need for revascularization. The study used SYNTAX, a
clinical trial conducted by a different research team and completed
before 2014,\133\ as the historical control to which the effects of
VEST were compared. The study reported that their CABG patients were
less likely than those in the SYNTAX trial to need revascularization at
12, 24, 36, and 48 months. However, we note the following differences
between the study and the historical control which may confound any
comparisons. For example, 28 percent of the CABG patients in the Du-
Toit study had undergone prior cardiac surgeries, while patients with
prior CABG or PCI were excluded from the SYNTAX trial \134\ and the
SYNTAX trial included patients with de novo 3-vessel disease, left main
(LM), or both, unlike the Du-Toit study. Also, since the Du-Toit study
was conducted in South Africa and Namibia, while the SYNTAX trial was
conducted in North America and Europe, the patient populations in the
two studies were likely to have different racial demographics. The
baseline clinical characteristics of patients in the Du-Toit study also
differed from those in the SYNTAX trial with respect to diabetes (Du-
Toit study: 27.9%; SYNTAX trial: 30.4%), any history of stroke (Du-Toit
study: 1.8%; SYNTAX trial: 5.3%), MI (Du-Toit study: 36.5%; SYNTAX
trial: 39%), and hypertension (Du-Toit study: 80%; SYNTAX trial: 65%).
We question whether these differences between the two studies could
confound any association between VEST and clinical outcomes, reducing
the external validity of study findings.\135\ For studies that did not
conduct randomization on either patients or SVGs, confounders could
further undermine external validity of the findings. For example, in
the Weltert study (2021),\136\ all patients underwent CABG with the
internal mammary artery to the left anterior descending artery and
additional artery and/or venous grafts. Half of the patients underwent
off-pump CABG surgery. In addition to CABG, 13 percent also underwent
concomitant valve or aortic surgery. Also, in addition to having at
least one SVG supported by VEST, 23 percent also had their bilateral
internal mammary artery grafted. Patients varied in terms of cross
clamp, pump, and overall surgery time. Re-vascularization strategy was
determined by the surgeon. While each of these surgical decisions could
confound the impact of VEST on clinical outcomes, they were not
accounted for in the result analysis.
---------------------------------------------------------------------------
\124\ Goldstein et al., 2022, op.cit.
\125\ Hattler B, Messenger JC, and Shroyer AL, et al. (Jun
2012). Off-Pump coronary artery bypass surgery is associated with
worse arterial and saphenous vein graft patency and less effective
revascularization: Results from the Veterans Affairs Randomized On/
Off Bypass (ROOBY) trial. Circulation. 12;125(23):2827-35.
\126\ Shroyer AL, Hattler B, Wagner TH, et al. (Aug 2017). Five-
Year Outcomes after On-Pump and Off-Pump Coronary-Artery Bypass. N
Engl J Med. 17;377(7):623-632.
\127\ Samano N, Dashwood M, Souza D. (Sep 2018) No-touch vein
grafts and the destiny of venous revascularization in coronary
artery bypass grafting-a 25th anniversary perspective. Ann
Cardiothorac Surg.;7(5):681-685.
\128\ Dushaj et al., unpublished, op.cit.
\129\ Aragam, K.G., D. Dai, M. L. Neely (2015). Gaps in referral
to cardiac rehabilitation of patients undergoing percutaneous
coronary intervention in the United States. Journal of the American
College of Cardiology. 65(19), 2079-2088.
\130\ Elbardissi, A.W., A. Duclos, J.D. Rawn, et al. (2013).
Cumulative team experience matters more than individual surgeon
experience in cardiac surgery. Journal of Thoracic and
Cardiovascular Surgery. 145(2): 328-33.
\131\ Goldstein et al. (2022), op. cit.
\132\ Du-Toit et al. (2021), op.cit.
\133\ Mohr et al. (2013), op.cit., Head et al. (2014), op.cit.
\134\ Mohr et al. (2013), op.cit.
\135\ Ghadessi, M., R. Tang, J. Zhou, et al. (2020) A roadmap to
using historical controls in clinical trials--by Drug Information
Association Adaptive Design Scientific Working Group (DIA-ADSWG).
Orphanet Journal of Rare Diseases. 15:69.
\136\ Weltert et al. (2021), op.cit.
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Thirdly, we question to what extent the findings from the cited
studies can be replicated among Medicare beneficiaries who undergo CABG
surgery. Specifically, the studies cited in the application were
conducted among patient populations that were predominantly male.\137\
Among Medicare fee-for-service beneficiaries who underwent CABG
surgery, only two-thirds (66%) were male.138 139 Because
female CABG patients tended to have poorer outcomes than their male
counterparts,140 141 we are interested in whether the impact
of VEST on clinical outcomes is comparable between male and female CABG
patients.
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\137\ For example, 81% in Sandner et al. (2022), 82% in
Goldstein et al. (2022), 84% in Taggart et al. (2022), 85% in Du-
Toit (2021), 87% in Weltert et al. (2021), 86-92% in Dishaj et al.
(unpublished manuscript).
\138\ Angraal, S., K. Khera, and Y. Wang, et al. (2018) Sex and
race differences in the utilization and outcome of coronary artery
bypass grafting among Medicare beneficiaries, 2009-2014. Journal of
American Heart Association.
\139\ McNeely, Markwell, Vassileva (2016). Trends in patient
characteristics and outcomes of coronary artery bypass grafting in
2000-2012 Medicare population. Annals of Thoracic Surgery. 102:132-
9.
\140\ Gaudino, M., D. Chadow, M. Rahouma, et al. (2023).
Operative outcomes of women undergoing coronary artery bypass
surgery in the US, 2011 to 2020. JAMA Surgery. doi:10.1001/
jamasurg.2022.8156.
\141\ Sandner, S., A. Kastrati, A. Niessner, et al. (2023). Sex
diffeences among patients receiving tricagrelor monotherapy onr
aspirin after coronary bypass surgery: A prespecified subgroup
analysis of the TiCAB trial. International Journal of Cardiology.
Vol. 370: 129-135. https://doi.org/10.1016/j.ijcard.2022.10.166.
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We are inviting public comments on whether VEST meets the
substantial clinical improvement criterion.
In this section, we summarize and respond to written public
comments received in response to the New Technology Town Hall meeting
notice published in the Federal Register regarding the substantial
clinical improvement criterion for VEST.
Comment: In response to a question regarding whether other aspects
of the CABG procedure were tested, such as ``no touch'' procedures, the
applicant stated that the surgical technique in Goldstein et al.
(2022), the VEST US pivotal study, did not include patients with ``no
touch'' vein harvesting technique. The VEST external support device
cannot be applied over veins with excessive surrounding tissue
included, due to the limitation of the external stent diameter. The
applicant also stated the ``no touch'' technique is rarely used in
clinical practice due to the increased risk of postoperative leg wound
complications and the trend toward minimal surgical incisions; however,
similarly to VEST, this technique supports the assertion that having an
external support to vein grafts results in improved clinical outcome
and vein graft longevity.
The applicant also stated, in response to a question on whether any
adjustments to the p-value were made for multiple comparisons, that no
adjustments were made to the p-values for multiple comparisons. The
applicant noted that the Goldstein study (2022) was a prospective,
multi-center, randomized, within-subject-controlled, pivotal clinical
trial that enrolled 224 patients with multi vessel atherosclerotic
coronary artery disease who were scheduled to undergo CABG procedure.
The study design included a within-patient randomization in which one
SVG was randomized to be supported by VEST and another SVG served as a
control. Seventeen sites in the United States and Canada participated
in the study, and the study was managed by the Cardiothoracic Surgery
Clinical Trials Network (CTSN).
The applicant explained that the primary endpoint evaluated the
degree
[[Page 26916]]
of graft disease (that is, IH) known to be associated with worse
clinical outcomes and increased rates of revascularization procedures.
Graft disease was assessed at 1 year post-CABG using angiogram and
intravenous ultrasound (IVUS). Thereafter, additional clinical follow-
ups were conducted on a yearly basis for up to 5 years post-CABG. The
applicant stated that to date, clinical follow-up on repeat
revascularization procedures at 4 years post-CABG is available. The
statistical analysis plan pre-specified multiple analysis-sets for the
primary endpoint, which included both the actual observed data and data
sets of all study subjects (including missing data using different pre-
specified imputation methods). Per the applicant, pre-specified
subgroup analysis, based on evidence from the literature regarding risk
factors for accelerated vein graft disease and clinical outcomes
(Goldstein et al. 2022), has shown that VEST was effective in
mitigating vein graft disease proliferation 12 months post-CABG in all
subgroups, with more pronounced effects in diabetic patients, who had
higher risk for vein graft disease and MACCE. All analysis sets yielded
consistent favorable effect for the VEST grafts results (with different
p-values ranging between 0.006-0.072).
The applicant further stated that the results of the Goldstein
study (2022) confirmed the following: VEST reduced vein graft disease
at 1-year post-CABG. There was a direct correlation between degree of
vein graft disease and clinical outcomes. Less vein graft disease was
associated with less MACCE, which, in turn, was associated with fewer
revascularization procedures. The clinical outcomes in the study, in
which each CABG patient had one vein graft randomized to be supported
by VEST and another not supported, were markedly better in performance
at 1 year (7.1%) compared with the literature-based safety performance
goal approved by FDA, which was total MACCE rate of up to 19 percent.
Territories with vein grafts supported with VEST had much fewer
repeated ischemic-driven revascularization procedures compared to
standard-of-care grafts, and the difference between the two groups
increased as follow up duration became longer; and the effectiveness of
VEST in preventing vein graft disease 12 months post-CABG was better in
all subgroups, compared to the control group. In certain groups, the
effect of VEST was profoundly better than the control, especially in
diabetic patients (50% of the patient population in the Goldstein study
of 2022).
Response: We thank the applicant for its comments and will take
this information into consideration when deciding whether to approve
new technology add-on payment for VEST.
s. XENOVIEW TM (Xenon Xe 129 Hyperpolarized)
Polarean, Inc. and The Institute for Quality Resource Management
(collectively referred to as ``applicant'') submitted an application
for new technology add-on payments for XENOVIEW TM (xenon Xe
129 hyperpolarized) for FY 2024. Per the applicant, XENOVIEW
TM is prepared using an FDA approved hyperpolarization
process from a dose of Xenon \129\Xe Gas Blend. The applicant stated
that the imaging signal is specifically created to address the unmet
needs to quantitively diagnose early pulmonary oxygen deficiency, at
the level of the alveoli oxygen exchange, without exposing the patient
to ionizing radiation to inform management of patients with diseases
manifested by diminished lung function. The applicant explained that
after inhalation, HP \129\Xe freely diffuses from the airspaces through
alveolar-capillary barrier (comprised of alveolar epithelial cells,
interstitial tissues, and capillary endothelial cells) and subsequently
into the red blood cells (RBCs). The applicant noted that HP \129\Xe
exhibits distinct magnetic resonance (MR) frequency shifts in the
airspace, barrier, and RBCs, allowing separate imaging of its
distribution in all three compartments, and that such imaging has been
used to spatially characterize disease burden across a range of
pulmonary disorders (for example, chronic obstructive pulmonary disease
(COPD) and asthma). We note that the applicant submitted an application
for new technology add-on payments for XENOVIEW TM for FY
2023, as summarized in the FY 2023 IPPS/LTCH PPS proposed rule (87 FR
28307 through 28317), that it withdrew prior to the issuance of the FY
2023 IPPS/LTCH PPS final rule (87 FR 48920).
Please refer to the online application posting for XENOVIEW
TM available at https://mearis.cms.gov/public/publications/ntap/NTP221017PBF9L, for additional detail describing the technology
and the diseases diagnosed by the technology.
With respect to the newness criterion, according to the applicant,
XENOVIEW TM was granted NDA approval from FDA on December
23, 2022 for the use of XENOVIEW TM (xenon Xe 129
hyperpolarized) with magnetic resonance imaging (MRI) for evaluation of
lung ventilation in adults and pediatric patients aged 12 years and
older. According to the applicant, XENOVIEW TM was
commercially available immediately following the NDA approval. The
applicant stated that the dose for patients 12 years and older is 75 mL
to 100 mL dose equivalent (DE, where DE = [total volume Xe gas] x
[\129\Xe isotopic enrichment] x [polarized percent]) of HP \129\Xe by
oral inhalation of the entire contents of one XENOVIEW TM
Dose Delivery Bag. The applicant explained that each bag contains at
least 75 mL DE with a recommended target DE range of 75 mL to 100 mL in
a volume of 250 mL to 750 mL total xenon with additional nitrogen,
National Formulary (NF) (99.999% purity) added to reach a total volume
of 1,000 mL measured 5 minutes before inhalation.
The applicant stated that effective October 1, 2022, the following
ICD-10-PCS procedure code may be used to uniquely describe procedures
involving the use of XENOVIEW TM: BB34Z3Z (Magnetic
resonance imaging (MRI) of bilateral lungs using hyperpolarized xenon
129 (Xe-129)).
As previously discussed, if a technology meets all three of the
substantial similarity criteria under the newness criterion, it would
be considered substantially similar to an existing technology and would
not be considered ``new'' for the purpose of new technology add-on
payments.
With respect to the substantial similarity criteria, the applicant
asserted that XENOVIEW TM is not substantially similar to
other currently available technologies because HP \129\Xe, a new
chemical entity, and new lung MRI signaling agent, is created on-site
following an FDA approved method, for oral inhalation. The applicant
explained that, absent ionizing radiation, XENOVIEW TM
identifies lung abnormalities reporting ventilation defect percent
(VDP) diagnosing early and deteriorating lung function to inform, guide
and monitor therapy. The applicant explained that XENOVIEW
TM's properties cause diffusion through the lung and distal
alveoli, and that novelty mechanistically lies in the gas preparation,
where HP creates a quantitative distinct volume DE for the patient's
anatomy. Therefore, the applicant asserted that the technology meets
the newness criterion. The following table summarizes the applicant's
assertions regarding the substantial similarity criteria. Please see
the online application posting for XENOVIEW TM for the
applicant's complete statements in support of its assertion that
XENOVIEW TM is not
[[Page 26917]]
substantially similar to other currently available technologies.
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Similar to our discussion in the FY 2023 IPPS/LTCH PPS proposed
rule (87 FR 28308), we note that although the applicant states that
XENOVIEW TM has not been assigned to an MS-DRG and cannot be
compared to an existing technology, we believe that based on its FDA
indication, cases involving the use of XENOVIEW TM would be
assigned to the same MS-DRGs as cases involving the use of other MRIs
and imaging modalities for pulmonary function and imaging of the lungs.
[[Page 26918]]
We are inviting public comments on whether XENOVIEW TM
is substantially similar to existing technologies and whether XENOVIEW
TM meets the newness criterion.
With respect to the cost criterion, the applicant searched the FY
2021 MedPAR file for potential cases representing patients who may be
eligible for XENOVIEW TM. The applicant limited its analysis
to eight MS-DRGs, listed in the following table, as it believes these
MS-DRGs represent patients most likely eligible for treatment with
XENOVIEW TM (that is, patients with lung and pulmonary
challenges, confirmed pulmonary disease, asthma and COPD). Using the
inclusion/exclusion criteria described in the following table, the
applicant identified 87,801 claims mapping to these eight MS-DRGs. The
applicant followed the order of operations described in the following
table and calculated a final inflated average case-weighted
standardized charge per case of $55,652, which exceeded the average
case-weighted threshold amount of $46,624. Because the final inflated
average case-weighted standardized charge per case exceeded the average
case-weighted threshold amount, the applicant asserted that XENOVIEW
TM meets the cost criterion.
[GRAPHIC] [TIFF OMITTED] TP01MY23.217
We note that the applicant limited its analysis to eight MS-DRGs.
We are interested in information as to whether the technology would map
to other MS-DRGs, such as other MS-DRGs under Major Diagnostic Category
004--Diseases & Disorders of the Respiratory System, as the indication
for the technology regarding lung ventilation seems very broad. We are
inviting public comments on whether XENOVIEW TM meets the
cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that XENOVIEW TM represents a substantial
clinical improvement over existing technologies because HP \129\Xe gas
for oral inhalation with MRI offers an effective option for patients
with pulmonary challenges to obtain quantitative information regarding
their lung ventilation as it relates to their progression of disease
without subjecting the patient to ionizing radiation or the half-life
of nuclear imaging agents. The applicant further stated that HP \129\Xe
MRI images are sharp and discreet providing visual evidence of oxygen
impairment across the barrier tissues leading to a quantifiable metric
to follow patients' treatment. The applicant asserted that XENOVIEW
TM 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. The applicant provided 10 studies to support these claims. The
following table summarizes the applicant's assertions regarding the
substantial clinical improvement criterion. Please see the online
posting for XENOVIEW TM for additional details on the
applicant's statements regarding the substantial clinical improvement
[[Page 26919]]
criterion and the supporting evidence provided.
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[[Page 26920]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.219
[[Page 26921]]
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[[Page 26922]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.221
[[Page 26923]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.222
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After review of the information the applicant provided, we have the
following concerns regarding whether XENOVIEW TM meets the
substantial clinical improvement criterion. We note that, similar to
our discussion in the FY 2023 IPPS/LTCH PPS proposed rule (87 FR
28312), with respect to the evidence provided by the applicant to
support its assertion that XENOVIEW TM is able to diagnose a
medical condition in a patient population where the medical condition
is currently undetectable and diagnose a medical condition earlier than
currently available methods, the studies do not appear to provide
evidence showing that use of the technology to make a diagnosis
affected the management of the patients, as under Sec.
412.87(b)(1)(ii)(B). Although the applicant provided studies
demonstrating that XENOVIEW TM can detect gas diffusion
abnormalities in patients that traditional imaging such as CT cannot,
or can detect these abnormalities earlier than currently available
methods, these studies do not appear to demonstrate that subsequently,
treatment planning or disease management was affected.
---------------------------------------------------------------------------
\142\ Hahn, AD, Carey KJ, Barton GP, Torres, LA, Kammerman J, et
al. Hyperpolarized 129Xe MR Spectroscopy in the Lung Shows 1-year
Reduced Function in Idiopathic Pulmonary Fibrosis. Radiology 2022;
000:1-9.
\143\ Grist JT, Collier GJ, Walters H, Kim M, Chen M, et al.
Lung abnormalities depicted with hyperpolarized xenon MRI in
patients with long COVID. Radiology 2022; inpress:1-26.
---------------------------------------------------------------------------
For example, we note that studies were designed to assess the
ability of XENOVIEW TM to detect changes in lung function
before and after treatment in comparison to other technologies, rather
than a change in patient management. For example, in the Mummy et al.
(2021) study,\144\ HP \129\Xe MRI was used to observe treatment effects
in COPD patients before and after receiving biologic therapy. Even
though the study demonstrated that XENOVIEW TM may have more
sensitivity in providing measurements of lung functioning in
structurally normal areas of the lung, there were no additional follow-
ups on patients who appeared to be non-responsive to therapy based on
HP \129\Xe MRI imaging. Without this information, it is difficult to
determine whether using XENOVIEW TM to observe the effects
of treatment has an impact on clinical decision-making for patients
with COPD. Similarly, although the study abstract for McIntosh et al.
(2020) \145\ noted that clinically relevant VDP improvements were
observed 14-days post-benralizumab in patients with minimal response
detected using spirometry, it is not clear from the study abstract if
the use of XENOVIEW TM to observe the effects of treatment
impacted the clinical decision-making for these patients. In addition,
we question the clinical significance of the findings in the Hahn et
al. (2022) study \146\ to support the applicant's statement that in
patients with IPF, HP \129\Xe MRI can predict disease progression in
patient population where fibrosis is not detectable by traditional CT,
as the study authors suggested that findings need to be verified in a
longitudinal multicenter study with more rigorous testing of the
repeatability of the MRI-based measurements of gas exchange and
ventilation in a larger sample of participants with IPF.
---------------------------------------------------------------------------
\144\ Mummy DG, Coleman M, Wang Z, Bier EA, Lu J, Driehuys D,
Huang YC. J. Regional Gas Exchange Measured by 129Xe Magnetic
Resonance Imaging Before and After Combination Bronchodilators
Treatment in Chronic Obstructive Pulmonary Disease. J Magn Reson
Imaging 54(3): 964-974. DOI: 10.1002/jmri.27662.
\145\ McIntosh M, Eddy RL, Knipping D, Barker AL, Lindenmaier
TJ, Yamashita C, et al. Response to benralizumab in severe asthma:
129Xe MRI, oscillometry and clinical measurements. Am J Respir Crit
Care Med 2020;201:A6244.
\146\ Hahn, AD, Carey KJ, Barton GP, Torres, LA, Kammerman J, et
al. Hyperpolarized 129Xe MR Spectroscopy in the Lung Shows 1-year
Reduced Function in Idiopathic Pulmonary Fibrosis. Radiology 2022;
000:1-9.
---------------------------------------------------------------------------
Furthermore, although the applicant states that HP \129\Xe MRI can
be used to quantify abnormalities across three compartments of alveolar
gas-exchange (in the airspaces (ventilation), barrier tissue of the
lung parenchyma, and transfer to red blood cells (RBCs)), we question
whether the detection of such abnormalities allows for a specific
diagnosis of disease. For example, in the Grist et al. (2022)
study,\147\ a follow-up to the Grist et al. (2021) study,\148\ the
authors noted that the relationship of the HP \129\Xe MRI abnormalities
detected and the breathlessness experienced by the wider population of
post-COVID-19 condition participants was unclear. The authors stated
that caution is necessary in the use of HP \129\Xe MRI for the
detection of disease, as it was unknown whether participants with other
respiratory tract infections, such as flu, had abnormal HP \129\Xe MRI
gas transfer months after infection. The authors also stated that it
was not known whether the abnormalities detected were of clinical
importance. The authors of the Mummy et. al. (2021) \149\ study also
indicated that HP
[[Page 26924]]
\129\Xe MRI ventilation measurements in COPD had not been well
characterized, which limited the authors' ability to determine a
clinically meaningful change in ventilation metrics. In addition, we
note that the Thomen et al. (2016) \150\ study provided by the
applicant consists of a pediatric population, and we question whether
such detection of ventilation abnormalities by XENOVIEW TM
would be generalizable to a Medicare population.
---------------------------------------------------------------------------
\147\ Grist JT, Collier GJ, Walters H, Kim M, Chen M, et al.
Lung abnormalities depicted with hyperpolarized xenon MRI in
patients with long COVID. Radiology 2022;in press:1-26.
\148\ Grist JT, Chen M, Collier GJ, Raman B, Abueid G, et al.
Hyperpolarized 129XE MRI abnormalities in dyspneic patients 3 months
after COVID-19 pneumonia: Preliminary results. Radiology
2021;301:E353-E360.
\149\ Mummy DG, Coleman M, Wang Z, Bier EA, Lu J, Driehuys D,
Huang YC. J. Regional Gas Exchange Measured by 129Xe Magnetic
Resonance Imaging Before and After Combination Bronchodilators
Treatment in Chronic Obstructive Pulmonary Disease. J Magn Reson
Imaging 54(3): 964-974. DOI: 10.1002/jmri.27662.
\150\ Thomen RP, Walkup LL, Roach DJ, Cleveland ZI, Clancy JP,
Woods JC. Hyperpolarized \129\Xe for investigation of mild cystic
fibrosis lung disease in pediatric patients. J Cyst Fibros
2016;16(2):275-282.
---------------------------------------------------------------------------
In summary, we question whether the evidence provided demonstrates
that earlier detection of alveolar gas-exchange defects using XENOVIEW
TM results in earlier diagnosis and subsequent changes to
clinical decision-making following an earlier diagnosis. As such, we
would be interested in additional evidence to support the applicant's
assertion that use of XENOVIEW TM to make a diagnosis
affects the management of the patient.
We are inviting public comments on whether XENOVIEW TM
meets the substantial clinical improvement criterion.
We did not receive any written comments in response to the New
Technology Town Hall meeting notice published in the Federal Register
regarding the substantial clinical improvement criterion for XENOVIEW
TM.
7. Proposed FY 2024 Applications for New Technology Add-On Payments
(Alternative Pathways)
As discussed previously, beginning with applications for FY 2021, a
medical device designated under FDA's Breakthrough Devices Program that
has received marketing authorization as a Breakthrough Device, for the
indication covered by the Breakthrough Device designation, may qualify
for the new technology add-on payment under an alternative pathway.
Additionally, beginning with FY 2021, a medical product that is
designated by the FDA as a Qualified Infectious Disease Product (QIDP)
and has received marketing authorization for the indication covered by
the QIDP designation, and, beginning with FY 2022, a medical product
that is a new medical product approved under FDA's Limited Population
Pathway for Antibacterial and Antifungal Drugs (LPAD) and used for the
indication approved under the LPAD pathway, may also qualify for the
new technology add-on payment under an alternative pathway. Under an
alternative pathway, a technology will be considered 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 represents an advance that substantially improves, relative to
technologies previously available, the diagnosis or treatment of
Medicare beneficiaries. These technologies must still be within the 2
to 3 year newness period to be considered ``new,'' and must also still
meet the cost criterion.
As discussed previously, in the FY 2023 IPPS/LTCH PPS final rule,
we finalized our proposal to publicly post online applications for new
technology add-on payment beginning with FY 2024 applications (87 FR
48986 through 48990). As noted in the FY 2023 IPPS/LTCH PPS final rule,
we are continuing to summarize each application in this proposed rule.
However, while we are continuing to provide discussion of the concerns
or issues we identified with respect to applications submitted under
the alternative pathway, we are providing more succinct information as
part of the summaries in the proposed and final rules regarding the
applicant's assertions as to how the medical service or technology
meets the applicable new technology add-on payment criteria. We refer
readers to https://mearis.cms.gov/public/publications/ntap for the
publicly posted FY 2024 new technology add-on payment applications and
supporting information (with the exception of certain cost and volume
information, and information or materials identified by the applicant
as confidential or copyrighted). In addition, we note that we are
making available separate tables listing the ICD-10-CM codes, ICD-10-
PCS codes, and/or MS-DRGs related to the analyses of the cost criterion
for certain technologies for the FY 2024 new technology add-on payment
applications in Table 10 associated with this proposed rule, available
via the internet on the CMS website at https://www.cms.gov/medicare/
medicare-fee-for-service-payment/acuteinpatientpps. Click on the link
on the left side of the screen titled ``FY 2024 IPPS Proposed Rule Home
Page'' or ``Acute Inpatient--Files for Download''. Please see section
VI of the Addendum for additional information regarding tables
associated with the proposed rule.
We received 27 applications for new technology add-on payments for
FY 2024 under the new technology add-on payment alternative pathway.
Seven applicants withdrew applications prior to the issuance of this
proposed rule. Of the remaining 20 applications, 16 of the technologies
received a Breakthrough Device designation from FDA and 1 has a pending
Breakthrough Device designation from FDA. The remaining three
applications were designated as a QIDP by FDA. We did not receive any
applications for technologies approved through the LPAD pathway.
In accordance with the regulations under Sec. 412.87(e)(2),
applicants for new technology add-on payments for FY 2024, including
Breakthrough Devices, must have FDA marketing authorization by July 1
of the year prior to the beginning of the fiscal year for which the
application is being considered. Under the policy finalized in the FY
2021 IPPS/LTCH PPS final rule (85 FR 58742), we revised the regulations
at Sec. 412.87 by adding a new paragraph (e)(3) which provides for
conditional approval for a technology for which an application is
submitted under the alternative pathway for certain antimicrobial
products (QIDPs and LPADs) at Sec. 412.87(d) that does not receive FDA
marketing authorization by the July 1 deadline specified in Sec.
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 FY 2021 IPPS/LTCH final rule for a complete discussion of
this policy (85 FR 58737 through 58742).
As we did in the FY 2023 IPPS/LTCH PPS proposed rule, for
applications under the alternative new technology add-on payment
pathway, in this proposed rule we are making a proposal to approve or
disapprove each of these 20 applications for FY 2024 new technology
add-on payments. Therefore, in this section of the preamble of this
proposed rule, we provide background information on each alternative
pathway application and propose whether or not each technology would be
eligible for the new technology add-on payment for FY 2024. 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) and FY 2021 IPPS/LTCH PPS final
rule (85 FR 58715 through 58733) for further discussion of the
alternative new technology add-on payment pathways for these
technologies.
a. Alternative Pathway for Breakthrough Devices
(1) 4WEB Medical Ankle Truss System
4WEB Medical Inc., submitted an application for new technology add-
on
[[Page 26925]]
payments for the 4WEB Medical Ankle Truss System (ATS). According to
the applicant, the ATS is a tibiotalocalcaneal (TTC) fusion system with
a premarket authorized TTC nail to manage ankle bone defects that occur
after a failed ankle arthrodesis or arthroplasty.
Please refer to the online application posting for ATS, available
at https://mearis.cms.gov/public/publications/ntap/NTP221014QPJ43, for
additional detail describing the technology.
According to the applicant, the ATS received Breakthrough Device
designation from FDA on October 4, 2022 for use with a premarket
authorized tibiotalocalcaneal (TTC) nail as part of a TTC fusion system
to manage ankle bone defects that may be associated with the following
indications: failed ankle arthrodesis, failed ankle arthroplasty. The
anatomical landmarks necessary for the design and creation of ATS Power
Mobility Devices (PMDs) must be present and identifiable on appropriate
radiography scans. The ATS is intended for use with autograft and/or
allogenic bone graft comprised of cancellous and/or corticocancellous
bone graft. The applicant stated that it is seeking 510(k) clearance
from FDA for the same indication.
According to the applicant, there are currently no ICD-10-PCS
procedure codes to distinctly identify the ATS. The applicant submitted
a request for approval for a unique ICD-10-PCS procedure code for the
ATS beginning in FY 2024.
With respect to the cost criterion, to identify potential cases
representing patients who may be eligible for the ATS, the applicant
searched the FY 2021 MedPAR file for cases reporting the ICD-10-PCS
codes listed in the following table, which describe open fusion of the
ankle joint with any device but autologous tissue substitute. The
applicant used the inclusion/exclusion criteria described in the
following table. The applicant provided two analyses to demonstrate
that the technology meets the cost criterion, the first using 100
percent of all identified cases, and the second using 75 percent of all
identified cases. The applicant followed the order of operations
described in the following table.
Under the first analysis (100 percent of all cases), the applicant
identified 1,278 cases mapping to 49 MS-DRGs (see Table 10.1.A.--4WEB
Medical Ankle Truss System Codes--FY 2024 associated with this proposed
rule for a complete list of MS-DRGs provided by the applicant). The
applicant calculated a final inflated average case-weighted
standardized charge per case of $212,292, which exceeded the average
case-weighted threshold amount of $100,961.
Under the second analysis (75 percent of all cases) the applicant
identified 959 claims mapping to 20 MS-DRGs (see Table 10.1.A.--4WEB
Medical Ankle Truss System Codes--FY 2024 associated with this proposed
rule for a complete list of MS-DRGs provided by the applicant), and
calculated a final inflated average case-weighted standardized charge
per case of $205,198, which exceeded the average case-weighted
threshold amount of $101,243.
Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount in
both scenarios, the applicant asserted that the ATS meets the cost
criterion.
BILLING CODE 4120-01-P
[[Page 26926]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.223
We note the following concern regarding the cost criterion. To
identify potentially eligible cases, the applicant searched the FY 2021
MedPAR file using only the listed ankle fusion procedure codes, but we
note that that the proposed indication for this device is for use in
failed ankle fusions and failed arthroplasties. We therefore question
whether searching for the ankle fusion procedure codes in combination
with diagnosis complication codes reported to identify the previous
failure such as category T84, M97.21, or M97.22 would more accurately
identify eligible cases.
Subject to the applicant adequately addressing this concern, we
would agree that the technology meets the cost criterion and are
proposing to approve the ATS for new technology add-on payments for FY
2024, subject to the technology receiving FDA marketing authorization
as a Breakthrough Device for the indication corresponding to the
Breakthrough Device designation by July 1, 2023.
Based on preliminary information from the applicant at the time of
this proposed rule, the estimated cost of this technology to the
hospital on a per-patient basis is $19,500, which is the cost of a
single implant. We note that the cost information for this technology
may be updated in the final rule based on revised or additional
information CMS receives prior to the final rule. Under Sec.
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 are
proposing that the maximum new technology add-on payment for a case
involving the use of the ATS would be $12,675 for FY 2024 (that is, 65
percent of the average cost of the technology).
We are inviting public comments on whether the 4WEB Medical Ankle
Truss System meets the cost criterion and our proposal to approve new
technology add-on payments for the 4WEB Medical Ankle Truss System for
FY 2024 subject to the technology receiving FDA marketing authorization
as a Breakthrough Device for the indication corresponding to the
Breakthrough Device designation by July 1, 2023.
(2) AveirTM AR Leadless Pacemaker
Abbott Cardiac Rhythm Management submitted an application for new
technology add-on payments for the AveirTM AR Leadless
Pacemaker for FY 2024. Per the applicant, the AveirTM AR
Leadless Pacemaker is a programmable system comprised of a single
leadless pacemaker implanted into the right atrium that provides
single-chamber pacing therapy without the need for traditional
``wired'' leads. According to the applicant, this technology contains
both the generator and electrodes within the device and is anticipated
to be indicated for one or more of the following permanent conditions:
syncope, presyncope, fatigue, disorientation due to arrhythmia/
[[Page 26927]]
bradycardia, or any combination of those symptoms. We note that the
applicant also submitted an application for new technology add-on
payments for FY 2024 for the AveirTM Leadless Pacemaker
(herein referred to as the AveirTM Dual-Chamber Leadless
Pacemaker), discussed separately in the following section.
Please refer to the online application posting for
AveirTM AR Leadless Pacemaker, available at https://mearis.cms.gov/public/publications/ntap/NTP221017AH7JC, for additional
detail describing the technology and the disease treated by the
technology.
According to the applicant, AveirTM AR Leadless
Pacemaker received Breakthrough Device designation from FDA on March
27, 2020, under the Breakthrough Device designation for the Leadless
Dual Chamber System for the following proposed indication: Pacemaker
implantation is indicated in one or more of the following permanent
conditions: syncope, presyncope, fatigue, disorientation due to
arrhythmia/bradycardia, or any combination of those symptoms. The
proposed indications for use of the Leadless Dual Chamber System
include all four of the following: (1) Rate-Modulated Pacing is
indicated for patients with chronotropic incompetence, and for those
who would benefit from increased stimulation rates concurrent with
physical activity. Chronotropic incompetence has not been rigorously
defined. A conservative approach, supported by the literature, defines
chronotropic incompetence as the failure to achieve an intrinsic heart
rate of 70 percent of the age-predicted maximum heart rate or 120 bpm
during exercise testing, whichever is less, where the age-predicted
heart rate is calculated as 197-(0.56 x age). (2) Dual-Chamber Pacing
is indicated for those patients exhibiting: sick sinus syndrome;
chronic, symptomatic second- and third-degree AV block; recurrent
Adams-Stokes syndrome; symptomatic bilateral bundle branch block when
tachyarrhythmia and other causes have been ruled out. (3) Atrial Pacing
is indicated for patients with: sinus node dysfunction and normal AV
and intraventricular conduction systems. (4) Ventricular Pacing is
indicated for patients with: significant bradycardia and normal sinus
rhythm with only rare episodes of AV block or sinus arrest; chronic
atrial fibrillation; severe physical disability.
According to the applicant, the relevant indications for single-
chamber atrial leadless pacing are the first and third indications,
Rate-Modulated Pacing and Atrial Pacing. The applicant further stated
that the Breakthrough Device designation applies to two clinical
scenarios: a de novo system where a patient receives the
AveirTM Dual-Chamber Leadless Pacemaker, or an upgrade
system where a patient already has a ventricular leadless pacemaker and
is upgraded to the AveirTM Dual-Chamber Leadless Pacemaker
by receiving the AveirTM AR Leadless Pacemaker. The
applicant stated that it is seeking FDA approval for both the atrial
leadless pacemaker (AveirTM AR Leadless Pacemaker) and the
dual chamber leadless pacemaker (AveirTM Dual-Chamber
Leadless Pacemaker) for the same indications. We note that, while the
intended indications for the AveirTM AR Leadless Pacemaker
would appear to match sections of the Breakthrough Device designation,
the Breakthrough Device designation provided by the applicant is for
the Leadless Dual Chamber System, rather than the AveirTM
Dual-Chamber Leadless Pacemaker. Therefore, although the
AveirTM AR Leadless Pacemaker may be one component of the
system, it appears that the AveirTM AR Leadless Pacemaker on
its own is not the subject of the Breakthrough Device designation, and
would not be considered a Breakthrough Device once FDA approved. As
discussed, a device must be designated under FDA's Breakthrough Devices
Program to be eligible under the alternative pathway. Accordingly,
because the AveirTM AR Leadless Pacemaker appears to only be
eligible under the alternative pathway for procedures involving the
full dual-chamber system (that is, where patients are upgraded to the
AveirTM Dual-Chamber Leadless Pacemaker by receiving the
AveirTM AR Leadless Pacemaker), we believe any eligible use
of the AveirTM AR Leadless Pacemaker would be included under
the new technology add-on payment application for the
AveirTM Dual-Chamber Leadless Pacemaker. We invite public
comment on the eligibility of the AveirTM AR Leadless
Pacemaker under the alternative pathway.
The applicant stated that the following ICD-10-PCS code may be used
to uniquely describe procedures involving the use of AveirTM
AR Leadless Pacemaker effective beginning FY 2017: 02H63NZ (Insertion
of intracardiac pacemaker into right atrium, percutaneous approach). We
note that the applicant also submitted a request for approval for a
unique ICD-10-PCS procedure code for AveirTM AR Leadless
Pacemaker beginning in FY 2024. The applicant stated that I49.9
(Cardiac arrythmia, unspecified) may be used to currently identify the
proposed indication for AveirTM AR Leadless Pacemaker under
the ICD-10-CM coding system.
With respect to the cost criterion, to identify potential cases
representing patients who may be eligible for the AveirTM AR
Leadless Pacemaker, the applicant searched the FY 2021 MedPAR file for
cases reporting ICD-10-PCS code 02H63NZ (Insertion of intracardiac
pacemaker into right atrium, percutaneous approach). Using the
inclusion/exclusion criteria described in the following table, the
applicant identified 1,186 claims mapping to 43 MS-DRGs. The applicant
followed the order of operations described in the following table and
calculated a final inflated average case-weighted standardized charge
per case of $207,890, which exceeded the average case-weighted
threshold amount of $158,574. Because the final inflated average case-
weighted standardized charge per case exceeded the average case-
weighted threshold amount, the applicant asserted that the
AveirTM AR Leadless Pacemaker meets the cost criterion.
[[Page 26928]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.224
We have the following concerns regarding the cost criterion. As
summarized in the following section, the applicant stated that the
AveirTM Dual-Chamber Leadless Pacemaker is identified using
both ICD-10-PCS code 02H63NZ (used for the cost analysis for the
AveirTM AR Leadless Pacemaker) and ICD-10-PCS code 02HK3NZ
(Insertion of Intracardiac Pacemaker into Right Ventricle, Percutaneous
Approach). We question whether, by not excluding cases reporting ICD-
10-PCS code 02HK3NZ as part of the case selection for the cost analysis
for the AveirTM AR Leadless Pacemaker, cases involving use
of the dual chamber system could have been included as part of this
analysis. Also, while it is our understanding that procedure code
02H63NZ was approved to describe procedures involving the use of
intracardiac atrial pacemakers effective beginning FY 2017, the
applicant stated that there are no technologies on the market eligible
to be coded with procedure code 02H63NZ as the AveirTM AR
Leadless Pacemaker will be the first atrial leadless pacemaker, if
approved. Therefore, we are unsure why the applicant searched for cases
reporting procedure code 02H63NZ within the FY 2021 MedPAR file if
there should not be any technologies coded with procedure code 02H63NZ
until FY 2022 (when the applicant stated clinical trials for the
AveirTM AR Leadless Pacemaker began). We further question
which technology the cases identified in the MedPAR data represent. We
question whether searching for cases utilizing standard pacemakers
instead of leadless pacemakers (with relevant adjustments to remove/add
charges as necessary) would better reflect the technology that the
applicant anticipates AveirTM AR Leadless Pacemaker will be
replacing.
Subject to the applicant adequately addressing these concerns, we
would agree that the technology meets the cost criterion and are
proposing to approve the AveirTM AR Leadless Pacemaker for
new technology add-on payments for FY 2024, subject to the technology
receiving Breakthrough Device designation and FDA marketing
authorization as a Breakthrough Device for the indication corresponding
to the Breakthrough Device designation by July 1, 2023.
The applicant has not provided an estimate for the cost of the
AveirTM AR Leadless Pacemaker at the time of this proposed
rule. We expect the applicant to submit cost information prior to the
final rule, and we will provide an update regarding the new technology
add-on payment amount for the technology, if approved, in the final
rule. Any new technology add-on payment for the AveirTM AR
Leadless Pacemaker would be subject to our policy under Sec.
412.88(a)(2) where 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.
We invite public comments on whether the AveirTM AR
Leadless Pacemaker meets the cost criterion and our proposal to approve
new technology add-on payments for the AveirTM AR Leadless
Pacemaker for FY 2024 subject to the technology receiving Breakthrough
Device designation and FDA marketing authorization as a Breakthrough
Device for the indication corresponding to the Breakthrough Device
designation by July 1, 2023.
(3) AveirTM Leadless Pacemaker (Dual-Chamber)
Abbott Cardiac Rhythm Management submitted an application for new
technology add-on payments for the AveirTM Leadless
Pacemaker (herein referred to as the AveirTM Dual-Chamber
Leadless Pacemaker) for FY 2024. According to the applicant, the
AveirTM Dual-Chamber Leadless Pacemaker is a modular
programmable system comprised of two implanted leadless pacemakers that
provide dual-chamber pacing therapy: a ventricular leadless pacemaker
intended for direct implantation into the right ventricle, and an
atrial leadless pacemaker intended for direct implantation into the
right atrium. The applicant stated that the AveirTM Dual-
Chamber Leadless Pacemaker has built-in power supply and electrodes, is
designed to be retrievable by a dedicated retrieval catheter, and
enables two separate pacemakers to function as one dual-chamber pacing
system. The applicant stated that pacemaker implantation is generally
indicated in one or more of the following permanent conditions:
syncope, presyncope, fatigue, disorientation due to arrhythmia/
bradycardia, or any combination of those symptoms. As discussed
separately in the previous section, the applicant also submitted an
application for FY 2024 new technology add-on payments for the
AveirTM AR Leadless Pacemaker, which provides atrial pacing.
Please refer to the online application posting for the
AveirTM Dual-Chamber Leadless Pacemaker, available at
https://mearis.cms.gov/public/publications/ntap/NTP221017AJNQH, for
additional detail describing the technology and the disease treated by
the technology.
[[Page 26929]]
According to the applicant, the AveirTM Dual-Chamber
Leadless Pacemaker was granted Breakthrough Device designation from FDA
on March 27, 2020 under the Breakthrough Device designation for the
Leadless Dual Chamber System for the following proposed indication:
Pacemaker implantation is indicated in one or more of the following
permanent conditions: syncope, presyncope, fatigue, disorientation due
to arrhythmia/bradycardia, or any combination of those symptoms. The
proposed indications for use of the Leadless Dual Chamber System
include all four of the following: (1) Rate-Modulated Pacing is
indicated for patients with chronotropic incompetence, and for those
who would benefit from increased stimulation rates concurrent with
physical activity. Chronotropic incompetence has not been rigorously
defined. A conservative approach, supported by the literature, defines
chronotropic incompetence as the failure to achieve an intrinsic heart
rate of 70 percent of the age-predicted maximum heart rate or 120 bpm
during exercise testing, whichever is less, where the age-predicted
heart rate is calculated as 197-(0.56 x age); (2) Dual-Chamber Pacing
is indicated for those patients exhibiting: sick sinus syndrome;
chronic, symptomatic second- and third-degree AV block; recurrent
Adams-Stokes syndrome; symptomatic bilateral bundle branch block when
tachyarrhythmia and other causes have been ruled out; (3) Atrial Pacing
is indicated for patients with: sinus node dysfunction and normal AV
and intraventricular conduction systems; (4) Ventricular Pacing is
indicated for patients with: significant bradycardia and normal sinus
rhythm with only rare episodes of AV block or sinus arrest; chronic
atrial fibrillation; severe physical disability.
The applicant further stated that the Breakthrough Device
designation applies to two clinical scenarios: a de novo system where a
patient receives the AveirTM Dual-Chamber Leadless
Pacemaker, or an upgrade system where a patient already has a
ventricular leadless pacemaker and is upgraded to the
AveirTM Dual-Chamber Leadless Pacemaker by receiving the
AveirTM AR Leadless Pacemaker. The applicant stated that it
is seeking FDA approval for the AveirTM Dual-Chamber
Leadless Pacemaker for the same indications listed on the Breakthrough
Device designation.
According to the applicant, the following ICD-10-PCS procedure
codes can currently be used to distinctly identify the
AveirTM Dual-Chamber Leadless Pacemaker effective beginning
FY 2017: 02H63NZ (Insertion of intracardiac pacemaker into right
atrium, percutaneous approach) and 02HK3NZ (Insertion of intracardiac
pacemaker into right ventricle, percutaneous approach). The applicant
stated that there are other systems also in development that will use
this combination of ICD-10-PCS codes but that the AveirTM
Dual-Chamber Leadless Pacemaker will be the first dual chamber leadless
pacemaker system on the market. We note that the applicant also
submitted a request for approval for a unique ICD-10-PCS code for the
Aveir Dual-Chamber Leadless Pacemaker beginning in FY 2024. The
applicant stated that diagnosis code I49.9 (Cardiac arrythmia,
unspecified) may be used to currently identify the proposed indication
for Aveir\TM\ Dual-Chamber Leadless Pacemaker under the ICD-10-CM
coding system.
With respect to the cost criterion, to identify potential cases
representing patients who may be eligible for the AveirTM
Dual-Chamber Leadless Pacemaker, the applicant searched the FY 2021
MedPAR file for cases reporting ICD-10-PCS code 02H63NZ (Insertion of
intracardiac pacemaker into right atrium, percutaneous approach) in
combination with ICD-10-PCS code 02HK3NZ (Insertion of intracardiac
pacemaker into right ventricle, percutaneous approach). Using the
inclusion/exclusion criteria described in the following table, the
applicant identified 991 claims mapping to 38 MS-DRGs. The applicant
followed the order of operations described in the following table and
calculated a final inflated average case-weighted standardized charge
per case of $206,636, which exceeded the average case-weighted
threshold amount of $159,357. Because the final inflated average case-
weighted standardized charge per case exceeded the average case-
weighted threshold amount, the applicant asserted that the
AveirTM Dual-Chamber Leadless Pacemaker meets the cost
criterion.
[GRAPHIC] [TIFF OMITTED] TP01MY23.225
[[Page 26930]]
We have the following concern regarding the cost criterion. It is
our understanding that procedure codes 02H63NZ and 02HK3NZ were
approved for use in describing procedures involving intracardiac
pacemakers effective beginning FY 2017. The applicant stated that there
are no technologies on the market eligible to be coded with procedure
code 02H63NZ as the AveirTM AR Leadless Pacemaker will be
the first atrial leadless pacemaker, if approved, and there are no
dual-chamber leadless pacemakers currently available. Therefore, we are
unsure why the applicant searched for cases reporting procedure code
02H63NZ within the FY 2021 MedPAR file if there should not be any
technologies coded with 02H63NZ until FY 2022 (when the applicant
stated clinical trials for the AveirTM AR and Dual-Chamber
Leadless Pacemaker began). We further question which technology the
cases identified in the MedPAR data represent. We question whether
searching for cases utilizing standard pacemakers instead of leadless
pacemakers (with relevant adjustments to remove/add charges as
necessary) would better reflect the technology that the applicant
anticipates AveirTM Dual-Chamber Leadless Pacemaker will be
replacing.
Subject to the applicant adequately addressing this concern, we
would agree with the applicant that the technology meets the cost
criterion and are therefore proposing to approve the AveirTM
Dual-Chamber Leadless Pacemaker for new technology add-on payments for
FY 2024, subject to the technology receiving FDA marketing
authorization as a Breakthrough Device for the indication corresponding
to the Breakthrough Device designation by July 1, 2023.
The applicant has not provided an estimate for the cost of the
AveirTM Dual-Chamber Leadless Pacemaker at the time of this
proposed rule. We expect the applicant to submit cost information prior
to the final rule, and we will provide an update regarding the new
technology add-on payment amount for the technology, if approved, in
the final rule. Any new technology add-on payment for the Aveir\TM\
Dual-Chamber Leadless Pacemaker would be subject to our policy under
Sec. 412.88(a)(2) where 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.
We invite public comments on whether the AveirTM Dual-
Chamber Leadless Pacemaker meets the cost criterion and our proposal to
approve new technology add-on payments for the AveirTM Dual-
Chamber Leadless Pacemaker for FY 2024 subject to the technology
receiving FDA marketing authorization as a Breakthrough Device for the
indication corresponding to the Breakthrough Device designation by July
1, 2023.
(4) Canary Tibial Extension (CTE) With Canary Health Implanted
Reporting Processor (CHIRP) System
Zimmer Biomet submitted an application for new technology add-on
payments for the Canary Tibial Extension (CTE) with Canary Health
Implanted Reporting Processor (CHIRP) System for FY 2024. Per the
applicant, the CTE with CHIRP System is a tibial extension implant
containing electronics and software, used with the Zimmer Persona
Personalized Knee System. According to the applicant, the CTE with
CHIRP System collects kinematic data pertaining to a patient's gait and
activity level following total knee arthroplasty (TKA) surgery using
internal motion sensors (3-D accelerometers and 3-D gyroscopes).
Please refer to the online application posting for the CTE with
CHIRP System, available at https://mearis.cms.gov/public/publications/ntap/NTP221014KYAL1, for additional detail describing the technology
and its intended use.
According to the applicant, the CTE with CHIRP System received
Breakthrough Device designation from FDA on October 24, 2019 for the
following proposed indication: for use with the Zimmer Persona
Personalized Knee System (K113369) for TKA. The CTE with CHIRP System
is intended to provide objective kinematic data from the implanted
medical device to assist the patient and clinician during a patient's
TKA post-surgical care. The kinematic data is intended as an adjunct to
standard of care and physiological parameter measurement tools applied
or utilized by the physician during the course of patient monitoring
and treatment post-surgery. FDA granted De Novo classification to the
CTE with CHIRP System on August 27, 2021 for the following indication:
to provide objective kinematic data from the implanted medical device
during a patient's TKA post-surgical care. The kinematic data is an
adjunct to other physiological parameter measurement tools applied or
utilized by the physician during the course of patient monitoring and
treatment post-surgery. The device is indicated for use in patients
undergoing a cemented TKA procedure that are normally indicated for at
least a 58 mm sized tibial stem extension. The applicant stated that
the technology was not immediately available for sale due to production
delays related to COVID-19 and because of the need to negotiate data
agreements with customer hospitals, but it became commercially
available on October 4, 2021.
According to the applicant, there are currently no ICD-10-PCS
procedure codes to distinctly identify the CTE with CHIRP System. The
applicant submitted a request for approval for a unique ICD-10-PCS
procedure code for the CTE with CHIRP System beginning in FY 2024.
With respect to the cost criterion, the applicant provided the
following analysis to demonstrate that it meets the cost criterion. To
identify potential cases representing patients who may be eligible for
the CTE with CHIRP System, the applicant searched the FY 2021 MedPAR
file for cases reporting the ICD-10-PCS codes describing cemented
replacement of the knee joint with a synthetic device via an open
approach, as listed in the following table. Using the inclusion/
exclusion criteria described in the following table, the applicant
identified 74,654 claims mapping to 60 MS-DRGs. See Table 10.5.A.--CTE
with CHIRP System Codes--FY 2024 associated with this proposed rule for
the complete list of MS-DRGs provided by the applicant. The applicant
followed the order of operations described in the following table and
calculated a final inflated average case-weighted standardized charge
per case of $90,599, which exceeded the average case-weighted threshold
amount of $84,613. Because the final inflated average case-weighted
standardized charge per case exceeded the average case-weighted
threshold amount, the applicant asserted that the CTE with CHIRP System
meets the cost criterion.
[[Page 26931]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.226
We agree with the applicant that the technology meets the cost
criterion and are therefore proposing to approve the CTE with CHIRP
System for new technology add-on payments for FY 2024 for the
indication to provide objective kinematic data from the implanted
medical device during a patient's TKA post-surgical care. The kinematic
data is an adjunct to other physiological parameter measurement tools
applied or utilized by the physician during the course of patient
monitoring and treatment post-surgery. The device is indicated for use
in patients undergoing a cemented TKA procedure that are normally
indicated for at least a 58 mm sized tibial stem extension.
Based on preliminary information from the applicant at the time of
this proposed rule, the total cost of the CTE with CHIRP System to the
hospital is approximately $1,654 per knee. This includes $1,309 for the
CTE and $345 for the Canary Medical Home Base Station. We note that per
the applicant, the Home Base Station System is intended for use in the
patient's home environment and is used to query the CTE while the
patient is asleep. We further note that the Home Base Station is
provided to the patient to set up and connect to their home Wi-Fi prior
to surgery. We therefore believe the relevant inpatient costs for the
add-on payment would include only the cost of the CTE.\151\ We note
that the cost information for this technology may be updated in the
final rule based on revised or additional information CMS receives
prior to the final rule. Under Sec. 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 are proposing that the
maximum new technology add-on payment for a case involving the use of
the CTE with CHIRP System would be $850.85 for one knee (or $1,701.70
for two knees) for FY 2024 (that is, 65 percent of the average cost of
the technology).
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We invite public comments on whether the CTE with CHIRP System
meets the cost criterion and our proposal to approve new technology
add-on payments for the CTE with CHIRP System for the indication to
provide objective kinematic data from the implanted medical device
during a patient's TKA post-surgical care.
(5) Ceribell Delirium Monitor
Ceribell, Inc. submitted an application for new technology add-on
payments for the Ceribell Delirium Monitor for FY 2024. Per the
applicant, the Ceribell Delirium Monitor is a medical device system
comprised of proprietary software and two cleared, proprietary
products, a single use signal acquisition headband (the Ceribell EEG
Headband) and a recorder (the Ceribell Pocket EEG). According to the
applicant, the software utilizes a machine learning model to analyze
EEG signals to detect features indicative of delirium in order to
provide more effective diagnosis of delirium.
Please refer to the online application posting for the Ceribell
Delirium Monitor, available at https://mearis.cms.gov/public/publications/ntap/NTP221014R4HKQ, for additional detail describing the
technology.
According to the applicant, the Ceribell Delirium Monitor received
Breakthrough Device designation from FDA on August 11, 2022 for the
following proposed indication: The Ceribell Delirium Monitor software
is intended to analyze features associated with diffuse slowing
electroencephalogram (EEG) patterns that may be indicative of delirium.
The Ceribell Delirium Monitor software is intended to aid in the
screening and monitoring of delirium with clinical assessments in adult
patients aged 65 and older in critical care settings within hospitals.
The applicant stated that it is seeking market authorization from FDA
under the De Novo pathway for the same indication. We note that the
Ceribell EEG Headband and Ceribell Pocket EEG are not included on the
Breakthrough Device designation and it therefore appears that only the
software would be designated as the Breakthrough Device once market
authorized, such that only the software would be eligible for new
technology add-on payments under the alternative pathway.
According to the applicant, there are currently no ICD-10-PCS
procedure codes to distinctly identify the Ceribell Delirium Monitor.
The applicant submitted a request for approval for a unique ICD-10-PCS
procedure code for the Ceribell Delirium Monitor beginning in FY 2024.
The applicant provided a list of diagnosis codes that may be used to
currently identify the indication for
[[Page 26932]]
the Ceribell Delirium Monitor under the ICD-10-CM coding system. Please
refer to the online application posting for the complete list of ICD-
10-CM codes provided by the applicant.
With respect to the cost criterion, to identify potential cases
representing patients who may be eligible for the Ceribell Delirium
Monitor, the applicant searched the FY 2021 MedPAR file for claims with
charges in the revenue codes 020X (Intensive Care Unit) and 021X
(Coronary Care Unit) for patients age 65 or older, based on the
expected FDA label and because the technology can be utilized for any
patient in intensive or critical care units. The applicant used the
inclusion/exclusion criteria described in the following table and
provided two analyses to demonstrate that it meets the cost criterion,
the first using 100 percent of all cases identified, and the second
using 75 percent of all cases identified. The applicant followed the
order of operations described in the following table for each scenario.
Under the first analysis (100 percent of all identified cases), the
applicant identified 2,538,587 claims mapping to 731 MS-DRGs (see Table
10.6.A.--Ceribell Delirium Monitor Codes--FY 2024 associated with this
proposed rule for a complete list of MS-DRGs provided by the applicant)
and calculated a final inflated average case-weighted standardized
charge per case of $105,176, which exceeded the average case-weighted
threshold amount of $85,580.
Under the second analysis (75 percent of all identified cases) the
applicant identified 1,904,914 claims mapping to 89 MS-DRGs (see Table
10.6.A.--Ceribell Delirium Monitor Codes--FY 2024 associated with this
proposed rule for a complete list of MS-DRGs provided by the applicant)
and calculated a final inflated average case-weighted standardized
charge of $102,354, which exceeded the average case-weighted threshold
amount of $85,363.
Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount in
both analyses, the applicant asserted that Ceribell Delirium Monitor
meets the cost criterion.
[GRAPHIC] [TIFF OMITTED] TP01MY23.227
We agree that the technology meets the cost criterion and therefore
are proposing to approve the Ceribell Delirium Monitor for new
technology add-on payments for FY 2024 subject to the technology
receiving FDA marketing authorization as a Breakthrough Device for the
indication corresponding to the Breakthrough Device designation by July
1, 2023.
The applicant has not provided an estimate for the cost of the
Ceribell Delirium Monitor at the time of this proposed rule. We expect
the applicant to submit cost information prior to the final rule, and
we will provide an update regarding the new technology add-on payment
amount for the technology, if approved, in the final rule. The
applicant stated that the operating costs of the technology will be
comprised of the Ceribell Delirium Monitor software, which is the
subject of the Breakthrough Device designation, and the Ceribell EEG
headband, which is required for each patient to utilize the Ceribell
Delirium Monitor software. However, as discussed previously, it seems
that only the software would be eligible for the new technology add-on
payment under the alternative pathway as it is the subject of the
Breakthrough Device designation. Moreover, we note that the Ceribell
EEG headband appears to have been 510(k)-cleared by FDA on August 21,
2017,\152\ and is therefore no longer new. Therefore, it appears any
add-on payment for the Ceribell Delirium Monitor would include only the
cost of the software. We welcome comment on including only the cost of
the software in determining the add-on payment amount for the Ceribell
Delirium Monitor. Any new technology add-on payment for the Ceribell
Delirium Monitor would be subject to our policy under Sec.
412.88(a)(2) where we limit new technology add-on payment to the lesser
of 65 percent of
[[Page 26933]]
the average cost of the technology, or 65 percent of the costs in
excess of the MS-DRG payment for the case.
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\152\ https://www.accessdata.fda.gov/cdrh_docs/pdf17/K171459.pdf.
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We invite public comments on whether the Ceribell Delirium Monitor
meets the cost criterion and our proposal to approve new technology
add-on payments for the Ceribell Delirium Monitor for FY 2024 subject
to the technology receiving FDA marketing authorization as a
Breakthrough Device for the indication corresponding to the
Breakthrough Device designation by July 1, 2023.
(6) Ceribell Status Epilepticus Monitor
Ceribell, Inc. submitted an application for new technology add-on
payments for the Ceribell Status Epilepticus Monitor for FY 2024.
According to the applicant, the Ceribell Status Epilepticus Monitor is
a medical device system comprised of proprietary software and two
cleared, proprietary products: a single-use signal acquisition headband
(the Ceribell EEG Headband) and a recorder (the Ceribell Pocket EEG).
Per the applicant, the software utilizes a machine learning model to
analyze EEG signals to detect features indicative of electrographic
status epilepticus (ESE) in order to provide more effective diagnosis
of ESE.
Please refer to the online application posting for the Ceribell
Status Epilepticus Monitor, available at https://mearis.cms.gov/public/publications/ntap/NTP22101439A1J, for additional detail describing the
technology.
The applicant stated that the Ceribell Status Epilepticus Monitor
received Breakthrough Device designation from FDA on October 25, 2022
for the following proposed indication: the Ceribell Status Epilepticus
Monitor software is intended for the diagnosis of ESE in adult patients
at risk for seizure. The Ceribell Status Epilepticus Monitor software
analyzes EEG waveforms and identifies patterns consistent with ESE as
defined in the American Clinical Neurophysiology Society's Guideline
14. The applicant stated that it is seeking 510(k) clearance from FDA
for the same indication. We note that the Ceribell EEG Headband and
Ceribell Pocket EEG are not included on the Breakthrough Device
designation and it therefore appears that only the software would be
designated as the Breakthrough Device once market authorized, such that
only the software would be eligible for new technology add-on payments
under the alternative pathway.
According to the applicant, there are currently no ICD-10-PCS
procedure codes to distinctly identify the Ceribell Status Epilepticus
Monitor. The applicant submitted a request for approval for a unique
ICD-10-PCS procedure code for the Ceribell Status Epilepticus Monitor
beginning in FY 2024. The applicant provided a list of diagnosis codes
that may be used to currently identify the indication for the Ceribell
Status Epilepticus Monitor under the ICD-10-CM coding system. Please
refer to the online application posting for the complete list of ICD-
10-CM codes provided by the applicant.
With respect to the cost criterion, the applicant provided multiple
analyses to demonstrate that it meets the cost criterion. For the first
two analyses, to identify potential cases representing patients who may
be eligible for treatment involving the Ceribell Status Epilepticus
Monitor, the applicant searched the FY 2021 MedPAR file for cases
reporting charges in the revenue codes 020X (Intensive Care Unit) and
021X (Coronary Care Unit) as this is where the technology is expected
to be utilized based on the expected FDA label of the technology. The
first analysis used 100 percent of all cases reporting charges in the
two revenue code categories because these cases could be monitored for
Status Epilepticus, and the second analysis used 75 percent of all such
cases. The applicant also provided sensitivity analyses limited to
cases reporting the diagnosis codes that were believed to identify
cases with the highest risk of Status Epilepticus. The third analysis
used 100 percent of these cases and the fourth analysis used 75 percent
of these cases. The applicant followed the order of operations
described in the following table.
Under the first analysis (100 percent of all cases within the
revenue code categories), the applicant identified 2,985,030 claims
mapping to 754 MS-DRGs (see Table 10.7.A.--Ceribell Status Epilepticus
Monitor Codes (Analyses 1-2)--FY 2024 associated with this proposed
rule for a complete list of MS-DRGs provided by the applicant) and
calculated a final inflated average case-weighted standardized charge
per case of $114,238, which exceeded the average case-weighted
threshold amount of $85,765.
Under the second analysis (75 percent of all cases within the
revenue code categories) the applicant identified 2,243,140 claims
mapping to 92 MS-DRGs (see Table 10.7.B.--Ceribell Status Epilepticus
Monitor Codes (Analyses 1-2)--FY 2024 associated with this proposed
rule for a complete list of MS-DRGs provided by the applicant) and
calculated a final inflated average case-weighted standardized charge
per case of $110,949, which exceeded the average case-weighted
threshold amount of $85,280.
Under the third analysis, in addition to searching for cases
reporting charges in the two revenue code categories listed previously,
the applicant limited the cases by selecting claims reporting diagnosis
codes that it believed reflected the cases for patients age 65 or older
with the highest risk of Status Epilepticus (see Table 10.7.B.--
Ceribell Status Epilepticus Monitor Codes (Analyses 3-4)--FY 2024
associated with this proposed rule for a complete list of the diagnosis
codes provided by the applicant). According to the applicant, the
diagnosis codes identified fall into four categories: Neurological
Disorders, Infection/Toxicity, Respiratory Failure and Cardiac Arrest.
The applicant identified 981,013 claims mapping to 672 MS-DRGs (see
Table 10.7.B.--Ceribell Status Epilepticus Monitor Codes (Analyses 3-
4)--FY 2024 associated with this proposed rule for a complete list of
MS-DRGs provided by the applicant), and calculated a final inflated
average case-weighted standardized charge per case of $127,942, which
exceeded the average case-weighted threshold amount of $89,219.
Under the fourth analysis, using 75 percent of all cases reporting
the diagnosis codes used in scenario 3, the applicant identified
734,908 claims mapping to 59 MS-DRGs (see Table 10.7.B.--Ceribell
Status Epilepticus Monitor Codes (Analyses 3-4)--FY 2024 associated
with this proposed rule for a complete list of MS-DRGs provided by the
applicant), and calculated a final inflated average case-weighted
standardized charge per case of $123,446, which exceeded the average
case-weighted threshold amount of $88,063.
Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount in
all scenarios, the applicant asserted that the Ceribell Status
Epilepticus Monitor meets the cost criterion.
[[Page 26934]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.228
BILLING CODE 4120-01-C
We agree that the technology meets the cost criterion and therefore
are proposing to approve the Ceribell Status Epilepticus Monitor for
new technology add-on payments for FY 2024 subject to the technology
receiving FDA marketing authorization as a Breakthrough Device for the
indication corresponding to the Breakthrough Device designation by July
1, 2023.
Based on preliminary information from the applicant at the time of
this proposed rule, the applicant anticipated the total cost of the
Ceribell Status Epilepticus Monitor to the hospital to be $2,600 per
patient (comprised of $1,800 for the software and $800 for the required
headband). However, as discussed previously, it seems that only the
software would be eligible for the new technology add-on payment under
the alternative pathway as it is the subject of the Breakthrough Device
designation. We further note, as discussed with regard to the Ceribell
Delirium Monitor, that the Ceribell EEG headband appears to have been
510(k)-cleared by FDA since August 2017 \153\ and is therefore no
longer new. Therefore, it appears any add-on payment for the Ceribell
Status Epilepticus Monitor would include only the cost of the software
($1,800). We welcome comment on including only the cost of the software
in determining the add-on payment amount for the Ceribell Status
Epilepticus Monitor. We note that the cost information for this
technology may be updated in the final rule based on revised or
additional information CMS receives prior to the final rule. Under
Sec. 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 are proposing that the maximum new technology add-on payment
for a case involving the use of the Ceribell Status Epilepticus Monitor
would be $1,170 ($1,800 x 0.65) for FY 2024 (that is, 65 percent of the
average cost of the technology for the software).
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\153\ https://www.accessdata.fda.gov/cdrh_docs/pdf17/K171459.pdf.
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We invite public comments on whether the Ceribell Status
Epilepticus Monitor meets the cost criterion and our proposal to
approve new technology add-on payments for the Ceribell Status
Epilepticus Monitor for FY 2024 for the diagnosis of ESE in adult
patients at risk for status epilepticus subject to the technology
receiving FDA marketing authorization as a Breakthrough Device for the
same indication by July 1, 2023.
(7) EchoGo Heart Failure 1.0
Ultromics Limited submitted an application for EchoGo Heart Failure
1.0 for FY 2024. According to the applicant, EchoGo Heart Failure 1.0
is an automated machine learning-based decision support system,
indicated as a diagnostic aid for patients undergoing routine
functional cardiovascular assessment using echocardiography. Per the
applicant, when utilized by an interpreting physician, this device
provides information that may be useful in detecting heart failure with
preserved ejection fraction (HFpEF).
Please refer to the online application posting for EchoGo Heart
Failure 1.0, available at https://mearis.cms.gov/public/publications/ntap/NTP2210172L1HN, for additional detail describing the technology
and the medical condition the technology is intended for.
According to the applicant, EchoGo Heart Failure 1.0 received
Breakthrough Device designation from FDA on February 24, 2022, as an
automated machine learning-based decision support system, indicated as
a diagnostic aid for patients undergoing routine functional
cardiovascular
[[Page 26935]]
assessment using echocardiography. When utilized by an interpreting
clinician, this device provides information that may be useful in
detecting heart failure with preserved ejection fraction (HFpEF).
EchoGo Heart Failure 1.0 is indicated in adult populations over 25
years of age. Patient management decisions should not be made solely on
the results of the EchoGo Heart Failure 1.0 analysis. EchoGo Heart
Failure 1.0 takes as input an apical 4-chamber view of the heart that
has been captured and assessed to have an ejection fraction >=50
percent. The applicant received FDA 510(k) clearance on November 23,
2022 for the same indication.
According to the applicant, there are currently no ICD-10-PCS
procedure codes that can be used to uniquely identify EchoGo Heart
Failure 1.0. The applicant submitted a request for approval for a
unique ICD-10-PCS procedure code for EchoGo Heart Failure 1.0 beginning
in FY 2024. The applicant provided a list of diagnosis codes that may
be used to currently identify the indication for EchoGo Heart Failure
1.0 under the ICD-10-CM coding system. Please refer to the online
application posting for the complete list of ICD-10-CM codes provided
by the applicant.
With respect to the cost criterion, the applicant provided multiple
analyses to demonstrate that it meets the cost criterion. For each
analysis, the applicant searched the FY 2021 MedPAR file using a
combination of MS-DRGs and ICD-10-CM codes to identify potential cases
representing patients who may be eligible for EchoGo Heart Failure 1.0.
The applicant explained that it ran eight additional simulations as a
sensitivity analysis, in which the applicant used combinations of MS-
DRGs and/or ICD-10-CM codes to identify potential cases. Each analysis
followed the order of operations described in the following table.
For the first analysis, the applicant searched for specific ICD-10-
CM codes in the primary diagnosis position mapped to specific MS-DRGs
representing patients likely to undergo routine functional
cardiovascular assessment using echocardiography and likely to use
EchoGo Heart Failure 1.0 to detect HFpEF. Please see Table 10.12.A.--
EchoGo Heart Failure 1.0 Codes (Analyses 1-5)--FY 2024 associated with
this proposed rule for the complete list of ICD-10-CM codes and MS-DRGs
that the applicant indicated were included in its cost analysis 1.
Using the inclusion/exclusion criteria described in the following
table, the applicant identified 407,813 claims mapping to 17 MS-DRGs.
The applicant calculated a final inflated average case-weighted
standardized charge per case of $66,144, which exceeded the average
case-weighted threshold amount of $52,548.
For the second analysis, the applicant searched for cases that had
a primary diagnosis from the applicant's ICD-10-CM list, in any MS-DRG.
Please see Table 10.12.A.--EchoGo Heart Failure 1.0 Codes (Analyses 1-
5)--FY 2024 associated with this proposed rule for the complete lists
of ICD-10-CM codes and MS-DRGs that the applicant indicated were
included in its cost analysis 2. The applicant used the inclusion/
exclusion criteria described in the following table. Under this
analysis, the applicant identified 496,879 claims mapping to 92 MS-
DRGs. The applicant calculated a final inflated average case-weighted
standardized charge per case of $88,203, which exceeded the average
case-weighted threshold amount of $66,971.
For the third analysis, the applicant used all cases (without the
use of any ICD-10-CM or ICD-10-PCS codes) in any of the MS-DRGs
included on the applicant's list of specific MS-DRGs representing
patients likely to undergo routine functional cardiovascular assessment
using echocardiography and likely to use the EchoGo Heart Failure 1.0
to detect HFpEF. Please see Table 10.12.A.--EchoGo Heart Failure 1.0
Codes (Analyses 1-5)--FY 2024 associated with this proposed rule for
the complete list of MS-DRGs that the applicant indicated were included
in its cost analysis 3. The applicant used the inclusion/exclusion
criteria described in the following table. Under this analysis, the
applicant identified 572,720 claims mapping to 20 MS-DRGs. The
applicant calculated a final inflated average case-weighted
standardized charge per case of $69,126, which exceeded the average
case-weighted threshold amount of $54,038.
For the fourth analysis, the applicant searched for any Medicare
fee-for-service (FFS) case with an admitting diagnosis from the
applicant's ICD-10-CM codes list, in any MS-DRG. Please see Table
10.12.A.--EchoGo Heart Failure 1.0 Codes (Analyses 1-5)--FY 2024
associated with this proposed rule for the complete lists of ICD-10-CM
codes and MS-DRGs that the applicant indicated were included in its
cost analysis 4. The applicant used the inclusion/exclusion criteria
described in the following table. Under this analysis, the applicant
identified 267,378 claims mapping to 493 MS-DRGs. The applicant
calculated a final inflated average case-weighted standardized charge
per case of $97,027, which exceeded the average case-weighted threshold
amount of $72,813.
For the fifth analysis, the applicant searched for any case with a
primary or secondary diagnosis from the applicant's ICD-10-CM codes
list, in any MS-DRG. Please see Table 10.12.A.--EchoGo Heart Failure
1.0 Codes (Analyses 1-5)--FY 2024 associated with this proposed rule
for the complete list of ICD-10-CM codes and MS-DRGs that the applicant
indicated were included in its cost analysis 5. The applicant used the
inclusion/exclusion criteria described in the following table. Under
this analysis, the applicant identified 2,277,736 claims mapping to 746
MS-DRGs, with none exceeding more than 15% of the total identified
cases. The applicant calculated a final inflated average case-weighted
standardized charge per case of $107,796, which exceeded the average
case-weighted threshold amount of $76,632.
According to the applicant, the ICD-10-CM codes for systolic HF
were included in the initial cost criterion analysis as the provider
may not know if the patient has either systolic or diastolic HF unless
the provider has ordered an echo and subsequently EchoGo Heart Failure
1.0. Symptoms are often identical, and systolic HF is defined by low
ejection fraction which the applicant stated is an incredibly variable
measurement. In addition, in acute decompensated HF, these patients can
present as HFpEF and transition to systolic HF or vice versa within a
single inpatient stay. As such, the applicant asserted that ordering
EchoGo Heart Failure 1.0 would be appropriate. To understand the impact
of removing the cases where the only inclusion criteria met was one of
the ICD-10-CM codes for systolic HF, the applicant conducted additional
analyses six through nine, removing ICD-10-CM codes for systolic heart
failure: I50.20 (Unspecified systolic (congestive) heart failure),
I50.21 (Acute systolic (congestive) heart failure), I50.22 (Chronic
systolic (congestive) heart failure), and I50.23 (Acute on chronic
systolic (congestive) heart failure). Please see Table 10.12.B.--EchoGo
Heart Failure 1.0 Codes (Analyses 6-9)--FY 2024 associated with this
proposed rule for the complete list of ICD-10-CM codes and MS-DRGs that
the applicant indicated were included in its cost analyses 6-9.
Inclusion/exclusion criteria for analyses six through nine are detailed
in the table that follows.
The sixth analysis mirrored the first analysis, except that cases
with ICD-10-CM systolic heart failure codes were
[[Page 26936]]
excluded. Under this analysis, the applicant identified 398,398 claims
mapping to 17 MS-DRGs. The applicant calculated a final inflated
average case-weighted standardized charge per case of $66,245, which
exceeded the average case-weighted threshold amount of $52,651.
The seventh analysis mirrored the second analysis, except that
cases with systolic heart failure ICD-10-CM codes were excluded. Under
this analysis, the applicant identified 485,027 claims mapping to 92
MS-DRGs. The applicant calculated a final inflated average case-
weighted standardized charge per case of $88,149, which exceeded the
average case-weighted threshold amount of $66,991.
The eighth analysis mirrored the fourth analysis, except that cases
with ICD-10-CM systolic heart failure codes were excluded. Under this
analysis, the applicant identified 244,399 claims mapping to 491 MS-
DRGs. The applicant calculated a final inflated average case-weighted
standardized charge per case of $97,453, which exceeded the average
case-weighted threshold amount of $72,735.
The ninth analysis mirrored the fifth analysis, except that cases
with ICD-10-CM systolic heart failure codes were excluded. Under this
analysis, the applicant identified 2,214,393 claims mapping to 746 MS-
DRGs. The applicant calculated a final inflated average case-weighted
standardized charge per case of $107,201, which exceeded the average
case-weighted threshold amount of $76,389.
Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount in
all scenarios, the applicant asserted that the EchoGo Heart Failure 1.0
meets the cost criterion.
BILLING CODE 4120-01-P
[[Page 26937]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.229
We agree with the applicant that EchoGo Heart Failure 1.0 meets the
cost criterion and are therefore proposing to approve EchoGo Heart
Failure 1.0 for new technology add-on payments for FY 2024.
[[Page 26938]]
Based on preliminary information from the applicant at the time of
this proposed rule, the applicant's anticipated cost per patient for
EchoGo Heart Failure 1.0 is $1,575. According to the applicant, the
EchoGo Heart Failure 1.0 is charged on a per patient basis with no
monthly subscription to the hospital. We note that the cost information
for this technology may be updated in the final rule based on revised
or additional information CMS receives prior to the final rule. Under
Sec. 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 are proposing that the maximum new technology add-on payment
for a case involving the use of EchoGo Heart Failure 1.0 would be
$1,023.75 for FY 2024 (that is, 65 percent of the average cost of the
technology).
We invite public comments on whether EchoGo Heart Failure 1.0 meets
the cost criterion and our proposal to approve new technology add-on
payments for EchoGo Heart Failure 1.0 for FY 2024 for the indication as
an automated machine learning-based decision support system, indicated
as a diagnostic aid for patients undergoing routine functional
cardiovascular assessment using echocardiography that corresponds to
the Breakthrough Device designation.
(8) LimFlow System
LimFlow submitted an application for new technology add-on payments
for the LimFlow System for FY 2024. According to the applicant, the
LimFlow System is a single-use, medical device system intended for
patients with no-option chronic limb-threatening ischemia (CLTI) of the
lower extremities and who are at risk of major amputation. The LimFlow
System consists of LimFlow's Straight and Conical Stent Grafts that are
used in conjunction with a LimFlow Arterial Catheter, a LimFlow Venous
Catheter, and a LimFlow Valvulotome. Per the applicant, the LimFlow
System is used for transcatheter arterialization of the deep veins
(TADV), a minimally invasive procedure that aims to restore blood flow
by diverting a stream of oxygenated blood around diseased arteries
through tibial veins and into the ischemic foot.
Please refer to the online application posting for the LimFlow
System, available at https://mearis.cms.gov/public/publications/ntap/NTP221012C5JB7, for additional detail describing the technology and the
condition treated by the technology.
According to the applicant, the LimFlow System received
Breakthrough Device designation from FDA on October 3, 2017 for use in
patients who have chronic limb-threatening ischemia (CLTI) with no
suitable endovascular or surgical revascularization options and are at
risk of major amputation. The applicant is seeking premarket
authorization from FDA for the same indication. According to the
applicant, the device will be available on the market immediately upon
FDA approval.
The applicant provided a list of ICD-10-PCS codes that, effective
October 1, 2018, can be used to uniquely describe procedures involving
the use of the LimFlow System under the ICD-10-PCS coding system.
Please refer to the online application posting for the complete list of
ICD-10-PCS codes provided by the applicant. The applicant stated that
the following ICD-10-CM codes may be used to currently identify the
indication for LimFlow System under the ICD-10-CM coding system: I70.92
(Chronic total occlusion of artery of the extremities) and I70.231-
I70.239 (Atherosclerosis of native arteries of right leg with
ulceration), I70.241-I70.249 (Atherosclerosis of native arteries of
left leg with ulceration), or I70.261-I70.263 (Atherosclerosis of
native arteries of legs with gangrene).
With respect to the cost criterion, the applicant provided two
analyses to demonstrate that it meets the cost criterion. Each analysis
used the same ICD-10-PCS codes to identify potential cases representing
patients who may be eligible for the LimFlow System, but utilized
different years of MedPAR data. According to the applicant, it
conducted a second analysis using the FY 2020 MedPAR data because of
the small number of claims identified in the FY 2021 data.
For the first analysis, the applicant searched the FY 2021 MedPAR
file for claims reporting at least one of the ICD-10-PCS codes listed
in the following table to identify cases that may be eligible for the
LimFlow System. The applicant used the inclusion/exclusion criteria
described in the following table. The applicant noted that it imputed
11 cases for all MS-DRGs where the case count was fewer than 11. As a
result, all MS-DRGs were imputed to 11 cases except for one MS-DRG
which had 12 cases. Under this analysis, the applicant identified 111
claims mapping to 10 MS-DRGs and calculated a final inflated average
case-weighted standardized charge per case of $265,409, which exceeded
the average case-weighted threshold amount of $110,688.
For the second analysis, the applicant searched the FY 2020 MedPAR
file for claims reporting at least one of the ICD-10-PCS codes listed
in the following table to identify cases that may be eligible for the
LimFlow System. The applicant used the inclusion/exclusion criteria
described in the following table. The applicant noted that it imputed
11 cases for all MS-DRGs where the case count was fewer than 11. As a
result, all MS-DRGs were imputed to 11 cases. Under this analysis, the
applicant identified 99 claims mapping to the nine MS-DRGs listed in
the following table and calculated a final inflated average case-
weighted standardized charge per case of $262,842, which exceeded the
average case-weighted threshold amount of $118,692.
Because the final inflated average case-weighted standardized
charge per case exceeded the average case weighted threshold amount in
both cohorts, the applicant asserted that the LimFlow System meets the
cost criterion.
[[Page 26939]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.230
We agree with the applicant that the LimFlow System meets the cost
criterion and are therefore proposing to approve the LimFlow System for
new technology add-on payments for FY 2024, subject to the technology
receiving FDA marketing authorization as a Breakthrough Device for the
indication corresponding to the Breakthrough Device designation by July
1, 2023.
Based on preliminary information from the applicant at the time of
this proposed rule, the applicant anticipated the total cost of the
LimFlow System to be $25,000 per patient. The applicant stated that all
components of the LimFlow System are single-use and the entire system
is an operating cost. According to the applicant, the LimFlow System is
sold as a system, as such, the components of the LimFlow System are not
priced or sold to hospitals independently. We note that the cost
information for this technology may be updated in the final rule based
on revised or additional information CMS receives prior to the final
rule. Under Sec. 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 are proposing that the maximum new technology add-on
payment for a case involving the use of the LimFlow System would be
$16,250 for FY 2024 (that is, 65 percent of the average cost of the
technology).
We invite public comments on whether the LimFlow System meets the
[[Page 26940]]
cost criterion and our proposal to approve new technology add-on
payments for the LimFlow System for FY 2024 subject to the technology
receiving FDA marketing authorization as a Breakthrough Device for the
indication corresponding to the Breakthrough Device designation by July
1, 2023.
(9) Nelli[reg] Seizure Monitoring System
Neuro Event Labs, Inc. submitted an application for new technology
add-on payments for the Nelli[reg] Seizure Monitoring System for FY
2024. Per the applicant, the Nelli[reg] Seizure Monitoring System is a
prescription-only device that is designed to be used as an adjunct to
seizure monitoring in a hospital inpatient or home setting for adults
and children 6 years of age and older. The applicant stated that data
is collected while the patient is `observed' using the system hardware
(Personal Recording Unit [PRU]), and the software provides objective
summaries of semiological components of identified events (including
velocity and acceleration of movements, seizure frequency, seizure
duration, heart rate, and respiratory rate) to enable the detection and
classification of epileptic events using pretrained artificial
intelligence (AI). We note that Neuro Event Labs, Inc. submitted an
application for new technology add-on payments for the Nelli[reg]
Seizure Monitoring System for FY 2023, as summarized in the FY 2023
IPPS/LTCH PPS proposed rule (87 FR 28341 through 28342), but the
technology did not meet the deadline of July 1, 2022, for FDA approval
or clearance of the technology and, therefore, was not eligible for
consideration for new technology add-on payments for FY 2023 (87 FR
48960).
Please refer to the online application posting for the Nelli[reg]
Seizure Monitoring System, available at https://mearis.cms.gov/public/publications/ntap/NTP2210147LTUM, for additional detail describing the
technology.
According to the applicant, the Nelli[reg] Seizure Monitoring
System received Breakthrough Device designation from FDA on October 9,
2020 for the automated analysis of audio and video data to identify
seizure events with a positive motor component in children and adults.
The applicant stated that it is seeking 510(k) clearance from FDA with
a proposed indication for use as an adjunct to seizure monitoring of
adults in healthcare facilities during periods of rest. The device
utilizes automated analysis of audio and video (media) data collected
via the Personal Recording Unit (PRU) hardware accessory to identify
epileptic and non-epileptic seizure events with a positive motor
component. Since the indication for which the applicant anticipates
receiving 510(k) clearance is included within the scope of the
Breakthrough Device designation, it appears that the proposed 510(k)
indication is appropriate for consideration for new technology add-on
payment under the alternative pathway criteria.
The applicant stated that effective October 1, 2022, the following
ICD-10-PCS code may be used to uniquely describe procedures involving
the use of the Nelli[reg] Seizure Monitoring System: XXE0X48
(Measurement of brain electrical activity, computer-aided semiologic
analysis, new technology group 8). The applicant provided a list of
diagnosis codes that may be used to currently identify the indication
for the Nelli[reg] Seizure Monitoring System under the ICD-10-CM coding
system, as set forth in the Nelli[reg] Seizure Monitoring System Cost
Analysis table that follows.
With respect to the cost criterion, the applicant provided two
analyses to demonstrate that it meets the cost criterion, with the
primary analysis excluding claims from hospitals with 11 or fewer
cases, and the second analysis based on all identified claims within
the same MS-DRGs identified in the primary analysis, as described in
further detail in the following table.
The applicant stated that since the inpatient patient population
that the Nelli[reg] Seizure Monitoring System would be used for would
also undergo standard video EEG monitoring, the applicant searched the
FY 2021 MedPAR file for potential cases representing patients who may
be eligible for the Nelli[reg] Seizure Monitoring System using ICD-10-
PCS code 4A10X4Z (Monitoring of central nervous electrical activity,
external approach) in combination with a list of seizure-related ICD-
10-CM codes, as set forth in the table that follows. The applicant
stated this approach to identifying cases is similar to the methodology
used in a study that assessed the ability of using code-based queries
to identify inpatient epilepsy monitoring unit (EMU) admissions from
billing records in a large academic medical center over a four-year
period, 2016-2019.\154\
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\154\ Kamitaki BK, Rishty S, Mani R, et al. Using ICD-10 codes
to identify elective epilepsy monitoring unit admissions from
administrative billing data: A validation study. Epilepsy Behav.
2020;111:107194. doi:10.1016/j.yebeh.2020.107194.
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The applicant used the inclusion/exclusion criteria and followed
the order of operations described in the following table. Under the
first analysis, the applicant identified 7,758 claims mapping to the 15
MS-DRGs listed in the following table and calculated a final inflated
average case-weighted standardized charge per case of $76,098, which
exceeded the average case-weighted threshold amount of $54,698. Under
the second analysis, the applicant identified 15,612 claims mapping to
the same 15 MS-DRGs and calculated a final inflated average case-
weighted standardized charge per case of $104,912, which exceeded the
average case-weighted threshold amount of $64,913. Because the final
inflated average case-weighted standardized charge per case exceeded
the average case-weighted threshold amount for both scenarios, the
applicant asserted that the Nelli[reg] Seizure Monitoring System meets
the cost criterion.
[[Page 26941]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.231
BILLING CODE 4120-01-C
We agree with the applicant that the Nelli[reg] Seizure Monitoring
System meets the cost criterion and are therefore proposing to approve
the Nelli[reg] Seizure Monitoring System for new technology add-on
payments for FY 2024, subject to the technology receiving FDA marketing
authorization as a Breakthrough Device for the indication corresponding
to the Breakthrough Device designation by July 1, 2023.
Based on preliminary information from the applicant at the time of
this proposed rule, the applicant anticipated the total cost of the
Nelli[reg] Seizure Monitoring System to the hospital to be $1,000 per
patient for the cost of the analysis (real time AI analysis during
hospital visit) and seminological report produced following patient
assessment. We note that the cost information for this technology may
be updated in the final rule based on revised or additional information
CMS receives prior to the final rule. The applicant based the cost per
case of its technology on two pricing
[[Page 26942]]
models that it currently uses in Europe. The applicant stated the first
pricing model consists of a 300 [euro] (approximately $330 USD) per day
charge for the technology. The applicant stated that this results in a
typical cost to the hospital of around $1,000 USD (excluding capital
costs) for an average patient stay of 3 days in an EMU. The applicant
stated that the second pricing model is a single 1,000 [euro] per-
patient fee for measurement of readings and producing the report,
regardless of the number of days the system is used. Therefore, based
on the information provided by the applicant, it appears that the
average cost per case for the use of the Nelli[reg] Seizure Monitoring
System is $1,000 USD. Under Sec. 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 are proposing that the maximum new
technology add-on payment for a case involving the use of the
Nelli[reg] Seizure Monitoring System would be $650 for FY 2024 (that
is, 65 percent of the average cost of the technology).
We invite public comments on whether the Nelli[reg] Seizure
Monitoring System meets the cost criterion and our proposal to approve
new technology add-on payments for the Nelli[reg] Seizure Monitoring
System for FY 2024 subject to the technology receiving FDA marketing
authorization as a Breakthrough Device for the indication corresponding
to the Breakthrough Device designation by July 1, 2023.
(10) NUsurface[reg] Meniscus Implant
Active Implants, LLC. submitted an application for new technology
add-on payments for the NUsurface[reg] Meniscus Implant for FY 2024.
According to the applicant, the NUsurface[reg] Meniscus Implant is a
flexible, discoid anatomic-shaped medial meniscus replacement implant
intended for patients with persistent medial knee compartment pain
following medial meniscus surgery. Per the applicant, the implant
design mimics that of the native meniscus, replacing the biomechanical
characteristics and distributing load (that is, weight) across the
medial compartment to protect the articular cartilage of the knee,
alleviating knee pain and restoring normal knee kinematics.
Please refer to the online application posting for the
NUsurface[reg] Meniscus Implant, available at https://mearis.cms.gov/public/publications/ntap/NTP221014466YN, for additional detail
describing the NUsurface[reg] Meniscus Implant and knee meniscus
disorders.
According to the applicant, the NUsurface[reg] Meniscus Implant
received Breakthrough Device designation from FDA on September 13,
2019, for middle-aged patients for whom nonsurgical care and partial
medial meniscectomy surgery failed to relieve knee pain, especially in
patients with more than one meniscectomy. A patient indicated for use
of the device has a debilitated knee pain condition that impacts day-to
day functioning and quality of life. The applicant stated that it is
seeking De Novo classification from FDA for the same indication.
The applicant stated that, effective October 1, 2022, the following
ICD-10-PCS codes can be used to uniquely describe procedures involving
the use of the NUsurface[reg] Meniscus Implant for the indication that
is the subject of this application: XRRG0M8 (Replacement of right knee
joint with synthetic substitute, medial meniscus, open approach, new
technology group 8) and XRRH0M8 (Replacement of left knee joint with
synthetic substitute, medial meniscus, open approach, new technology
group 8).
With respect to the cost criterion, the applicant did not provide a
complete cost analysis. According to the applicant, it determined the
cases eligible mapped to MS-DRG 489 (Knee Procedures without Principal
Diagnosis of Infection without CC/MCC). However, to determine the
average charge per case for the technology, instead of using charges
per case from a claims database such as the MedPAR file for cases
assigned to MS-DRG 489, the applicant used the costs of the technology
converted to charges, and then doubled rather than standardized the
charges. The applicant then inflated the charges based on the inflation
factor used to calculate outlier threshold charges in the FY 2023 IPPS/
LTCH PPS final rule. The applicant then added more charges for the
technology to the inflated charges. In essence, the applicant presented
the charges per case based on the cost of the technology as converted
to charges, and then almost tripled these charges. We further note that
the charges for the technology as presented by the applicant are lower
than the threshold for MS-DRG 489. Because the applicant did not
present an analysis based on the average charge per case, we are unable
to assess whether the average charge per case exceeds the threshold for
MS-DRG 489. In addition, it seems cases eligible for the use of the
technology (medial meniscus replacement) may map to additional MS-DRGs
for other knee procedures, such that those cases should also be
considered in the cost analysis. CMS requested a revised cost analysis
utilizing data to identify potential cases eligible for the technology
and to demonstrate that it meets the cost criterion. However, we did
not receive a revised analysis in time for the development of this
proposed rule. Therefore, because the applicant has not provided
sufficient information to demonstrate that the NUsurface[reg] Meniscus
Implant meets the cost criterion, we are proposing to disapprove new
technology add-on payments for the NUsurface[reg] Meniscus Implant for
FY 2024. However, in the event we receive updated information to
establish that the NUsurface[reg] Meniscus Implant meets the cost
criterion, we are providing the following information regarding the new
technology add-on payment amount.
Based on preliminary information from the applicant at the time of
this proposed rule, the applicant anticipated the total device costs of
the NUsurface[reg] Meniscus Implant to the hospital to be $9,795 per
patient, which is the cost of the NUsurface[reg] definitive implant
($7,295), and the NUsurface[reg] trial implants ($2,500) which are
disposable and used to determine the definitive implant size. We note
that the applicant also included $2,026 in related costs for O.R. time
and procedure-related costs. As we have discussed in prior rulemaking,
when determining a new technology add-on payment, we provide payment
based on the cost of the actual technology (such as the drug or device
itself) and not for additional costs related to the use of the device
(86 FR 45146). Therefore, we are not including these costs in the
relevant costs for purposes of determining the new technology add-on
payment amount. We note that the cost information for this technology
may be updated in the final rule based on revised or additional
information CMS receives prior to the final rule. Under Sec.
412.88(a)(2), we would 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. In
the event we receive supplemental information to establish that the
technology meets the cost criterion, and we were to approve new
technology add-on payments for the NUsurface[reg] Meniscus Implant in
the final rule, the maximum new technology add-on payment for a case
involving the use of the NUsurface[reg] Meniscus Implant would be
$6,366.75 ($9,795 x 0.65) for FY 2024 (that is, 65
[[Page 26943]]
percent of the average cost of the NUsurface[reg] Meniscus Implant).
We invite public comments on whether the NUsurface[reg] Meniscus
Implant meets the cost criterion and our proposal to disapprove new
technology add-on payments for the NUsurface[reg] Meniscus Implant for
FY 2024. In the event we receive updated information to establish that
the NUsurface[reg] Meniscus Implant meets the cost criterion, any
approval for new technology add on payments would be subject to the
technology receiving FDA marketing authorization as a Breakthrough
Device for the indication corresponding to the Breakthrough Device
designation by July 1, 2023.
(11) Phagenyx[reg] System
Phagenesis Ltd. submitted an application for new technology add-on
payments for the Phagenyx[reg] System for FY 2024. The Phagenyx[reg]
System treats neurogenic dysphagia using electrical pulses to stimulate
sensory nerves in the oropharynx. We note that Phagenesis Ltd.
submitted an application for new technology add-on payments for the
Phagenyx[reg] System for FY 2022 and 2023, as summarized in the FY 2022
and 2023 IPPS/LTCH PPS proposed rules (86 FR 25382 through 25384, and
87 FR 28342 through 28344), but the technology did not meet the
deadline of July 1, 2021/2022 for FDA approval or clearance of the
technology and, therefore, was not eligible for consideration for new
technology add-on payments for the FY 2022 or 2023 IPPS/LTCH PPS final
rules (86 FR 45126 through 45127 and 87 FR 48780).
Please refer to the online application posting for the
Phagenyx[reg] System, available at https://mearis.cms.gov/public/publications/ntap/NTP221013D2MDC, for additional detail describing the
technology and the disorder treated by the technology.
According to the applicant, the Phagenyx[reg] System received
Breakthrough Device designation from FDA on January 29, 2021, for the
treatment of non-progressive neurogenic dysphagia in adult patients.
Non-progressive neurogenic dysphagia is defined as all neurogenic
dysphagia excluding that arising solely as a result of a progressive
neurodegenerative disease or condition. The Phagenyx[reg] System was
granted De Novo Classification from FDA on September 16, 2022 as a
neurostimulation device delivering electrical stimulation to the
oropharynx, to be used in addition to standard dysphagia care, as an
aid to improve swallowing in patients with severe dysphagia post
stroke. Since the indication for which the applicant received 510(k)
clearance is included within the scope of the Breakthrough Device
designation, and FDA considers this marketing authorization to be the
Breakthrough Device,\155\ it appears that the 510(k) indication is
appropriate for consideration for new technology add-on payment under
the alternative pathway criteria.
---------------------------------------------------------------------------
\155\ List of Breakthrough Devices with Marketing Authorization:
https://www.fda.gov/medical-devices/how-study-and-market-your-device/breakthrough-devices-program.
---------------------------------------------------------------------------
According to the applicant, Phagenesis Ltd is based in Manchester,
United Kingdom and currently setting up business operations
infrastructure to commercially market and sell Phagenyx. This includes
but is not limited to establishing an importing agent, third party
warehousing and logistics, tax IDs in all states, a corporate office,
and hiring staff. The applicant stated that for these reasons, April 1,
2023 is the expected date when the Phagenyx[reg] System will be
commercially available.
The applicant stated that, effective October 1, 2021, the ICD-10-
PCS code XWHD7Q7 (Insertion of neurostimulator lead into mouth and
pharynx, via natural or artificial opening, new technology group 7) may
be used to uniquely describe procedures involving the use of the
Phagenyx[reg] System. The applicant provided a list of diagnosis codes
that may be used to currently identify the indication for the
Phagenyx[reg] System under the ICD-10-CM coding system. Please refer to
the online application posting for the complete list of ICD-10-CM codes
provided by the applicant.
With respect to the cost criterion, the applicant searched the FY
2021 MedPAR file for potential cases representing patients who may be
eligible for the Phagenyx[reg] System to demonstrate that it meets the
cost criterion. The applicant searched for cases reporting a
combination of the ICD-10-CM codes that may be used to currently
identify the indication for the Phagenyx[reg] System under the ICD-10-
CM coding systems. Please see the following table, for the complete
list of ICD-10-CM codes provided by the applicant. Using the inclusion/
exclusion criteria described in the following table, the applicant
identified 79,056 claims mapping to 551 MS-DRGs (see Table 10.16.A.--
Phagenyx[reg] System Codes--FY 2024 associated with this proposed rule
for a list of MS-DRGs that the applicant indicated were included in its
cost analysis). The applicant followed the order of operations
described in the following table and calculated a final inflated
average case-weighted standardized charge per case of $130,440, which
exceeded the average case-weighted threshold amount of $82,183. Because
the final inflated average case-weighted standardized charge per case
exceeded the average case-weighted threshold amount, the applicant
asserted that the Phagenyx[reg] System meets the cost criterion.
BILLING CODE 4120-01-P
[[Page 26944]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.232
We agree with the applicant that the Phagenyx[reg] System meets the
cost criterion and are therefore proposing to approve the Phagenyx[reg]
System for new technology add-on payments for FY 2024.
Based on preliminary information from the applicant at the time of
this proposed rule, the applicant anticipated the cost to the hospital
for the Phagenyx[reg] System to be $5,000, which is the price of the
single use, per patient catheter. We note that the cost information for
this technology may be updated in the final rule based on revised or
additional information CMS receives prior to the final rule. Under
Sec. 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 are proposing that the maximum new technology add-on payment
for a case involving the use of the Phagenyx[reg] System would be
$3,250 for FY 2024 (that is, 65 percent of the average cost of the
technology).
We invite public comments on whether the Phagenyx[reg] System meets
the cost criterion and our proposal to approve new technology add-on
payments for the Phagenyx[reg] System for FY 2024 as a neurostimulation
device delivering electrical stimulation to the oropharynx, to be used
in addition to standard dysphagia care, as an aid to improve swallowing
in patients with severe dysphagia post stroke, which corresponds to the
Breakthrough Device designation.
(12) SAINT Neuromodulation System
Magnus Medical, Inc. submitted an application for new technology
add-on payments for the SAINT Neuromodulation System for FY 2024. The
SAINT Neuromodulation System is a non-invasive repetitive transcranial
magnetic stimulation (rTMS) system that identifies an individualized
target and delivers navigationally directed repetitive magnetic pulses
to that individualized target located within the left dorsolateral
prefrontal cortex (L-DLPFC) to treat Major Depressive Disorder (MDD) in
adult patients who have failed to achieve satisfactory improvement from
prior antidepressant medication in the current episode. The SAINT
Neuromodulation System consists of hardware devices (for example,
stimulator with treatment coil
[[Page 26945]]
and neuro-navigation) designed to deliver SAINT Therapy to a targeted
area within the L-DLPFC, as well as cloud software that identifies the
personalized target. We note that Magnus Medical, Inc. submitted an
application for new technology add-on payments for the SAINT
Neuromodulation System for FY 2023 under the name Magnus
Neuromodulation System with SAINT Technology, as summarized in the FY
2023 IPPS/LTCH PPS proposed rule (87 FR 28339 through 28341), that it
withdrew prior to the issuance of the FY 2023 IPPS/LTCH PPS final rule
(87 FR 48960).
Please refer to the online application posting for the SAINT
Neuromodulation System, available at https://mearis.cms.gov/public/publications/ntap/NTP2210157HBCW, for additional detail describing the
technology and the disorder treated by the technology.
According to the applicant, the SAINT Neuromodulation System
received Breakthrough Device designation from FDA on July 2, 2021 for
the treatment of MDD in adult patients who have failed to receive
satisfactory improvement from prior antidepressant medication in the
current episode. According to the applicant, the Magnus Neuromodulation
System (SAINT Neuromodulation System) received 510(k) clearance from
FDA on September 1, 2022 for the same indication. According to the
applicant, the technology is not anticipated to become available for
sale until March 29, 2024 as several components of the SAINT
Neuromodulation System are currently being integrated into a single
unit to simplify and improve ease of use, and the applicant is bringing
up scalable manufacturing of production systems to optimize commercial
adoption of the technology. We note that the applicant has submitted
the application for new technology add-on payments for FY 2024 with a
Breakthrough Device designation that corresponds to the SAINT
Neuromodulation System, as it was assessed by FDA. Changes to the
system to integrate components may require a reassessment by FDA to
determine if the integrated, single unit system still meets the current
Breakthrough Device designation, or if a new application for
Breakthrough Device designation and additional 510(k) clearance is
required. We note that a device must be designated under FDA's
Breakthrough Devices Program to be eligible under the alternative
pathway. We would be interested in additional information regarding the
Breakthrough Device status of the integrated, single unit system as it
becomes available.
The applicant stated that ICD-10-PCS code X0Z0X18 (Computer-
assisted transcranial magnetic stimulation of prefrontal cortex, new
technology group 8) may be used to uniquely describe procedures
involving the use of the SAINT Neuromodulation System, effective
October 1, 2022. The applicant stated that ICD-10-CM codes F32.2 (Major
depressive disorder, single episode, severe without psychotic features)
and F33.2 (Major depressive disorder, recurrent severe without
psychotic features) may be used to currently identify the indication
for the SAINT Neuromodulation System under the ICD-10-CM coding system.
With respect to the cost criterion, the applicant provided the
following analysis to demonstrate that it meets the cost criterion. To
identify potential cases representing patients who may be eligible for
the SAINT Neuromodulation System, the applicant searched the FY 2021
MedPAR file for cases reporting one of the following ICD-10-CM codes:
F32.2 (Major depressive disorder, single episode, severe without
psychotic features) and F33.2 (Major depressive disorder, recurrent
severe without psychotic features). Only MS-DRG 885 (Psychoses) had
significant volume; all other MS-DRGs accounted for 1 percent or less
of cases by volume. Using the inclusion/exclusion criteria described in
the following table, the applicant identified 19,181 claims mapping to
MS-DRG 885 (Psychoses). The applicant followed the order of operations
described in the following table and calculated a final inflated
average case-weighted standardized charge per case of $94,697, which
exceeded the average case-weighted threshold amount of $39,071. Because
the final inflated average case-weighted standardized charge per case
exceeded the average case-weighted threshold amount, the applicant
asserted that the SAINT Neuromodulation System meets the cost
criterion.
[[Page 26946]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.233
We agree with the applicant that SAINT Neuromodulation System meets
the cost criterion and are therefore proposing to approve SAINT
Neuromodulation System for new technology add-on payments for FY 2024
for the treatment of MDD in adult patients who have failed to receive
satisfactory improvement from prior antidepressant medication in the
current episode.
Based on preliminary information from the applicant at the time of
this proposed rule, the applicant anticipated the total cost of the
SAINT Neuromodulation System to the hospital to be $19,500.00 per
patient, including personalized target identification using the SAINT
software, neuro-navigation, and treatment for 50 sessions over 5 days.
We note that the cost information for this technology may be updated in
the final rule based on revised or additional information CMS receives
prior to the final rule. Under Sec. 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 are proposing that the
maximum new technology add-on payment for a case involving the use of
the SAINT Neuromodulation System would be $12,675.00 for FY 2024 (that
is, 65 percent of the average cost of the technology).
We invite public comments on whether the SAINT Neuromodulation
System meets the cost criterion and our proposal to approve new
technology add-on payments for the SAINT Neuromodulation System for FY
2024 for the treatment of MDD in adult patients who have failed to
receive satisfactory improvement from prior antidepressant medication
in the current episode, which corresponds to the Breakthrough Device
designation.
(13) Selux NGP System
Selux Diagnostics, Inc. submitted an application for new technology
add-on payments for the Selux Next-Generation Phenotyping (NGP) System
for FY 2024. Per the applicant, the Selux NGP System is a phenotypic
antimicrobial susceptibility testing (AST) system, intended to assist
medical professionals in the identification of in vitro susceptibility
or resistance to specific antimicrobial agents. According to the
applicant, the technology is intended for use with bacteria separated
from monomicrobial positive blood cultures and sterile body fluid
culture samples from non-charcoal-containing types of BACTEC, BacT/
ALERT, VIRTUO and VersaTREK blood culture bottles. Per the applicant,
the Selux NGP System supports antimicrobial susceptibility testing on a
subset of aerobic and facultative anaerobic gram-negative and gram-
positive species. The Selux NGP System consists of an automated sample
preparation instrument, the Positive Blood Culture (PBC) Separator;
automated instruments for preparing and processing AST panels, the
Inoculator and Analyzer; a computer workstation running Selux Site
Software that integrates the instruments; and reagents and consumables
required to perform AST testing. The Selux Site Software includes
algorithmic models based on machine learning that enables the system to
determine the susceptibilities of an organism to the variety of
antimicrobials under test.
Please refer to the online application posting for the Selux NGP
System, available at https://mearis.cms.gov/public/publications/ntap/NTP221017CVJ8C, for additional detail describing the technology and how
it is used.
According to the applicant, the Selux NGP System received
Breakthrough Device designation from FDA on September 21, 2021, with
the indication that the Selux Positive Blood Culture Separator and
Selux System is intended for use with bacteria separated from
monomicrobial positive blood cultures and sterile body fluid culture
samples from non-charcoal-containing types of BACTEC, BacT/ALERT,
VIRTUO and VersaTREK blood culture bottles. Per the applicant, the
Selux NGP System is seeking FDA premarket approval from FDA for the
same indication. The applicant noted that it is concurrently seeking
FDA authorization for in vitro diagnostic (IVD) use in the clinical
microbiology laboratory for automated quantitative AST by minimal
inhibitory concentration (MIC) of isolated colonies
[[Page 26947]]
for aerobic and facultative anaerobic gram-negative Enterobacterales
and non-Enterobacterales. We note that, the applicant used ``the Selux
NGP System'' as the name of technology, which is different from
``Direct-from-Positive Blood Culture Rapid AST System'' as in the FDA
Breakthrough Device designation letter. We would appreciate additional
clarification on whether the Selux NGP System is the same as ``Direct-
from-Positive Blood Culture Rapid AST System''. As previously stated,
under the eligibility criteria for approval under the alternative
pathway for certain transformative devices, only the use of the
technology for the indication that corresponds to the technology's
Breakthrough Device designation would be eligible for the new
technology add-on payment for FY 2024.
According to the applicant, there are currently no ICD-10-PCS
procedure codes to distinctly identify the Selux NGP System. The
applicant submitted a request for approval for a unique ICD-10-PCS
procedure code for the Selux NGP System beginning in FY 2024. The
applicant provided a list of ICD-10-CM codes that may be used to
currently identify the indication for the Selux NGP System under the
ICD-10-CM coding system. Please refer to the online application posting
for the complete list of ICD-10-CM codes provided by the applicant.
With respect to the cost criterion, the applicant provided multiple
analyses to demonstrate that the technology meets the cost criterion.
The applicant searched the FY 2021 MedPAR file to identify eligible
cases, with the first analysis using all cases assigned to a list of
MS-DRGs to which the technology would most commonly map, the second
analysis identifying potential cases using ICD-10-CM diagnosis codes
representing patients who may be eligible for the Selux NGP System, and
the third analysis combining the results of the first 2 analyses. Each
analysis followed the order of operations described in the following
table.
For the first analysis, the applicant limited the analysis to all
cases in a subset of MS-DRGs to which the vast majority of cases are
projected to map. Please see Table 10.20.A.--Selux NGP System Codes--FY
2024 associated with this proposed rule for a complete list of MS-DRGs
provided by the applicant. The applicant used the inclusion/exclusion
criteria described in the following table. Under this analysis, the
applicant identified 1,543,757 claims mapping to 34 MS-DRGs and
calculated a final inflated average case-weighted standardized charge
per case of $86,399, which exceeded the average case-weighted threshold
amount of $69,947.
For the second analysis, the applicant searched for cases using a
list of bacteremia or sepsis ICD-10-CM diagnosis codes in any position
(primary or secondary) that may be eligible for the technology. Please
see Table 10.20.A.--Selux NGP System Codes--FY 2024 associated with
this proposed rule for a complete list of ICD-10-CM diagnosis codes
provided by the applicant. Under this analysis, the applicant
identified 446,137 claims mapping to 593 MS-DRGs, with the highest
percentage of cases (43 percent) mapping to MS-DRG 871, and calculated
a final inflated average case-weighted standardized charge per case of
$146,538, which exceeded the average case-weighted threshold amount of
$90,279.
For the third analysis, the applicant combined the results from the
first and second analyses. The applicant used the inclusion/exclusion
criteria described in the following table. Under this analysis, the
applicant identified 1,679,957 claims mapping to 595 MS-DRGs, with the
highest percentage of cases mapping to MS-DRG 871 (32 percent) and MS-
DRG 177 (25 percent), and calculated a final inflated average case-
weighted standardized charge per case of $95,625, which exceeded the
average case-weighted threshold amount of $72,865.
Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount in
all scenarios, the applicant asserted that the Selux NGP System meets
the cost criterion.
[[Page 26948]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.234
We agree with the applicant that the Selux NGP System meets the
cost criterion and are therefore proposing to approve the Selux NGP
System for new technology add-on payments for FY 2024, subject to the
technology receiving FDA marketing authorization as a Breakthrough
Device for the indication corresponding to the Breakthrough Device
designation by July 1, 2023.
Based on preliminary information from the applicant at the time of
this proposed rule, the applicant anticipated the total cost of the
Selux NGP System to the hospital to be $149.87 per patient per test,
including the capital component (Positive Blood Culture Separator,
Inoculator, and Analyzer ($14.83)) and the operating components (Selux
AST Gram Negative and Selux AST Gram Positive Kit ($80.00), Selux AST
Positive Blood Culture Kit ($50.00), Selux ASTAnalyzer Reagent Kit
($4.79), and Selux AST Waste Kit ($0.25)). Because section
1886(d)(5)(K)(i) of the Act requires that the Secretary establish a
mechanism to recognize the costs of new medical services or
technologies under the payment system established under that
subsection, which establishes the system for payment of the operating
costs of inpatient hospital services, we do not include capital costs
in the add-on payments for a new medical service or technology or make
new technology add-on payments under the IPPS for capital-related costs
(86 FR 45145). Based on the information from the applicant, it appears
that the costs of the Positive Blood Culture Separator, Inoculator, and
Analyzer are capital costs. Therefore, these components are not
eligible for new technology add-on payment because, as discussed in
prior rulemaking and noted previously, we only make new technology add-
on payments for operating costs (72 FR 47307 through 47308). Based on
the operating costs from the applicant at the time of this proposed
rule, the total operating cost of the Selux NGP System to the hospital
is $135.04 per patient per test.
The applicant stated that total cost per patient will vary
depending on the estimated number of tests that the hospital expects
that it will perform. To account for the variability of institution and
patient status and calculate the average usage of the Selux NGP System
during a patient stay, the applicant analyzed the Premier Healthcare
Database (Ph.D.-AC) Linked to Closed Claims (Ph.D.-CC), Microbiology
data (available for a subset from 2009 to current). The database
includes information on over 490,000 patient journeys. The applicant
applied the following criteria to optimize the data: removing negative
blood cultures; removing unclear results (incomplete information);
including only inpatient stays; excluding patients who have more than
one organism identified; excluding patients with organisms that not
non-fastidious; and filtering out results of anything besides
susceptible, intermediate and resistant (S, I, and R). Per the
applicant, the output of the calculation illustrated that on average,
each patient with a positive blood culture result would receive 1.2 AST
tests using the Selux NGP System per
[[Page 26949]]
stay. The average cost per patient would therefore be $162.05 (the cost
per test of $135.04 x 1.2 tests on average, per patient).
We note that the cost information for this technology may be
updated in the final rule based on revised or additional information
CMS receives prior to the final rule. Under Sec. 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 are proposing that the
maximum new technology add-on payment for a case involving the use of
the Selux NGP System would be $105.33 for FY 2024 (that is, 65 percent
of the average cost of the technology, $162.05).
We invite public comments on whether the Selux NGP System meets the
cost criterion and our proposal to approve new technology add-on
payments for the Selux NGP System for FY 2024 subject to the technology
receiving FDA marketing authorization as a Breakthrough Device for the
indication corresponding to the Breakthrough Device designation by July
1, 2023.
(14) DETOUR System
Endologix, Inc., submitted an application for new technology add-on
payments for the DETOUR System for fiscal year (FY) 2024. According to
the applicant, the DETOUR System is a fully percutaneous approach to
femoral-popliteal bypass. Per the applicant, under fluoroscopic
guidance, a proprietary TORUS Stent Graft System is deployed from the
popliteal artery into the femoral vein, and from the femoral vein into
the superficial femoral artery (SFA) in a continuous, overlapping
fashion through two independent anastomoses. The applicant stated that
the intended result is a large lumen endograft bypass, that delivers
unobstructed, pulsatile flow from the SFA ostium to the popliteal
artery.
Please refer to the online application posting for the DETOUR
System, available at https://mearis.cms.gov/public/publications/ntap/NTP2210149Y5M6, for additional detail describing the technology and the
disease treated by the technology.
According to the applicant, the DETOUR System received Breakthrough
Device designation from FDA on September 2, 2020 for percutaneous
revascularization of symptomatic femoropopliteal lesions 200mm to 460mm
with a chronic total occlusion 100mm to 425mm, and/or moderate-to-
severe calcification, and/or in-stent-restenosis in patients with
severe peripheral arterial disease. The applicant stated that it is
seeking premarket approval from FDA for the same indication. According
to the applicant, the device will be available on the market
immediately upon FDA approval.
According to the applicant, there are currently no ICD-10-PCS
procedure codes to distinctly identify the DETOUR System. The applicant
submitted a request for approval for a unique ICD-10-PCS procedure code
for the DETOUR System beginning in FY 2024. Per the applicant,
diagnosis codes 170.92 (Chronic total occlusion of artery of the
extremities), 170.2XX (Atherosclerosis of native arteries of the
extremities), and 173.9 (Peripheral vascular disease, unspecified) may
be used to currently identify the indication for the DETOUR System
under the ICD-10-CM system.
With respect to the cost criterion, the applicant provided two
analyses to demonstrate that it meets the cost criterion. For both
analyses, the applicant searched the FY 2021 MedPAR file for potential
cases representing patients who may be eligible for the DETOUR System
femoral-popliteal bypass procedures using either a synthetic substitute
or an autologous venous tissue graft.
Under the first analysis, the applicant searched the FY 2021 MedPAR
file for cases reporting one of the ICD-10-PCS codes listed in the
following table and included 100 percent of the cases identified. Using
the inclusion/exclusion criteria described in the following table, the
applicant identified 3,110 cases mapping to 63 MS-DRGs. Please see
Table 10.25.A.--The DETOUR System Codes--FY 2024 associated with this
proposed rule for the complete list of MS-DRGs that the applicant
indicated were included in its cost analysis. The applicant followed
the order of operations described in the following table and calculated
a final inflated average case-weighted standardized charge per case of
$146,323, which exceeded the average case-weighted threshold amount of
$106,123.
Under the second analysis, the applicant searched the FY 2021
MedPAR file for cases reporting one of the ICD-10-PCS codes listed in
the table that follows and included 67.3 percent of the cases
identified. Using the inclusion/exclusion criteria described in the
following table, the applicant limited the search to the top three MS-
DRGs as listed in the table and identified 2,094 cases. The applicant
followed the order of operations described in the following table and
calculated a final inflated average case-weighted standardized charge
per case of $111,332, which exceeded the average case-weighted
threshold amount of $96,526. Because the final inflated average case-
weighted standardized charge per case exceeded the average case-
weighted threshold amount in both analyses, the applicant asserted that
the DETOUR System meets the cost criterion.
[[Page 26950]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.235
We agree with the applicant that the DETOUR System meets the cost
criterion and propose to approve the DETOUR System for new technology
add-on payments for FY 2024, subject to the technology receiving FDA
marketing authorization as a Breakthrough Device for the indication
corresponding to the Breakthrough Device designation by July 1, 2023.
The applicant has not provided an estimate for the cost of the
DETOUR System at the time of this proposed rule. We expect the
applicant to submit cost information prior to the final rule, and we
will provide an update regarding the new technology add-on payment
amount for the technology, if approved, in the final rule. Any new
technology add-on payment for the DETOUR System would be subject to our
policy under Sec. 412.88(a)(2) where 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.
We invite public comments on whether the DETOUR System meets the
cost criterion and our proposal to approve new technology add-on
payments for the DETOUR System for FY 2024 subject to the technology
receiving FDA marketing authorization as a Breakthrough Device for the
indication corresponding to the Breakthrough Device designation by July
1, 2023.
(15) TOPSTM System
Premia Spine, Inc submitted an application for new technology add-
on payments for the TOPSTM System for FY 2024. According to
the applicant, the TOPSTM System is a motion preserving
device inserted and affixed during spinal surgery after open posterior
decompression to preserve normal spinal motion and provide
stabilization of the lumbar intervertebral segment. The applicant
stated that the TOPSTM System replaces anatomical
structures, such as the lamina and the facet joints, which are removed
during spinal decompression treatment to alleviate pain. We note that
Premia Spine, Inc submitted an application for new technology add-on
payments for the TOPSTM System for FY 2023, as summarized in
the FY 2023 IPPS/LTCH PPS proposed rule (87 FR 28346), that it withdrew
prior to the issuance of the FY 2023 IPPS/LTCH PPS final rule (87 FR
48960).
Please refer to the online application posting for the
TOPSTM System, available at https://mearis.cms.gov/public/publications/ntap/NTP2210146W0H2, for additional detail describing the
technology and the disease treated by the technology.
According to the applicant, the TOPSTM System received
Breakthrough Device designation from FDA on October 26, 2020 for
patients between 35 and 80 years of age suffering from neurogenic
claudication resulting from degenerative spondylolisthesis up to Grade
I with moderate to severe lumbar spinal stenosis and either the
thickening of the ligamentum flavum or scaring facet joint capsule at
one level from L2 to L5. The applicant stated that it is seeking
premarket approval from FDA for the following indication: for patients
between the ages 35 and 80 years suffering from degenerative
spondylolisthesis up to Grade I with moderate to severe lumbar spinal
stenosis and either the thickening of the ligamentum flavum or scarring
facet joint capsule at one level from L2 to L5. We note that the
premarket approval indication does not include limitation to neurogenic
claudication as noted in the Breakthrough Device designation. We note
that, as previously stated, under the eligibility criteria for approval
under the alternative pathway for certain transformative devices, only
the use of the technology for the indication that corresponds to the
technology's Breakthrough Device designation would be eligible for the
new technology add-on payment for FY 2024.
The applicant stated that effective October 1, 2021, the following
ICD-10-
[[Page 26951]]
PCS procedure codes may be used to uniquely describe procedures
involving the use of TOPSTM System: XRHB018 (Insertion of
Posterior Spinal Motion Preservation Device into Lumbar Vertebral
Joint, Open Approach, New Technology Group 8) and XRHD018 (Insertion of
Posterior Spinal Motion Preservation Device into Lumbosacral Joint,
Open Approach, New Technology Group 8). The applicant stated that ICD-
10-CM codes M43.16 (Spondylolisthesis, lumbar region), M48.061 (Spinal
stenosis, lumbar region, without neurogenic claudication) and M48.062
(Spinal stenosis, lumbar region, with neurogenic claudication) may be
used to currently identify the indication for the TOPSTM
System under the ICD-10-CM coding system. We note that ICD-10-CM code
M48.061 is not relevant for identification of the indication under
Breakthrough Device designation.
With respect to the cost criterion, the applicant provided the
following analysis to demonstrate that it meets the cost criterion. To
identify potential cases representing patients who may be eligible for
the TOPSTM System, the applicant searched the FY 2021 MedPAR
file for cases reporting one of the ICD-10-PCS codes listed in table
10.2.A.--TOPSTM System Codes--FY 2024 associated with this
proposed rule. Using the inclusion/exclusion criteria described in the
following table, the applicant identified 669 claims mapping to MS-DRG
518. The applicant followed the order of operations described in the
following table and calculated a final inflated average case-weighted
standardized charge per case of $175,574, which exceeded the average
case-weighted threshold amount of $123,029. Because the final inflated
average case-weighted standardized charge per case exceeded the average
case-weighted threshold amount, the applicant asserted that the
TOPSTM System meets the cost criterion.
[GRAPHIC] [TIFF OMITTED] TP01MY23.236
We agree with the applicant that the TOPSTM System meets
the cost criterion and are therefore proposing to approve the
TOPSTM System for new technology add-on payments for FY
2024, subject to the technology receiving FDA marketing authorization
as a Breakthrough Device for the indication corresponding to the
Breakthrough Device designation by July 1, 2023.
Based on preliminary information from the applicant at the time of
this proposed rule, the applicant anticipated the total cost of the
TOPSTM System to the hospital to be $17,500 for a single
level construct. Per the applicant, as the TOPSTM System is
anticipated to only be implanted at one level, the per-patient
anticipated cost to the hospital is $17,500. We note that the cost
information for this technology may be updated in the final rule based
on revised or additional information CMS receives prior to the final
rule. Under Sec. 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 are proposing that the maximum new technology add-on
payment for a case involving the use of the TOPSTM System
would be $11,375 for FY 2024 (that is, 65 percent of the average cost
of the technology).
We invite public comments on whether the TOPSTM System
meets the cost criterion and our proposal to approve new technology
add-on payments for the TOPSTM System for FY 2024 subject to
the technology receiving FDA marketing authorization as a Breakthrough
Device for the indication corresponding to the Breakthrough Device
designation by July 1, 2023.
[[Page 26952]]
(16) Total Ankle Talar Replacement
4WEB Medical, Inc. submitted an application for new technology add-
on payments for the Total Ankle Talar Replacement for FY 2024. Per the
applicant, the Total Ankle Talar Replacement is a patient specific,
metallic spacer that is a solid, polished replica of a patient's
physiologic talus and intended to articulate to the surrounding native
bone anatomy (that is, calcaneus and navicular). However, the dome is
mapped so that it matches that of a third-party ankle system. The
applicant stated that the device is intended to allow for restoration
of function due to losses attributed to talar dysfunction.
Please refer to the online application posting for the Total Ankle
Talar Replacement, available at https://mearis.cms.gov/public/publications/ntap/NTP221014C88U0, for additional details describing the
technology.
According to the applicant, the Total Ankle Talar Replacement has
not yet received Breakthrough Device designation from FDA, but the
applicant is seeking the designation for use with a premarket
authorized total ankle arthroplasty system as part of an ankle
arthroplasty system to manage talar dysfunction that may be associated
with the following indications: failed ankle arthroplasties, talar
trauma, tumors or lesions, ankle arthritis/degenerative joint disease,
ankle arthrodesis or malunion, talar osteomyelitis/infection or ankle/
foot deformities. The applicant stated that it is seeking 510(k)
clearance from FDA for the same indication and anticipates receiving
FDA marketing authorization before July 1, 2023.
According to the applicant, there are currently no ICD-10-PCS
procedure codes to distinctly identify the use of the Total Ankle Talar
Replacement. The applicant submitted an application for a unique ICD-
10-PCS code for FY 2024.
With respect to the cost criterion, to identify potential cases
representing patients who may be eligible for the Total Ankle Talar
Replacement, the applicant searched the FY 2021 MedPAR file for cases
reporting one of the ICD-10-PCS codes listed in the table in this
section. Using the inclusion/exclusion criteria described in the
following table, the applicant identified 187 claims mapping to 17 MS-
DRGs as listed in the table in this section. The applicant followed the
order of operations described in the following table and calculated a
final inflated average case-weighted standardized charge per case of
$199,539, which exceeded the average case-weighted threshold amount of
$98,577. Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount,
the applicant asserted that the Total Ankle Talar Replacement meets the
cost criterion.
[[Page 26953]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.237
We note the following concerns regarding the cost criterion. The
applicant stated that the technology is a replica of the patient's
physiologic talus and mapped to fit a third-party ankle system.
However, the applicant included tarsal joint replacement procedure
codes (for example, 0SRH0JZ, 0SRJ0JZ, 0SRH0KZ, 0SRJ0KZ) in addition to
talar replacement codes, when searching for eligible cases, and we
question whether these tarsal joint replacement procedure codes are
applicable since this joint is in the foot (and not the ankle). We
question whether only cases for talar replacement should be included.
Subject to the applicant adequately addressing these concerns, we
would agree that the technology meets the cost criterion and are
proposing to approve the Total Ankle Talar Replacement for new
technology add-on payments for FY 2024 subject to the technology
receiving Breakthrough Device designation and FDA marketing
authorization as a Breakthrough Device for the same indication by July
1, 2023.
Based on preliminary information from the applicant at the time of
this proposed rule, the applicant anticipated the total cost of the
Total Ankle Talar Replacement to the hospital to be $19,500 per
patient, which represents one implant. We note that the cost
information for this technology may be updated in the final rule based
on revised or additional information CMS receives prior to the final
rule. Under Sec. 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 are proposing that
[[Page 26954]]
the maximum new technology add-on payment for a case involving the use
of the Total Ankle Talar Replacement would be $12,675 for FY 2024 (that
is, 65 percent of the average cost of the technology).
We are inviting public comments on whether the Total Ankle Talar
Replacement meets the cost criterion and our proposal to approve new
technology add-on payments for the Total Ankle Talar Replacement for FY
2024, subject to the technology receiving Breakthrough Device
Designation and FDA marketing authorization as a Breakthrough Device
for the same indication by July 1, 2023.
(17) Transdermal GFR Measurement System Utilizing Lumitrace
MediBeacon, Inc. submitted an application for new technology add-on
payments for Transdermal Glomerular Filtration Rate (GFR) Measurement
System utilizing Lumitrace for FY 2024. According to the applicant, the
Transdermal GFR Measurement System utilizing Lumitrace is a three-
component system consisting of (1) an optical skin sensor, (2) a
monitor and (3) MB-102 (also known as relmapirazin/Lumitrace), which is
a proprietary fluorescent tracer agent that glows in the presence of
light and is removed from the blood exclusively by the GFR mechanism of
the kidney. The technology is intended to measure Glomerular Filtration
Rate (GFR) in patients with impaired or normal renal function during
clinical conditions where the real time measurement of GFR (versus
estimated measures) is clinically useful to patient management.
Please refer to the online application posting for Transdermal GFR
Measurement System utilizing Lumitrace, available at https://mearis.cms.gov/public/publications/ntap/NTP221013VQ6RT, for additional
detail describing the technology.
According to the applicant, the Transdermal GFR Measurement System
utilizing Lumitrace received Breakthrough Device designation from FDA
on October 16, 2018 for measuring GFR in patients with impaired or
normal renal function, and the applicant is seeking premarket approval
from FDA for the same indication. According to the applicant, the
Transdermal GFR Measurement System will be available on the market
immediately after FDA approval.
The applicant stated that, effective October 1, 2019, the following
ICD-10-PCS code may be used to uniquely identify procedures involving
the Transdermal GFR Measurement System utilizing Lumitrace: XT25XE5
(Monitoring of kidney using fluorescent pyrazine, external approach,
new technology group 5).
With respect to the cost criterion, the applicant searched the FY
2021 MedPAR file for potential cases representing patients who may be
eligible for Transdermal GFR Measurement System utilizing Lumitrace
using a combination of ICD-10-CM/PCS codes representing the clinical
scenarios in the inpatient hospital setting involving the potential for
or presence of acute or chronic kidney injury where measurement of the
GFR in patients with impaired or normal renal function may facilitate
clinical management, as listed in the following table. Using the
inclusion/exclusion criteria described in the following table, the
applicant identified 497,297 claims mapping to 687 MS-DRGs. Please see
Table 10.26.A.--Transdermal GFR Measurement System utilizing Lumitrace
Codes--FY 2024 associated with this proposed rule for a complete list
of codes provided by the applicant. The applicant followed the order of
operations described in the following table and calculated a final
inflated average case-weighted standardized charge per case of $230,414
which exceeded the average case-weighted threshold amount of $130,279.
Because the final inflated average case-weighted standardized charge
per case exceeded the average case-weighted threshold amount, the
applicant asserted that the Transdermal GFR Measurement System
utilizing Lumitrace meets the cost criterion.
[[Page 26955]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.238
We agree with the applicant that the Transdermal GFR Measurement
System utilizing Lumitrace meets the cost criterion and propose to
approve Transdermal GFR Measurement System utilizing Lumitrace for new
technology add-on payments for FY 2024, subject to the technology
receiving FDA marketing authorization as a Breakthrough Device for the
indication corresponding to the Breakthrough Device designation by July
1, 2023.
The applicant has not provided an estimate for the cost of
Transdermal GFR Measurement System utilizing Lumitrace at the time of
this proposed rule. The applicant stated that there would be three
components for the cost of the technology: the operating cost of the
optical skin sensor, the operating cost of the relmapirazin
(fluorescent tracer) that glows in the presence of light and is removed
from the blood exclusively by the GFR mechanism of the kidney, and the
capital cost of the monitor that converts the measured fluorescence
time dependent curve to a measured GFR (mGFR). Because section
1886(d)(5)(K)(i) of the Act requires that the Secretary establish a
mechanism to recognize the costs of new medical services or
technologies under the payment system established under that
subsection, which establishes the system for payment of the operating
costs of inpatient hospital services, we do not include capital costs
in the add-on payments for a new medical service or technology or make
new technology add-on payments under the IPPS for capital-related costs
(86 FR 45145). As noted, the applicant stated that the cost of the
monitor that converts the measured fluorescence time dependent curve to
a mGFR is a capital cost. We expect the applicant to submit cost
information prior to the final rule, and we will provide an update
regarding the new technology add-on payment amount for the technology,
if approved, in the final rule. Any new technology add-on payment for
Transdermal GFR Measurement System utilizing Lumitrace would be subject
to our policy under Sec. [thinsp]412.88(a)(2), where 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.
We invite public comments on whether the Transdermal GFR
Measurement System utilizing Lumitrace meets the cost criterion and our
proposal to approve new technology add-on payments for Transdermal GFR
Measurement System utilizing Lumitrace for FY 2024 subject to the
technology receiving FDA marketing authorization as a Breakthrough
Device for the indication corresponding to the Breakthrough Device
designation by July 1, 2023.
b. Alternative Pathways for Qualified Infectious Disease Products
(QIDPs)
(1) Taurolidine/Heparin
CorMedix Inc. submitted an application for new technology add-on
payments for taurolidine/heparin for FY 2024. Per the applicant,
taurolidine/heparin is a proprietary formulation of taurolidine, a
thiadiazinane antimicrobial, and heparin, an anti-coagulant, that is
under development for use as catheter lock solution, with the aim of
reducing the risk of catheter-related bloodstream infections (CRBSI)
from in-dwelling catheters in patients undergoing hemodialysis (HD)
through a central venous catheter (CVC). We note that CorMedix Inc.
submitted an application for new technology add-on payments for
taurolidine/heparin for FY 2023 under the name DefenCathTM
and received conditional approval for new
[[Page 26956]]
technology add-on payments for FY 2023, subject to
DefenCathTM receiving FDA marketing authorization before
July 1, 2023 (87 FR 48978 through 48982). If DefenCathTM
receives FDA marketing authorization before July 1, 2023, the new
technology add-on payment for cases involving the use of this
technology would be made effective for discharges beginning in the
first quarter after FDA marketing authorization is granted. If the FDA
marketing authorization is received on or after July 1, 2023, no new
technology add-on payments will be made for cases involving the use of
DefenCathTM for FY 2023. We note that the applicant stated
that it submitted this second new technology add-on payment application
for FY 2024 in the event it does not obtain FDA approval prior to July
1, 2023. We note that in the event DefenCathTM does receive
FDA marketing authorization before July 1, 2023, evaluation of this FY
2024 application would no longer be necessary, and we would propose to
instead continue the new technology add-on payment for
DefenCathTM for FY 2024.
Please refer to the online application posting for taurolidine/
heparin, available at https://mearis.cms.gov/public/publications/ntap/NTP221014UJ89G, for additional detail describing the technology and the
disease treated by the technology.
According to the applicant, taurolidine/heparin received QIDP
designation from FDA in 2015 for the prevention of CRBSI in patients
with end-stage renal disease (ESRD) receiving HD through a CVC, and has
been granted FDA Fast Track status. The applicant indicated that it is
pursuing an NDA under FDA's LPAD for the same indication. The applicant
noted that FDA issued a Complete Response Letter and the NDA is pending
resubmission.
The applicant stated that effective October 1, 2022, the following
ICD-10-PCS codes may be used to uniquely describe procedures involving
the use of taurolidine/heparin: XY0YX28 (Extracorporeal introduction of
taurolidine anti-infective and heparin anticoagulant, new technology
group 8).
With respect to the cost criterion, the applicant provided two
analyses to demonstrate that it meets the cost criterion. For each
analysis, the applicant searched the FY 2021 MedPAR file using a
different combination of codes to identify potential cases representing
patients who may be eligible for taurolidine/heparin.
Per the applicant, taurolidine/heparin will be used for patients
receiving HD through a CVC. The applicant stated that coding to
identify this population is difficult because the available CVC codes
only describe the insertion of a CVC. The applicant asserted that it is
not possible to identify in the MedPAR file those patients who had
previously received a CVC and are now hospitalized and receiving HD.
Therefore, the applicant developed two sets of selection criteria.
Analysis A searched for claims with presence of a diagnosis code for
ESRD, chronic kidney disease (CKD), AKI, or ATN in combination with
diagnosis and procedure codes for HD. Analysis B searched for claims
with presence of a diagnosis code for ESRD, CKD, AKI, or ATN with codes
for both HD (diagnosis and procedure codes) and CVC (procedure codes).
The applicant explained that Analysis A overstates the population of
patients eligible for taurolidine/heparin because it includes any
patient receiving HD, regardless of whether a central venous catheter
is used. The applicant further explained that Analysis B undercounts
the potential cases because CVC codes are not always available on
inpatient claims. Please see Table 10.10.A Taurolidine/Heparin Codes--
FY 2024 associated with this proposed rule for a complete list of ICD-
10-CM and ICD-10-PCS codes provided by the applicant.
Under Analysis A, using the inclusion/exclusion criteria described
in the following table, the applicant identified 412,436 claims mapping
to 494 MS-DRGs. Please see Table 10.10.A.--Taurolidine/Heparin Codes--
FY 2024 associated with this proposed rule for a complete list of MS-
DRGs provided by the applicant. The applicant followed the order of
operations described in the following table and calculated a final
inflated average case-weighted standardized charge per case of
$230,720, which exceeded the average case-weighted threshold amount of
$141,035.
Under Analysis B, using the inclusion/exclusion criteria described
in the following table, the applicant identified 66,861 claims mapping
to 410 MS-DRGs. Please see Table 10.10.A.--Taurolidine/Heparin Codes--
FY 2024 associated with this proposed rule for a complete list of MS-
DRGs provided by the applicant. The applicant followed the order of
operations described in the following table and calculated a final
inflated average case-weighted standardized charge per case of
$313,587, which exceeded the average case-weighted threshold amount of
$201,755.
Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount in
all scenarios, the applicant asserted that taurolidine/heparin meets
the cost criterion.
[[Page 26957]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.239
We agree with the applicant that taurolidine/heparin meets the cost
criterion based on the analysis presented. We also welcome additional
information on using additional codes and/or criteria to better target
cases of taurolidine/heparin for the cost criterion.
Therefore, if taurolidine/heparin does not receive FDA approval by
July 1, 2023 to receive new technology add-on payments beginning with
FY 2023, per Sec. 412.87(e)(3), we are proposing to conditionally
approve taurolidine/heparin for new technology add-on payments for FY
2024, subject to the technology receiving FDA marketing authorization
by July 1, 2024. If taurolidine/heparin receives FDA marketing
authorization before July 1, 2024, the new technology add-on payment
for cases involving the use of this technology would be made effective
for discharges beginning in the first quarter after FDA marketing
authorization is granted. If FDA marketing authorization is received on
or after July 1, 2024, no new technology add-on payments will be made
for cases involving the use of taurolidine/heparin for FY 2024. If
taurolidine/heparin receives FDA marketing authorization prior to July
1, 2023, we are proposing to continue making new technology add-on
payments for taurolidine/heparin in FY 2024.
Based on preliminary information from the applicant at the time of
this proposed rule, according to the applicant, the Wholesale
Acquisition Cost of taurolidine/heparin is $1,170 per three milliliter
vial taurolidine/heparin. The applicant notes that two vials of
taurolidine/heparin (one vial for each lumen) will be used for each HD
session and that while HD typically occurs three times/week for
patients in the outpatient setting, inpatients may receive HD daily or
every other day, depending on the severity of their disease. According
to the applicant, on average, patients will receive 9.75 HD treatments
per inpatient stay based upon the average length of stay of 13.3 days,
which would require 19.5 vials of taurolidine/heparin. Thus, the
applicant anticipates the cost of taurolidine/heparin to the hospital
per patient to be $22,815. We would be interested in additional
information as to how the length of stay for patients on HD and the
estimation of daily or every other day dialysis were determined for
purposes of estimating the anticipated average cost. We also note that
the cost information for this technology may be updated in the final
rule based on revised or additional information CMS receives prior to
the final rule. Under Sec. 412.88(a)(2), 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 costs in excess of the MS-DRG
payment for the case. As a result, we are proposing that the maximum
new technology add-on payment for a case involving the use of
taurolidine/heparin would be $17,111.25 for FY 2024 (that is, 75
percent of the average cost of the technology).
We invite public comments on whether taurolidine/heparin meets the
cost criterion and our proposal to approve new technology add-on
payments for taurolidine/heparin for FY 2024 for the prevention of
CRBSI in patients with ESRD receiving HD through a CVC.
[[Page 26958]]
(2) REZZAYOTM (Rezafungin for Injection)
Cidara Therapeutics submitted an application for new technology
add-on payments for REZZAYOTM (rezafungin for injection) for
FY 2024. According to the applicant, REZZAYOTM is an
echinocandin antifungal drug for the treatment of candidemia and
invasive candidiasis in patients 18 years of age or older.
Please refer to the online application posting for
REZZAYOTM, available at https://mearis.cms.gov/public/publications/ntap/NTP221017057WN, for additional detail describing the
technology and the disease treated by the technology.
According to the applicant, REZZAYOTM received QIDP
designation from FDA on June 27, 2017 for treatment of candidemia and/
or invasive candidiasis. The applicant stated that the NDA for
REZZAYOTM was approved on March 22, 2023, for use in
patients 18 years of age or older who have limited or no alternative
options for the treatment of candidemia and invasive candidiasis.
Approval of this indication is based on limited clinical safety and
efficacy data for REZZAYOTM. Due to the timing of receipt of
FDA approval, we are interested in additional information on whether
the technology is considered a QIDP under this NDA.
According to the applicant, there are currently no ICD-10-PCS
procedure codes that distinctly identify the administration of
REZZAYOTM. The applicant submitted a request for approval
for a unique ICD-10-PCS procedure code for REZZAYOTM
beginning in FY 2024.
With respect to the cost criterion, to identify potential cases
representing patients who may be eligible for REZZAYOTM, the
applicant searched the FY 2021 MedPAR file for cases reporting one of
the ICD-10-CM diagnosis codes for candidemia or invasive candidiasis
(in any position) listed in the table in this section. Using the
inclusion/exclusion criteria described in the following table, the
applicant identified 50,939 claims mapping to 540 MS-DRGs. The
applicant followed the order of operations described in the following
table and calculated a final inflated average case-weighted
standardized charge per case of $177,099.74, which exceeded the average
case-weighted threshold amount of $97,375.67. Because the final
inflated average case-weighted standardized charge per case exceeded
the average case-weighted threshold amount, the applicant asserted that
REZZAYOTM meets the cost criterion.
[GRAPHIC] [TIFF OMITTED] TP01MY23.240
We agree with the applicant that REZZAYOTM meets the
cost criterion and are therefore proposing to approve
REZZAYOTM for new technology add-on payments for FY 2024 for
use in patients 18 years of age or older who have limited or no
alternative options for the treatment of candidemia and invasive
candidiasis.
[[Page 26959]]
The applicant has not provided an estimate for the cost of
REZZAYOTM at the time of this proposed rule. According to
the applicant, REZZAYOTM is to be administered once weekly
by intravenous infusion, with an initial loading dose of 400 mg and
followed by a 200 mg dose once weekly thereafter. According to the
applicant, in the pivotal trial, on average patients received 14 days
of IV treatment and that data also showed that patients stay in the
hospital after being diagnosed with invasive candidiasis for 14 days.
Therefore, the applicant estimates the average dose of medication
during an inpatient stay to be 600 mg, given the initial 400 mg dose
plus one 200 mg maintenance dose prior to discharge from the hospital.
We expect the applicant to submit cost information prior to the final
rule, and we will provide an update regarding the new technology add-on
payment amount for the technology, if approved, in the final rule. Any
new technology add-on payment for REZZAYOTM would be subject
to our policy under Sec. 412.88(a)(2) where 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 costs in excess of the MS-
DRG payment for the case.
We invite public comments on whether REZZAYOTM meets the
cost criterion and our proposal to approve new technology add-on
payments for REZZAYOTM for FY 2024 for use in patients 18
years of age or older who have limited or no alternative options for
the treatment of candidemia and invasive candidiasis.
(3) SUL-DUR (Sulbactam/Durlobactam)
Entasis Therapeutics, Inc. submitted an application for new
technology add-on payments for SUL-DUR for FY 2024. According to the
applicant, SUL-DUR is a penicillin derivative and classified as a
[beta]-lactamase inhibitor but also has intrinsic antibacterial
activity against Acinetobacter baumannii and other members of the
Acinetobacter baumannii-calcoaceticus complex (ABC). According to the
applicant, sulbactam, in combination with durlobactam, will be used for
the treatment of hospital-acquired and ventilator-associated bacterial
pneumonia (HABP/VABP) and bloodstream infections (BSI) due to
Acinetobacter baumannii.
Please refer to the online application posting for SUL-DUR,
available at https://mearis.cms.gov/public/publications/ntap/NTP221017F5WKE, for additional detail describing the technology and the
disease treated by the technology.
According to the applicant, SUL-DUR received QIDP designation for
the treatment of HABP/VABP and bloodstream infections due to
Acinetobacter baumannii. The applicant stated that it is seeking
approval of a broader NDA from FDA for the treatment of adults with
infections due to Acinetobacter baumannii-calcoaceticus complex
organisms, including multidrug-resistant and carbapenem-resistant
strains. According to the applicant, patients are expected to receive 1
to 1.5 grams sulbactam and 1 to 1.5 grams durlobactam every 6 hours for
an average of 10 days. We note that, under the eligibility criteria for
approval under the alternative pathway for certain antimicrobial
products, only the use of SUL-DUR for the treatment of HABP/VABP and
bloodstream infections due to Acinetobacter baumannii, and the FDA QIDP
designation it received for that use, are relevant for purposes of the
new technology add-on payment application for FY 2024. We also note
that, as an application submitted under the alternative pathway for
certain antimicrobial products at Sec. 412.87(d), SUL-DUR is eligible
for conditional approval for new technology add-on payments if it does
not receive FDA marketing authorization by the July 1 deadline
specified in Sec. 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 (that
is, July 1, 2024).
According to the applicant, there are currently no ICD-10-PCS
procedure codes to distinctly identify SUL-DUR. The applicant submitted
a request for a new unique ICD-10-PCS procedure code for SUL-DUR to be
considered at the March 2023 ICD-10 Coordination and Maintenance
Committee meeting. The applicant provided a list of diagnosis codes
that may be used to currently identify the indication for SUL-DUR under
the ICD-10-CM coding system. Please refer to the online application
posting for the complete list of ICD-10-CM codes provided by the
applicant. We note that the applicant included ICD-10-CM codes that
correspond to the broader anticipated NDA indication. As previously
noted, only use of the technology for the indications corresponding to
the QIDP designation would be relevant for new technology add-on
payment purposes. We believe the relevant ICD-10-CM codes to identify
the QIDP-designated indications are: Y95 and J15.6 (describing HABP due
to Acinetobacter baumannii); or J95.851 and B96.89 (describing VABP due
to Acinetobacter baumannii); or A41.59 (Other Gram-negative sepsis) for
bloodstream infection due to Acinetobacter baumannii.
With respect to the cost criterion, the applicant provided two
analyses to demonstrate that it meets the cost criterion. For each
analysis, the application searched the FY 2021 MedPAR file using a
different combination of codes to identify potential cases representing
patients who may be eligible for SUL-DUR. The applicant explained that
it used different codes to demonstrate different cohorts that may be
eligible for the technology. Each analysis followed the order of
operations described in the following table.
According to the applicant, SUL-DUR is anticipated to be indicated
in adults for the treatment of infections due to ABC complex including
multi-drug resistant and carbapenem-resistant strains upon FDA
approval. Therefore, in the first analysis, the applicant identified
ICD-10-CM codes that reflect the anticipated FDA indication. According
to the QIDP designation, SUL-DUR was designated for the treatment of
HABP/VABP and bloodstream infections due to Acinetobacter baumannii.
Therefore, in the second analysis, the applicant identified ICD-10-CM
codes that reflect the QIDP-designated indications. Please see Table
10.23.A.--SUL-DUR Codes--FY 2024 associated with this proposed rule for
the complete list of codes provided by the applicant.
For Analysis 1, using the inclusion/exclusion criteria described in
the following table, the applicant identified 440,756 cases mapping to
452 MS-DRGs. The applicant followed the order of operations described
in the following table and calculated a final inflated average case-
weighted standardized charge per case of $182,553, which exceeded the
average case-weighted threshold amount of $76,364.
For Analysis 2, using the inclusion/exclusion criteria described in
the following table, the applicant identified 214,694 claims mapping to
330 MS-DRGs. The applicant followed the order of operations described
in the following table and calculated a final inflated average case-
weighted standardized charge per case of $202,171, which exceeded the
average case-weighted threshold amount of $85,665.
Because the final inflated average case-weighted standardized
charge per case exceeds the average case-weighted threshold amount in
both analyses, the
[[Page 26960]]
applicant asserted that SUL-DUR meets the cost criterion.
[GRAPHIC] [TIFF OMITTED] TP01MY23.241
We agree with the applicant that SUL-DUR meets the cost criterion
and are therefore proposing to approve SUL-DUR for new technology add-
on payments for FY 2024 for the treatment of HABP/VABP and bloodstream
infections due to Acinetobacter baumannii, subject to the technology
receiving FDA marketing authorization for the indication corresponding
to the QIDP designation by July 1, 2023. As an application submitted
under the alternative pathway for certain antimicrobial products at
Sec. 412.87(d), SUL-DUR is eligible for conditional approval for new
technology add-on payments if it does not receive FDA marketing
authorization by the July 1 deadline specified in Sec. 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 (that is, July 1, 2024). If SUL-DUR
receives FDA marketing authorization before July 1, 2024, the new
technology add-on payment for cases involving the use of this
technology would be made effective for discharges beginning in the
first quarter after FDA marketing authorization is granted. If FDA
marketing authorization is received on or after July 1, 2024, no new
technology add-on payments would be made for cases involving the use of
SUL-DUR for FY 2024.
Based on preliminary information from the applicant at the time of
the proposed rule, the applicant stated that the anticipated cost of
SUL-DUR is $15,000 per stay based upon the expectation that patients
would receive 1 to 1.5 grams sulbactam and 1 to 1.5 grams durlobactam
every 6 hours for an average of 10 days. The applicant did not provide
the cost per vial and did not supply supporting information with regard
to the average of 10 days. Therefore, we are interested in information
regarding the cost per vial and the average of 10 days to support the
anticipated average cost of $15,000 provided by the applicant. We note
that the cost information for this technology may be updated in the
final rule based on revised or additional information CMS receives
prior to the final rule. Under Sec. 412.88(a)(2), 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 costs in excess of
the MS-DRG payment for the case. As a result, we propose that the
maximum new technology add-on payment for a case involving the use of
SUL-DUR when used for the treatment of HABP/VABP and bloodstream
infections due to Acinetobacter baumannii would be $11,250 for FY 2024
(that is, 75 percent of the average cost of the technology).
We invite public comments on whether SUL-DUR meets the cost
criterion and our proposal to approve new technology add-on payments
for SUL-DUR for FY 2024 for the treatment of HABP/VABP and bloodstream
infections due to Acinetobacter baumannii subject to the technology
receiving marketing authorization consistent with its QIDP designation
by July 1, 2023.
[[Page 26961]]
8. Proposal To Modify New Technology Add-On Payment Application
Eligibility Requirements Related to FDA Application Status and To Move
FDA Marketing Authorization Deadline From July 1 to May 1 for
Technologies That Are Not Already FDA Market Authorized
As noted in section II.E.1.f. of this proposed rule, applicants for
new technology add-on payments for new medical services or technologies
must submit to CMS 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). In
addition, as reflected in the application, applicants must submit
information about the technology's FDA market authorization status and
the status of any relevant required designations.
As set forth in 42 CFR 412.87(e)(1), CMS considers whether a
technology meets the criteria for the new technology add-on payment and
announces the results as part of its annual updates and changes to the
IPPS. Accordingly, in drafting the proposed rule, CMS reviews each new
technology add-on payment application it receives under the pathway
specified by the applicant at the time of application submission, along
with any supplemental information obtained from the applicant,
information provided at the Town Hall meeting, and comments received in
response to the Town Hall meeting. As part of the new technology add-on
payment application process, CMS summarizes in the IPPS/LTCH PPS
proposed rule the information submitted as part of each new technology
add-on payment application. This generally includes summarizing and/or
providing the public with information on the applicant's explanation of
what the technology does, background on the disease process, status of
FDA approval or clearance, and the applicant's assertions and
supporting data on how the technology meets the new technology add-on
payment criteria under Sec. 412.87. As discussed in prior rulemaking,
our goal is to ensure that the public has sufficient information to
facilitate public comment on whether the medical service or technology
meets the new technology add-on payment criteria.
In the FY 2023 IPPS/LTCH PPS final rule, to increase transparency,
enable increased stakeholder engagement, and improve and streamline our
new technology add-on payment review process, we finalized a policy
that, beginning with FY 2024, new technology add-on payment
applications and certain related materials would be publicly posted
online (87 FR 48986 through 48990). We noted that we believed making
this information publicly available may help to further engage the
public and foster greater input and insights through public comments on
the new medical services and technologies presented annually for
consideration for new technology add-on payments. Consistent with this
finalized policy, the FY 2024 applications for new technology add-on
payments are available at https://mearis.cms.gov/public/publications/ntap.
Building on our efforts to further increase transparency,
facilitate public input, and improve the review process, we are
proposing modifications to both the new technology add-on payment
eligibility requirements and the date by which applicants must receive
FDA marketing authorization in order to be eligible for consideration.
Specifically, we are proposing to modify the new technology add-on
payment application eligibility requirements for technologies that are
not already FDA market authorized to require such applicants to have a
complete and active FDA market authorization request at the time of new
technology add-on payment application submission, and to move the FDA
marketing authorization deadline from July 1 to May 1, beginning with
applications for FY 2025. As we discuss in further detail later in this
section, we believe these changes would significantly improve our
ability to evaluate whether a technology is eligible for new technology
add-on payment.
We accept new technology add-on payment applications annually, each
fall. As previously discussed, CMS considers whether the technology
meets the criteria for the new technology add-on payment and announces
the results as part of the annual IPPS rulemaking. To provide maximum
flexibility for applicants for new technology add-on payments, we have
not historically specified how complete an application must be at the
time of its submission. This has resulted in a significant number of
applicants submitting new technology add-on payment applications that
lack critical information that is needed to evaluate whether the
technology meets the eligibility criteria at Sec. 412.87(b), (c), or
(d), particularly with regard to having information available for the
proposed rule and during the comment period. Specifically, many
applicants submit new technology add-on payment applications prior to
submitting a request to FDA for the necessary marketing authorization,
and applicants have stated that information missing from their
applications, which is needed to evaluate the technology for the add-on
payment, will not become available until after submission to FDA. With
regard to the alternative pathways, such applications may also be
missing information that would help inform understanding of the details
and interrelationship between the intended indication and FDA
Breakthrough Device or QIDP designation, which is the basis for a
product's eligibility for the alternative pathway.
Ultimately, it is difficult for CMS to review and for interested
parties to comment on a product that has not yet been submitted to FDA,
as multiple sections of the new technology add-on payment applications
lack preliminary information that is more likely to be available after
an FDA submission. Public input is an important part of our assessment
of whether a technology meets the new technology add-on payment
criteria, particularly as technology becomes more complex and
specialized.
Thus, we believe that requiring applicants to have already
submitted a market authorization request to FDA at the time of
submission of the new technology add-on payment application would
further increase transparency and improve the evaluation process,
including the identification of critical questions in the proposed
rule, particularly as the number and complexity of the applications
have been increasing over time. By requiring applicants to submit their
FDA marketing authorization requests prior to submitting an application
for new technology add-on payments, the public and the agency would be
able to more knowledgeably analyze the new technology add-on payment
applications and supporting data and evidence to inform an assessment
of the technology's eligibility for the add-on payment.
[[Page 26962]]
Therefore, we are proposing that beginning with the new technology
add-on payment applications for FY 2025, to be eligible for
consideration for the new technology add-on payment, an applicant must
have already submitted an FDA market authorization request before
submitting an application for new technology add-on payments. We
propose that, for the purposes of this policy, submission of a request
for marketing authorization by the FDA would mean that the applicant
has submitted a complete application to FDA, and that the application
has an active status with FDA (such as not in a Hold status or having
received a Complete Response Letter). An applicant must provide
documentation of the market authorization request at the time of
submission of its new technology add-on payment application to CMS. We
believe that requiring an FDA acceptance or filing letter would provide
the clearest and most effective means of documenting that the applicant
has submitted a complete request to FDA and are therefore proposing to
require this approach to documentation. Under this proposal, the
applicant would also indicate on the new technology add-on payment
application whether the FDA request has an active status with FDA. We
note that applicants for technologies that have already received FDA
market authorization for the indication for which they are applying for
new technology add-on payments would not be required to submit an FDA
acceptance or filing letter and would continue to be eligible for
consideration for new technology add-on payments. We are proposing to
amend 42 CFR 412.87 to reflect this proposal by redesignating current
paragraph (e) as paragraph (f) and adding a new provision at 42 CFR
412.87(e) to state that CMS will only consider, for add-on payments for
a particular fiscal year, an application for which the medical service
or technology is either FDA market authorized for the indication that
is the subject of the new technology add-on payment application or for
which the medical service or technology is the subject of a complete
and active FDA marketing authorization request and documentation of FDA
acceptance or filing is provided to CMS at the time of new technology
add-on payment application submission.
In the FY 2009 IPPS/LTCH PPS final rule (73 FR 48562 through
48563), we finalized our proposal to set July 1 of each year as the
deadline by which IPPS new technology add-on payment applications must
receive FDA marketing authorization. We noted that while we prefer that
technologies have FDA approval or clearance at the time of application,
this may not always be feasible. At that time, we believed that the
July 1 deadline would provide an appropriate balance between the
necessity for adequate time to fully evaluate the applications, the
requirement to publish the IPPS final rule by August 1 of each year,
and addressing commenters' concerns that potential new technology
applicants have some flexibility with respect to when their technology
receives FDA approval or clearance.
However, with the increased complexity and volume of applications
for new technology add-on payments since finalization of this policy in
the FY 2009 IPPS/LTCH PPS final rule, we believe the July 1 deadline
may no longer provide sufficient time to fully evaluate the new
technology applications in advance of the issuance of the final rule,
including information that does not become available until FDA approval
or clearance. The technologies that are the subject of new technology
add-on payment applications are increasingly complex, such as fourth
and fifth line therapies and devices utilizing artificial intelligence
algorithms. The volume of new technology add-on payment applications
has also risen substantially. In the first 20 years of the new
technology add-on payment program, CMS received on average 2-10
applications per year. Applications have risen by 200 percent from FY
2020 to FY 2024.
The increased volume and complexity of applications makes it more
challenging to mitigate information gaps in advance of the final rule,
particularly with regard to analysis and validation of information
necessary to make determinations regarding whether technologies meet
the add-on payment criteria. For traditional pathway applications, this
may involve submission of new clinical studies and/or a different final
indication, which can change the relevant comparators for
consideration. For alternative pathway applications, CMS must assess
the relevant designations in connection with the applicable indications
and how the necessary market authorization relates to the designated
technology, which often necessitates coordination with FDA and other
components of HHS. As new technology continues to be developed, we
expect both the complexity and the number of applications to increase,
further increasing the need for additional time to fully evaluate the
applications in advance of the final rule. We also believe that
providing the opportunity for interested parties to review the FDA
approved clinical indications and the clinical data that often only
becomes available after receiving FDA market authorization would
strengthen the quality of the public comments and allow for more
informed decision-making in the final rule.
Accordingly, to allow adequate time to fully evaluate the new
technology add-on payment criteria for FDA-authorized technologies in
advance of the final rule, and to further facilitate and inform public
comment, we are proposing to require that applicants receive FDA
approval or clearance by May 1 in order to be eligible for
consideration for the new technology add-on payment for the upcoming
fiscal year. We believe this May 1 deadline would strike a balance
between providing adequate time to fully evaluate the applications
while also continuing to preserve flexibility for manufacturers. We are
proposing to amend proposed redesignated Sec. 412.87(f)(2) to reflect
this proposed change by revising the date by which new medical services
or technologies must receive FDA marketing authorization from July 1 to
May 1 and making other conforming changes to the regulatory text.
Consistent with our current approach, under this proposal, we would
not include in the final rule the description and discussion of new
technology add-on payment applications which were included in the
proposed rule that were withdrawn or that were ineligible for
consideration for the upcoming fiscal year due to not meeting the
proposed May 1 deadline. We would also neither summarize nor respond to
public comments received regarding these withdrawn or ineligible
applications in the final rule.
We note that we are not proposing to change the July 1 deadline for
technologies for which an application is submitted under the
alternative pathway for certain antimicrobial products because they
would continue to be eligible for conditional approval under Sec.
412.87(e)(3) (proposed to be redesignated as Sec. 412.87(f)(3)), as
finalized in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58740).
However, we are proposing to amend proposed redesignated Sec.
412.87(f)(3) to revise the current cross-reference to Sec.
412.87(e)(2) in light of the previously discussed proposed amendments.
We are seeking public comment on our proposals to modify the new
technology add-on payment application eligibility requirements for
technologies
[[Page 26963]]
that are not already FDA market authorized to require such applicants
to have a complete and active FDA market authorization request at the
time of new technology add-on payment application submission, to
provide documentation of FDA acceptance or filing to CMS at the time of
application submission, and to move the FDA marketing authorization
deadline from July 1 to May 1, beginning with applications for FY 2025.
III. Proposed Changes to the Hospital Wage Index for Acute Care
Hospitals
A. Background
1. Legislative Authority
Section 1886(d)(3)(E) of the Act requires that, as part of the
methodology for determining prospective payments to hospitals, the
Secretary adjust the standardized amounts for area differences in
hospital wage levels by a factor (established by the Secretary)
reflecting the relative hospital wage level in the geographic area of
the hospital compared to the national average hospital wage level. We
currently define hospital labor market areas based on the delineations
of statistical areas established by the Office of Management and Budget
(OMB). A discussion of the proposed FY 2024 hospital wage index based
on the statistical areas appears under section III.A.2. of the preamble
of this proposed rule.
Section 1886(d)(3)(E) of the Act requires the Secretary to update
the wage index annually and to base the update on a survey of wages and
wage-related costs of short-term, acute care hospitals. CMS collects
these data on the Medicare cost report, CMS Form 2552-10, Worksheet S-
3, Parts II, III, IV. The OMB control number for this information
collection request is 0938-0050, which expires on September 30, 2025.
Section 1886(d)(3)(E) of the Act also requires that any updates or
adjustments to the wage index be made in a manner that ensures that
aggregate payments to hospitals are not affected by the change in the
wage index. The proposed adjustment for FY 2024 is discussed in section
II.B. of the Addendum to this proposed rule.
As discussed in section III.I. of the preamble of this proposed
rule, we also take into account the geographic reclassification of
hospitals in accordance with sections 1886(d)(8)(B) and 1886(d)(10) of
the Act when calculating IPPS payment amounts. Under section
1886(d)(8)(D) of the Act, the Secretary is required to adjust the
standardized amounts so as to ensure that aggregate payments under the
IPPS after implementation of the provisions of sections 1886(d)(8)(B),
1886(d)(8)(C), and 1886(d)(10) of the Act are equal to the aggregate
prospective payments that would have been made absent these provisions.
The proposed budget neutrality adjustment for FY 2024 is discussed in
section II.A.4.b. of the Addendum to this proposed rule.
Section 1886(d)(3)(E) of the Act also provides for the collection
of data every 3 years on the occupational mix of employees for short-
term, acute care hospitals participating in the Medicare program, in
order to construct an occupational mix adjustment to the wage index.
(The OMB control number for approved collection of this information is
0938-0907, which expires on January 31, 2026.) A discussion of the
occupational mix adjustment that we are proposing to apply to the FY
2024 wage index appears under sections III.E. and F. of the preamble of
this proposed rule.
2. Core-Based Statistical Areas (CBSAs) for the Proposed FY 2024
Hospital Wage Index
The wage index is calculated and assigned to hospitals on the basis
of the labor market area in which the hospital is located. Under
section 1886(d)(3)(E) of the Act, beginning with FY 2005, we delineate
hospital labor market areas based on OMB-established Core-Based
Statistical Areas (CBSAs). The current statistical areas (which were
implemented beginning with FY 2015) are based on revised OMB
delineations issued on February 28, 2013, in OMB Bulletin No. 13-01.
OMB Bulletin No. 13-01 established revised delineations for
Metropolitan Statistical Areas, Micropolitan Statistical Areas, and
Combined Statistical Areas in the United States and Puerto Rico based
on the 2010 Census, and provided guidance on the use of the
delineations of these statistical areas using standards published in
the June 28, 2010, Federal Register (75 FR 37246 through 37252). We
refer readers to the FY 2015 IPPS/LTCH PPS final rule (79 FR 49951
through 49963 and 49973 through 49982)) for a full discussion of our
implementation of the OMB statistical area delineations beginning with
the FY 2015 wage index.
Generally, OMB issues major revisions to statistical areas every 10
years, based on the results of the decennial census. However, OMB
occasionally issues minor updates and revisions to statistical areas in
the years between the decennial censuses through OMB Bulletins. On July
15, 2015, OMB issued OMB Bulletin No. 15-01, which provided updates to
and superseded OMB Bulletin No. 13-01 that was issued on February 28,
2013. The attachment to OMB Bulletin No. 15-01 provided detailed
information on the update to statistical areas since February 28, 2013.
The updates provided in OMB Bulletin No. 15-01 were based on the
application of the 2010 Standards for Delineating Metropolitan and
Micropolitan Statistical Areas to Census Bureau population estimates
for July 1, 2012, and July 1, 2013. In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 56913), we adopted the updates set forth in OMB Bulletin
No. 15-01 effective October 1, 2016, beginning with the FY 2017 wage
index. For a complete discussion of the adoption of the updates set
forth in OMB Bulletin No. 15-01, we refer readers to the FY 2017 IPPS/
LTCH PPS final rule. In the FY 2018 IPPS/LTCH PPS final rule (82 FR
38130), we continued to use the OMB delineations that were adopted
beginning with FY 2015 to calculate the area wage indexes, with updates
as reflected in OMB Bulletin No. 15-01 specified in the FY 2017 IPPS/
LTCH PPS final rule.
On August 15, 2017, OMB issued OMB Bulletin No. 17-01, which
provided updates to and superseded OMB Bulletin No. 15-01 that was
issued on July 15, 2015. The attachments to OMB Bulletin No. 17-01
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. Historically OMB bulletins issued
between decennial
[[Page 26964]]
censuses have only contained minor modifications to CBSA delineations
based on changes in population counts. However, OMB's 2010 Standards
for Delineating Metropolitan and Micropolitan Statistical Areas to
Census Bureau population estimates created a larger mid-decade
redelineation that takes into account commuting data from the American
Commuting Survey. As a result, the September 14, 2018, OMB Bulletin No.
18-04 included more modifications to the CBSAs than are typical for OMB
bulletins issued between decennial censuses.
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58743 through 58755)
we adopted the updates set forth in OMB Bulletin No. 18-04 effective
October 1, 2020, beginning with the FY 2021 wage index. For a complete
discussion of the adoption of the updates set forth in OMB Bulletin No.
18-04, we refer readers to the FY 2021 IPPS/LTCH PPS final rule.
On March 6, 2020, OMB issued Bulletin No. 20-01, which provided
updates to and superseded OMB Bulletin No. 18-04 that was issued on
September 14, 2018. The attachments to OMB Bulletin No. 20-01 provided
detailed information on the update to statistical areas since September
14, 2018, 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, 2017, and July 1, 2018. After
reviewing OMB Bulletin No. 20-01, we determined that the changes in
Bulletin 20-01 encompassed delineation changes that would not affect
the Medicare wage index for FY 2022. While we adopted the updates set
forth in OMB Bulletin No. 20-01 in the FY 2022 IPPS/LTCH PPS final rule
(86 FR 45163 through 45164) consistent with our general policy of
adopting OMB delineation updates, we also noted that specific wage
index updates would not be necessary for FY 2022 as a result of
adopting these updates. In other words, the updates set forth in OMB
Bulletin No. 20-01 would not affect any hospital's geographic area for
purposes of the wage index calculation for FY 2022. For a complete
discussion of the adoption of the updates set forth in OMB Bulletin No.
20-01, we refer readers to the FY 2022 IPPS/LTCH PPS final rule (86 FR
45163 through 45164).
For FY 2024, we would continue 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, 17-01, 18-04 and
20-01.
3. Codes for Constituent Counties in CBSAs
CBSAs are made up of one or more constituent counties. Each CBSA
and constituent county has its own unique identifying codes. There are
two different lists of codes associated with counties: Social Security
Administration (SSA) codes and Federal Information Processing Standard
(FIPS) codes. Historically, CMS has listed and used SSA and FIPS county
codes to identify and crosswalk counties to CBSA codes for purposes of
the hospital wage index. As we discussed in the FY 2018 IPPS/LTCH PPS
final rule (82 FR 38129 through 38130), we have learned that SSA county
codes are no longer being maintained and updated. However, the FIPS
codes continue to be maintained by the U.S. Census Bureau. We believe
that using the latest FIPS codes will allow us to maintain a more
accurate and up-to-date payment system that reflects the reality of
population shifts and labor market conditions.
The Census Bureau's most current statistical area information is
derived from ongoing census data received since 2010; the most recent
data are from 2020. The Census Bureau maintains a complete list of
changes to counties or county equivalent entities on the website at
https://www.census.gov/programs-surveys/geography/technical-documentation/county-changes.html. We believe that it is important to
use the latest counties or county equivalent entities in order to
properly crosswalk hospitals from a county to a CBSA for purposes of
the hospital wage index used under the IPPS. Per the schedule published
in a July 16, 2021 OMB Notice of Decision, we expect revised
delineations based on the 2020 decennial census data to be available in
July 2023 (86 FR 37775). We intend to address these revisions in future
rulemaking.
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 cross
walking 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. We refer the
reader to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38129 through
38130) for a complete discussion of our adoption of FIPS county codes.
For FY 2024, we are continuing to use only the FIPS county codes
for purposes of crosswalking counties to CBSAs. For FY 2024, Tables 2
and 3 associated with this proposed rule and the County to CBSA
Crosswalk File and Urban CBSAs and Constituent Counties for Acute Care
Hospitals File posted on the CMS website reflect the latest FIPS code
updates.
B. Worksheet S-3 Wage Data for the Proposed FY 2024 Wage Index
The proposed FY 2024 wage index values are based on the data
collected from the Medicare cost reports submitted by hospitals for
cost reporting periods beginning in FY 2020 (the FY 2023 wage indexes
were based on data from cost reporting periods beginning during FY
2019).
1. Included Categories of Costs
The proposed FY 2024 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)).
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 modified in the FY 2016 IPPS/LTCH PPS final rule (80
FR 49505 through 49508)) and other deferred compensation costs.
2. Excluded Categories of Costs
Consistent with the wage index methodology for FY 2023, the
proposed wage index for FY 2024 also excludes the direct and overhead
salaries and hours for services not subject to IPPS payment, such as
skilled nursing facility (SNF) services, home health services, costs
related to GME (teaching physicians and residents) and certified
registered nurse anesthetists (CRNAs), and other subprovider components
that are not paid under the IPPS. The proposed FY 2024 wage index also
excludes the salaries, hours, and wage-
[[Page 26965]]
related costs of hospital-based rural health clinics (RHCs), and
Federally Qualified Health Centers (FQHCs) because Medicare pays for
these costs outside of the IPPS (68 FR 45395). In addition, salaries,
hours, and wage-related costs of CAHs are excluded from the wage index
for the reasons explained in the FY 2004 IPPS final rule (68 FR 45397
through 45398). For FY 2020 and subsequent years, other wage-related
costs are also excluded from the calculation of the wage index. As
discussed in the FY 2019 IPPS/LTCH final rule (83 FR 41365 through
41369), other wage-related costs reported on Worksheet S-3, Part II,
Line 18 and Worksheet S-3, Part IV, Line 25 and subscripts, as well as
all other wage-related costs, such as contract labor costs, are
excluded from the calculation of the wage index.
3. Use of Wage Index Data by Suppliers and Providers Other Than Acute
Care Hospitals Under the IPPS
Data collected for the IPPS wage index also are currently used to
calculate wage indexes applicable to suppliers and other providers,
such as SNFs, home health agencies (HHAs), ambulatory surgical centers
(ASCs), and hospices. In addition, they are used for prospective
payments to IRFs, IPFs, and LTCHs, and for hospital outpatient
services. We note that, in the IPPS rules, we do not address comments
pertaining to the wage indexes of any supplier or provider except IPPS
providers and LTCHs. Such comments should be made in response to
separate proposed rules for those suppliers and providers.
C. Verification of Worksheet S-3 Wage Data
The wage data for the FY 2024 wage index were obtained from
Worksheet S-3, Parts II, III and IV of the Medicare cost report, CMS
Form 2552-10 (OMB Control Number 0938-0050 with an expiration date
September 30, 2025) for cost reporting periods beginning on or after
October 1, 2019, and before October 1, 2020. For wage index purposes,
we refer to cost reports beginning on or after October 1, 2019, and
before October 1, 2020, as the ``FY 2020 cost report,'' the ``FY 2020
wage data,'' or the ``FY 2020 data.'' Instructions for completing the
wage index sections of Worksheet S-3 are included in the Provider
Reimbursement Manual (PRM), Part 2 (Pub. 15-2), Chapter 40, Sections
4005.2 through 4005.4. The data file used to construct the proposed FY
2024 wage index includes FY 2020 data submitted to us as of January 30,
2023. As in past years, we performed an extensive review of the wage
data, mostly through the use of edits designed to identify aberrant
data.
Consistent with the IPPS and LTCH PPS ratesettings, our policy
principles with regard to the wage index include generally using the
most current data and information available which is usually data on a
4-year lag (for example, for the FY 2022 wage index we used cost report
data from FY 2018). We stated in the FY 2023 IPPS/LTCH PPS final rule
(87 FR 48994) that we will be looking at the differential effects of
the COVID-19 PHE on the audited wage data in future fiscal years. We
also stated we plan to review the audited wage data, and the impacts of
the COVID-19 PHE on such data and evaluate these data for future
rulemaking. For the FY 2024 wage index, the best available data
typically would be from the FY 2020 wage data.
Based on pre reclassified wage data, the changes in the wage data
from FY 2019 to FY 2020 show the following compared to the annual
changes for the most recent 3 year periods (that is, FY 2016 to FY
2017, FY 2017 to FY 2018 and FY 2018 to FY 2019):
Approximately 85 percent of hospitals have an increase in
their average hourly wage (AHW) from FY 2019 to FY 2020 compared to a
range of 76-77 percent of hospitals for the most recent 3 year periods.
Approximately 81 percent of all CBSA AHWs increased from
FY 2019 to FY 2020 compared to a range of 73-75 percent of all CBSAs
for the most recent 3 year periods.
Approximately 36 percent of all urban areas have an
increase in their area wage index from FY 2019 to FY 2020 compared to a
range of 41-43 percent of all urban areas for the most recent 3 year
periods.
Approximately 2.8 percent of all rural areas have an
increase in their area wage index from FY 2019 to FY 2020 compared to a
range of 4-6 percent of all rural areas for the most recent 3 year
periods.
The unadjusted national average hourly wage increased by a
range of 2.4-2.8 percent per year from FY 2016-FY 2019. For FY 2020,
the unadjusted national average hourly increased by 5.3 percent from FY
2019.
Even if the comparison with the historical trends had indicated
greater differences at a national level in this context, it is not
apparent whether any changes due to the COVID-19 PHE differentially
impacted the wages paid by individual hospitals. Furthermore, even if
hypothetically changes due the COVID-19 PHE did differentially impact
the wages paid by individual hospitals over time, it is not clear how
those changes could be isolated from changes due to other reasons and
what an appropriate potential methodology might be to adjust the data.
Lastly, we also note that we have not identified any significant
issues with the FY 2020 wage data itself in terms of our audits of this
data. As usual, the data was audited by the MACs, and there were no
significant issues reported across the data for all hospitals.
Taking all of these factors into account, we believe the FY 2020
wage data is the best available wage data to use for FY 2024 and are
proposing to use the FY 2020 wage data for FY 2024.
We welcome comment from the public with regard to the FY 2020 wage
data. We note, AHW data by provider and CBSA, including the data upon
which the comparisons, as previously described are based, is available
in our Public Use Files released with each proposed and final rule each
fiscal year. The Public Use Files for the respective FY Wage Index Home
Page can be found on the Wage Index Files web page at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files.
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 area of the hospital compared to the
national average hospital wage level. In response to public comments,
as previously stated in past final rules (FY 2016 IPPS/LTCH PPS final
rule (80 FR 49490 through 49491), the FY 2022 IPPS/LTCH PPS final rule
(86 FR 45168 through 45169) and the FY 2023 IPPS/LTCH PPS final rule
(87 FR 48996 through 48997), we believe that, under this section of the
Act, we have discretion to exclude aberrant hospital data from the wage
index public use files (PUFs) to help ensure that the costs
attributable to wages and wage-related costs in fact reflect the
relative hospital wage level in the hospitals' geographic area. We
refer the reader to our previous responses to comments at the Federal
Register pages cited earlier with regard to the exclusion of hospitals'
wage data from the wage index. We requested that our MACs revise or
verify data elements that result in specific edit failures. For the
proposed FY 2024 wage index, we identified and excluded 88 providers
with aberrant data that should not be included in the wage index. If
data elements for some of these providers are corrected, we intend to
include data from those providers in the final FY
[[Page 26966]]
2024 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 20, 2023.
In constructing the proposed FY 2024 wage index, we included the
wage data for facilities that were IPPS hospitals in FY 2020, inclusive
of those facilities that have since terminated their participation in
the program as hospitals, as long as those data did not fail any of our
edits for reasonableness. We believe that including the wage data for
these hospitals is, in general, appropriate to reflect the economic
conditions in the various labor market areas during the relevant past
period and to ensure that the current wage index represents the labor
market area's current wages as compared to the national average of
wages. However, we excluded the wage data for CAHs as discussed in the
FY 2004 IPPS final rule (68 FR 45397 through 45398); that is, any
hospital that is designated as a CAH by 7 days prior to the publication
of the preliminary wage index public use file (PUF) is excluded from
the calculation of the wage index. For the proposed rule, we removed 1
hospital that converted to CAH status on or after January 22, 2022, the
cut-off date for CAH exclusion from the FY 2023 wage index, and through
and including January 23, 2023, the cut-off date for CAH exclusion from
the FY 2024 wage index. In summary, we calculated the FY 2024 wage
index using the Worksheet S-3, Parts II and III wage data of 3,103
hospitals.
For the proposed FY 2024 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 2024 wage
index associated with this proposed rule (available via the internet on
the CMS website), includes separate wage data for the campuses of 28
multicampus hospitals. The following chart lists the multicampus
hospitals by core service area (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:
BILLING CODE 4120-01-P
[[Page 26967]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.242
We note that, in past years, in Table 2, we have placed a ``B'' to
designate the subordinate campus in the fourth position of the hospital
CCN. However, for the FY 2019 IPPS/LTCH PPS proposed and final rules
and subsequent rules, we have moved the ``B'' to the third position of
the CCN. Because all IPPS hospitals have a ``0'' in the third position
of the CCN, we believe that placement of the ``B'' in this third
position, instead of the ``0'' for the subordinate campus, is the most
efficient method of identification and interferes the least with the
other, variable, digits in the CCN.
D. Method for Computing the Proposed FY 2024 Unadjusted Wage Index
The method used to compute the proposed FY 2024 wage index without
an occupational mix adjustment follows the same methodology that we
used to compute the wage indexes without an occupational mix adjustment
in the FY 2021 IPPS/LTCH PPS final rule (see 85 FR 58758 through 58761,
September 18, 2020), and we are not proposing any changes to this
methodology. We have restated our methodology in this section of this
rule.
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 2024,
these were data from cost reports for cost reporting periods beginning
on or after October 1, 2019, and before October 1, 2020). In addition,
we included data from some hospitals that had cost reporting periods
[[Page 26968]]
beginning before October 2019 and reported a cost reporting period
covering all of FY 2020. 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 2020 data. We note that, if a
hospital had more than one cost reporting period beginning during FY
2020 (for example, a hospital had two short cost reporting periods
beginning on or after October 1, 2019, and before October 1, 2020), 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 the excluded areas by multiplying the previously discussed
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 the 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-related costs) and hours derived in Steps 2 and 3.
Step 5.--For each hospital, we adjust the total salaries plus wage-
related costs to a common period to determine total adjusted salaries
plus wage-related costs. To make the wage adjustment, we estimate the
percentage change in the employment cost index (ECI) for compensation
for each 30-day increment from October 14, 2019, through April 15,
2021, for private industry hospital workers from the Bureau of Labor
Statistics' (BLS') National Compensation Survey. We use the ECI because
it reflects the price increase associated with total compensation
(salaries plus fringes)
[[Page 26969]]
rather than just the increase in salaries. In addition, the ECI
includes managers as well as other hospital workers. This methodology
to compute the monthly update factors uses actual quarterly ECI data
and assures that the update factors match the actual quarterly and
annual percent changes. We also note that, since April 2006 with the
publication of March 2006 data, the BLS' ECI uses a different
classification system, the North American Industrial Classification
System (NAICS), instead of the Standard Industrial Codes (SICs), which
no longer exist. We have consistently used the ECI as the data source
for our wages and salaries and other price proxies in the IPPS market
basket, and we are not proposing to make any changes to the usage of
the ECI for FY 2024. 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 proposed FY 2024
wage index, we note there is one urban CBSAs 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 Appendix A of this proposed rule
for the policy regarding rural areas that do not have IPPS hospitals.
Step 11.--Section 4410 of Public Law 105-33 provides that, for
discharges on or after October 1, 1997, the area wage index applicable
to any hospital that is located in an urban area of a State may not be
less than the area wage index applicable to hospitals located in rural
areas in that State. The areas affected by this provision are
identified in Table 2 listed in section VI. of the Addendum to the
proposed rule and available via the internet on the CMS website.
The 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, 2019, through April 15,
2021, for private industry hospital workers from the BLS' National
Compensation Survey. We have consistently used the ECI as the data
source for our wages and salaries and other price proxies in the IPPS
market basket, and we are not proposing any changes to the usage of the
ECI for FY 2024. The factors used to adjust the hospital's data are
based on the midpoint of the cost reporting period, as indicated in the
following table.
[[Page 26970]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.243
For example, the midpoint of a cost reporting period beginning
January 1, 2020, and ending December 31, 2020, is June 30, 2020. An
adjustment factor of 1.01923 was applied to the wages of a hospital
with such a cost reporting period.
Previously, we also would provide a Puerto Rico overall average
hourly wage. As discussed in the FY 2017 IPPS/LTCH PPS final rule (81
FR 56915), prior to January 1, 2016, Puerto Rico hospitals were paid
based on 75 percent of the national standardized amount and 25 percent
of the Puerto Rico-specific standardized amount. As a result, we
calculated a Puerto Rico specific wage index that was applied to the
labor-related share of the Puerto Rico-specific standardized amount.
Section 601 of the Consolidated Appropriations Act, 2016 (Pub. L. 114-
113) amended section 1886(d)(9)(E) of the Act to specify that the
payment calculation with respect to operating costs of inpatient
hospital services of a subsection (d) Puerto Rico hospital for
inpatient hospital discharges on or after January 1, 2016, shall use
100 percent of the national standardized amount. As we stated in the FY
2017 IPPS/LTCH PPS final rule (81 FR 56915 through 56916), because
Puerto Rico hospitals are no longer paid with a Puerto Rico specific
standardized amount as of January 1, 2016, under section 1886(d)(9)(E)
of the Act, as amended by section 601 of the Consolidated
Appropriations Act, 2016, there is no longer a need to calculate a
Puerto Rico specific average hourly wage and wage index. Hospitals in
Puerto Rico are now paid 100 percent of the national standardized
amount and, therefore, are subject to the national average hourly wage
(unadjusted for occupational mix) and the national wage index, which is
applied to the national labor-related share of the national
standardized amount. Therefore, for FY 2024, there is no Puerto Rico-
specific overall average hourly wage or wage index.
Based on the previously discussed methodology, the proposed FY 2024
unadjusted national average hourly wage is the following:
[GRAPHIC] [TIFF OMITTED] TP01MY23.244
E. Proposed Occupational Mix Adjustment to the FY 2024 Wage Index
As stated earlier, section 1886(d)(3)(E) of the Act provides for
the collection of data every 3 years on the occupational mix of
employees for each short-term, acute care hospital participating in the
Medicare program, in order to construct an occupational mix adjustment
to the wage index, for application beginning October 1, 2004 (the FY
2005 wage index). The purpose of the occupational mix adjustment is to
control for the effect of hospitals' employment choices on the wage
index. For example, hospitals may choose to employ different
combinations of registered nurses, licensed practical nurses, nursing
aides, and medical assistants for the purpose of providing nursing care
to their patients. The varying labor costs associated with these
choices reflect hospital management decisions rather than geographic
differences in the costs of labor.
1. Use of 2019 Medicare Wage Index Occupational Mix Survey for the FY
2024 Wage Index
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
[[Page 26971]]
care hospital participating in the Medicare program. As discussed in
the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25402 through 25403) and
final rule (86 FR 45173), we collected data in 2019 to compute the
occupational mix adjustment for the FY 2022, FY 2023, and FY 2024 wage
indexes. The FY 2024 occupational mix adjustment is based on the
calendar year (CY) 2019 survey. Hospitals were required to submit their
completed 2019 surveys (Form CMS-10079, OMB Number 0938-0907,
expiration date January 31, 2026) to their MACs by September 3, 2021.
The preliminary, unaudited CY 2019 survey data were posted on the CMS
website on September 8, 2020. As with the Worksheet S-3, Parts II and
III cost report wage data, as part of the FY 2022 desk review process,
the MACs revised or verified data elements in hospitals' occupational
mix surveys that resulted in certain edit failures.
2. Calculation of the Occupational Mix Adjustment for FY 2024
For FY 2024, we are proposing to calculate the occupational mix
adjustment factor using the same methodology that we have used since
the FY 2012 wage index (76 FR 51582 through 51586) and to apply the
occupational mix adjustment to 100 percent of the FY 2024 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 proposed rule (which is
available via the internet on the CMS website), which contains the
proposed FY 2024 occupational mix adjusted wage index, includes
separate wage data for the campuses of multicampus hospitals. We refer
readers to section III.C. of the preamble of this proposed rule for a
chart listing the multicampus hospitals and the FTE percentages used to
allot their occupational mix data.
Because the statute requires that the Secretary measure the
earnings and paid hours of employment by occupational category not less
than once every 3 years, all hospitals that are subject to payments
under the IPPS, or any hospital that would be subject to the IPPS if
not granted a waiver, must complete the occupational mix survey, unless
the hospital has no associated cost report wage data that are included
in the proposed FY 2024 wage index. For the proposed FY 2024 wage
index, we are using the Worksheet S-3, Parts II and III wage data of
3,103 hospitals, and we used the occupational mix surveys of 3,007
hospitals for which we also had Worksheet S-3 wage data, which
represented a ``response'' rate of 97 percent (3,007/3,103). For the
proposed FY 2024 wage index, we are applying proxy data for
noncompliant hospitals, new hospitals, or hospitals that submitted
erroneous or aberrant data in the same manner that we applied proxy
data for such hospitals in the FY 2012 wage index occupational mix
adjustment (76 FR 51586). As a result of applying this methodology, the
proposed FY 2024 occupational mix adjusted national average hourly wage
is the following:
[GRAPHIC] [TIFF OMITTED] TP01MY23.245
3. Deadline for Submitting the 2022 Medicare Wage Index Occupational
Mix Survey for Use Beginning With the FY 2025 Wage Index
A new measurement of occupational mix is required for FY 2025. The
FY 2025 occupational mix adjustment will be based on a new calendar
year (CY) 2022 survey. The CY 2022 survey (Form CMS-10079, OMB Number
0938-0907, expiration date January 31, 2026) received OMB approval on
January 3, 2023. The final CY 2022 Occupational Mix Survey Hospital
Reporting Form is available on the CMS website at: https://www.cms.gov/medicare/medicare-fee-service-payment/acuteinpatientpps/wage-index-files/2022-occupational-mix-survey-hospital. Hospitals are required to
submit their completed 2022 surveys to their MACs by June 30 2023. The
preliminary, unaudited CY 2022 survey data will be posted on the CMS
website in mid-July 2023. As with the Worksheet S-3, Parts II and III
cost report wage data, as part of the FY 2025 desk review process, the
MACs will revise or verify data elements in hospitals' occupational mix
surveys that result in certain edit failures.
F. Analysis and Implementation of the Proposed Occupational Mix
Adjustment and the Proposed FY 2024 Occupational Mix Adjusted Wage
Index
As discussed in section III.E. of the preamble of this proposed
rule, for FY 2024, we are applying the occupational mix adjustment to
100 percent of the FY 2024 wage index. We calculated the occupational
mix adjustment using data from the 2019 occupational mix survey data,
using the methodology described in the FY 2012 IPPS/LTCH PPS final rule
(76 FR 51582 through 51586).
The proposed FY 2024 national average hourly wages for each
occupational mix nursing subcategory as calculated in Step 2 of the
occupational mix calculation are as follows:
[[Page 26972]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.246
The proposed national average hourly wage for the entire nurse
category is computed in Step 5 of the occupational mix calculation.
Hospitals with a nurse category average hourly wage (as calculated in
Step 4) of greater than the national nurse category average hourly wage
receive an occupational mix adjustment factor (as calculated in Step 6)
of less than 1.0. Hospitals with a nurse category average hourly wage
(as calculated in Step 4) of less than the national nurse category
average hourly wage receive an occupational mix adjustment factor (as
calculated in Step 6) of greater than 1.0.
Based on the 2019 occupational mix survey data, we determined (in
Step 7 of the occupational mix calculation) the following:
[GRAPHIC] [TIFF OMITTED] TP01MY23.247
We compared the FY 2024 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:
[GRAPHIC] [TIFF OMITTED] TP01MY23.248
G. Application of the Rural Floor, Application of the Imputed Floor,
Application of the State Frontier Floor, Continuation of the Low Wage
Index Hospital Policy, and Permanent Cap on Wage Index Decreases
1. Proposed Application of the Rural Floor
Section 4410(a) of the Balanced Budget Act of 1997 (Pub. L. 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 the Patient Protection
and Affordable Care Act (Pub. L. 111-148) also requires that a national
budget neutrality adjustment be applied in implementing the rural
floor.
Based on the FY 2024 wage index associated with this proposed rule
(which is available via the internet on the CMS website), and based on
the calculation of the rural floor including the wage data of hospitals
that have reclassified as rural under Sec. 412.103 (as discussed in
section III.K. of the preamble of this proposed rule), we
[[Page 26973]]
estimate that 596 hospitals would receive the rural floor in FY 2024.
The budget neutrality impact of the proposed application of the rural
floor is discussed in section II.A.4.e. of the Addendum of this
proposed rule.
a. Treatment of Hospitals Reclassified as Rural Under Sec. 412.103 for
the Rural Wage Index and Rural Floor Calculation
Section 1886(d)(8)(E)(i) of the Act, implemented at 42 CFR 412.103,
requires 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.
In recent years, CMS's wage index and floor policies involving the
treatment of Sec. 412.103 hospitals have been the subject of frequent
litigation. Courts have repeatedly held unlawful CMS wage index and
floor policies that do not treat Sec. 412.103 hospitals the same as
geographically rural hospitals based on section 1886(d)(8)(E)(i) of the
Act, which requires that ``the Secretary shall treat the [Sec.
412.103] hospital as being located in the rural area.''
For example, on July 23, 2015, the U.S. Court of Appeals for the
Third Circuit issued a decision in Geisinger Community Medical Center
v. Secretary, United States Department of Health and Human Services,
794 F.3d 383 (3d Cir. 2015). Geisinger challenged as unlawful a CMS
regulation prohibiting hospitals with an active Sec. 412.103 rural
reclassification from applying for an additional reclassification for
wage index purposes through the MGCRB. A divided panel of the Court of
Appeals for the Third Circuit held that section 1886(d)(8)(E)(i) of the
Act required the Secretary to treat Sec. 412.103 hospitals the same as
geographically rural hospitals for the purposes of MGCRB
reclassification. Because geographically rural hospitals were eligible
for MGCRB reclassification, the court held CMS's regulation prohibiting
Sec. 412.103 hospitals from seeking MGCRB reclassification was
unlawful.
On February 4, 2016, the U.S. Court of Appeals for the Second
Circuit issued its decision in Lawrence + Memorial Hospital v. Burwell,
812 F.3d 257 (2d Cir. 2016), agreeing with the Third Circuit's
conclusion in Geisinger. The Second Circuit disagreed with CMS's
argument that the impact of these decisions--allowing Sec. 412.103
hospitals to be urban for wage index purposes and rural for others--was
``anomalous'': ``[T]his is simply a function of the many different
roles that hospitals play and the many different contexts in which they
operate . . . Section 401 simply increases the number of situations in
which hospitals can be treated as rural for some purposes and urban for
others, but there is nothing `absurd' about such a measured approach.''
Id. at 267.
As a consequence of the Geisinger and Lawrence + Memorial
decisions, CMS published an interim final rule with comment period
(IFC) on April 21, 2016 (81 FR 23428 through 23438) revising the
regulations to allow hospitals to hold simultaneous Sec. 412.103 and
MGCRB reclassifications, consistent with the courts' decisions. But
commenters have since argued that CMS continued to treat Sec. 412.103
hospitals differently from geographically rural hospitals in two
respects. First, CMS only allowed MGCRB reclassifications for Sec.
412.103 hospitals when the hospital's wages are at least 106 percent of
the urban area in which it was geographically located, rather than the
rural area to which it was reclassified under Sec. 412.103 (see 81 FR
56925). Additionally, CMS would not include data from Sec. 412.103
hospitals that are reclassified to an urban area by the MGCRB for wage
index purposes when calculating the rural wage index for that state (81
FR 23434).
The first policy was held unlawful on May 14, 2020, when the United
States District Court for the District of Columbia issued a decision in
Bates County Memorial Hospital v. Azar, 464 F. Supp. 3d 43 (D.D.C.
2020) (Bates). There, Bates County Memorial Hospital and five other
geographically urban hospitals were reclassified to rural under Sec.
412.103. They also applied for reclassification under the MGCRB, but
were denied because their wages were not at least 106 percent of the
geographic urban area in which the hospitals were located. Each of the
hospitals' average hourly wages were at least 106 percent of the 3-year
average hourly wage of all other hospitals in the rural area of the
state in which the hospitals were located. The Court agreed with the
Plaintiffs that section 1886(d)(8)(E)(i) of Act requires that CMS
consider the rural area to be the area in which a Sec. 412.103
hospital is located for the wage comparisons required for MGCRB
reclassifications.
CMS did not appeal this decision, and in the May 10, 2021 Federal
Register (86 FR 24735), concurrent with the FY 2022 IPPS/LTCH PPS
proposed rule, we published an interim final rule with comment period
that amended our regulations to allow hospitals with a rural
reclassification under the Act to reclassify through the MGCRB using
the rural reclassified area as the geographic area in which the
hospital is located. We stated that these changes implemented the Bates
Court's interpretation of the requirement at section 1886(d)(8)(E)(i)
of the Act that ``the Secretary shall treat the hospital as being
located in the rural area,'' for all purposes of MGCRB
reclassification, including the average hourly wage comparisons
required by Sec. 412.230(a)(5)(i) and (d)(1)(iii)(C).
The second policy was recently challenged in Deaconess Hospital
Inc. v. Becerra, No. 1:22-cv-03136 (D.D.C. Oct. 14, 2022) and Robert
Packer v. Becerra, No. 1:22-cv-03196 (D.D.C. Oct. 19, 2022).
Specifically, plaintiffs in Deaconess and Robert Packer contend that
CMS must include Sec. 412.103 hospitals reclassified to another wage
area under the MGCRB in the rural wage index and rural wage floor under
the ``hold harmless'' provision in section 1886(d)(8)(C)(ii) of Act.
That provision provides that if an MGCRB decision ``reduces the wage
index for that rural area (as applied under this subsection), the
Secretary shall calculate and apply such wage index under this
subsection as if the hospitals so treated had not been excluded from
calculation of the wage index for that rural area.''
The treatment of Sec. 412.103 hospitals was again the subject of
litigation in a recent case contesting our FY 2020 rural floor policy,
under which we calculated the rural floor and the related budget
neutrality adjustment without including data from hospitals that
reclassified from urban to rural (84 FR 42332 through 42336). On April
8, 2022, the district court in Citrus HMA, LLC, d/b/a Seven Rivers
Regional Medical Center v. Becerra, No. 1:20-cv-00707 (D.D.C.) (Citrus)
found that the Secretary did not have authority under section 4410(a)
of the Balanced Budget Act of 1997 to establish a rural floor different
from the rural wage index for a state.
Following our review of the Citrus decision (which we did not
appeal) and the comments we received on the FY 2023 IPPS/LTCH PPS
proposed rule, in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49002
through 49004), we finalized a policy that calculates the rural floor
as it was calculated before FY 2020. We stated that we understand that
our policy of setting a rural floor lower than the rural wage index for
a state was inconsistent with the district court's decision in Citrus.
For FY 2023 and subsequent years, our policy is to include the wage
data of hospitals that have reclassified from urban to rural under
section 1886(d)(8)(E) of the Act (as implemented in the regulations at
Sec. 412.103) and have no MGCRB
[[Page 26974]]
reclassification in the calculation of the rural floor, and to include
the wage data of such hospitals in 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.\156\ We stated
that we will apply the same policy as prior to the FY 2020 final rule
for calculating the rural floor, in which the rural wage index sets the
rural floor.
---------------------------------------------------------------------------
\156\ We note in the FY 2023 IPPS/LTCH PPS final rule (87 FR
49004), we stated that for FY 2023 and subsequent years, we are
finalizing a policy to include the wage data of hospitals that have
reclassified from urban to rural under section 1886(d)(8)(E) of the
Act (as implemented in the regulations at Sec. 412.103) and have no
additional form of reclassification (MGCRB or Lugar) in the
calculation of the rural floor, and to include the wage data of such
hospitals in 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. ``Lugar'' hospitals are
geographically rural and would be included in the rural wage index
calculation, unless excluded per the hold harmless provision at
section 1886(d)(8)(C)(ii). The parenthetical reference to ``Lugar''
hospitals in the rule was included in error, and was not implemented
in our rate setting methodology in FY 2023.
---------------------------------------------------------------------------
In addition to the litigation, as previously described, CMS has
received numerous public comments in recent years urging CMS to treat
Sec. 412.103 hospitals the same as geographically rural hospitals for
the rural wage index and rural floor calculations. For example, we
received many comments in response to our FY 2020 policy of excluding
the wage data of Sec. 412.103 hospitals from the calculation of the
rural floor stating that excluding reclassified hospitals from the
rural floor is inconsistent with the statutory language of section
1886(d)(8)(E) of the Act and section 4410(a) of the Balanced Budget Act
of 1997. As summarized in greater detail in the FY 2020 IPPS/LTCH PPS
final rule (84 FR 42334), commenters stated that the statute does not
draw any distinction between the ``rural areas'' used to calculate the
rural floor under section 4410(a) of the Balanced Budget Act of 1997
and the ``rural areas'' that reclassified hospitals are to be treated
as located in under section 1886(d)(8)(E) of the Act, and that under
the Geisinger and Lawrence & Memorial Hospital cases, a Sec. 412.103
hospital should be treated as a rural hospital for wage
reclassification.
Also, in the FY 2022 IPPS/LTCH PPS final rule (86 FR 45181), a
commenter disagreed with CMS' treatment of hospitals with dual Sec.
412.103 and MGCRB reclassifications. The commenter stated that CMS'
policy of considering the hospital's geographic CBSA and the urban CBSA
to which the hospital is reclassified under the MGCRB for the wage
index calculation violates the statutory requirement to treat Sec.
412.103 hospitals the same as geographically rural hospitals. The
commenter specifically requested that CMS include the wages of Sec.
412.103 hospitals that also have an active MGCRB reclassification in
calculating the rural wage of the state if not doing so would reduce
the wage index for that area, in the same manner that geographically
rural hospitals with a MGCRB reclassification are treated according to
section 1886(d)(8)(C)(ii) of Act.
Again in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49002),
commenters urged CMS to discontinue the policy of excluding the wage
data of Sec. 412.103 hospitals from the rural floor calculation.
Spurred by the aforementioned district court's decision in Citrus,
commenters urged CMS to acquiesce, stating their belief that the
court's analysis was thorough and emphasizing that continuing the rural
floor policy would only increase the agency's exposure to future
lawsuits. Commenters asserted that the plain language of the statute
does not provide for a free-floating rural floor that is not linked to
the rural wage index.
As previously enumerated, CMS has made policy changes as a result
of the courts' decisions and related public comments. Because these
policy changes were implemented piecemeal in reaction to litigation,
and many through IFCs rather than the usual proposed rule process, CMS
has not had the opportunity to systematically revisit this statutory
framework.
In this proposed rule, CMS has taken the opportunity to revisit the
case law, prior public comments, and the relevant statutory language.
After doing so, CMS now agrees--for the reasons expressed by the U.S.
Courts of Appeals for the Second and Third Circuit, as well as the U.S.
District Court for the District of Columbia--that the best reading of
section 1886(d)(8)(E)'s text that CMS ``shall treat the [Sec. 412.103]
hospital as being located in the rural area'' is that it instructs CMS
to treat Sec. 412.103 hospitals the same as geographically rural
hospitals for the wage index calculation. While CMS has previously
treated section 1886(d)(8)(E) reclassifications as one among many
reclassifications provided for under section 1886(d) and so limited its
scope in several ways, we now read it to provide that a Sec. 412.103
reclassification functions the same as if the reclassifying hospital
had physically relocated into a geographically rural area. We are
influenced by the fact that courts have largely adopted this
interpretation of section 1886(d)(8)(E), and that it requires
considerable resources to unwind a wage index policy after adverse
judicial decisions--often requiring an IFC outside the usual IPPS
rulemaking schedule and also may have budget neutrality implications.
Cf. Amgen, Inc. v. Smith, 357 F.3d 103, 112 (D.C. Cir. 2004)
(collecting cases ``not[ing] the havoc that piecemeal review of OPPS
payments could bring about'' in light of statutory budget neutrality
requirements).
We acknowledge that this interpretation of section 1886(d)(8)(E)
can lead to significant financial consequences. Many hospitals eligible
for Sec. 412.103 reclassifications have paired that reclassification
with a MGCRB wage index reclassification to escalate their wage index
beyond what would be otherwise available to them under the law. Section
1886(d)(3)(E)(i) of the Act states that any adjustments or updates made
under subparagraph (E) for a fiscal year shall be made in a manner that
assures that the aggregate payments under section 1886(d) in the fiscal
year are not greater or less than those that would have been made
without such adjustment, and therefore any increases to these
hospitals' wage index inevitably decrease the payments Medicare makes
to other hospitals. But, as the Second Circuit explained (Lawrence +
Memorial Hospital, 812 F.3d at 267), these payment consequences are ``a
function of the many different roles that hospitals play and the many
different contexts in which they operate.'' We solicit comments on our
proposed interpretation of section 1886(d)(8)(E) and section
1886(d)(3)(E)(i).
As additionally, previously discussed, pending litigation and
public comments in the FY 2022 IPPS/LTCH PPS final rule (86 FR 45181
and 45182) have raised concerns that there is an additional wage index
policy under which CMS does not treat Sec. 412.103 hospitals the same
as geographically rural hospitals: its policy of CMS excluding data
from Sec. 412.103 hospitals that are reclassified to an urban area by
the MGCRB for wage index purposes when calculating the rural wage index
for that state. We propose to change that policy, consistent with our
new proposed interpretation of section 1886(d)(8)(E), as described in
this section of this rule. Under the policy changes adopted in the FY
2023 IPPS/LTCH PPS final rule under which the rural floor is the same
as the rural wage index (87 FR 49002 through 49004), we believe that
this change to the wage index policy would also resolve the concerns
about the rural floor raised in comments discussed previously. As far
[[Page 26975]]
as we are aware, these are the only policies that our reinterpretation
of section 1886(d)(8)(E) of the Act requires us to change, but we
solicit comments on whether there are any remaining policies that CMS
should reexamine in light of our proposed reinterpretation of section
1886(d)(8)(E) of the Act.
b. Current Calculation of the Rural Wage Index and Application of
Various Hold Harmless Policies
Sections 1886(d)(8)(C)(ii) and (iii) of the Act are ``hold
harmless'' provisions that may affect the wage index calculation when
hospitals reclassify out of a state's rural area into another area.
Section 1886(d)(8)(C)(ii) of the Act provides that if the application
of section 1886(d)(8)(B) of the Act (``Lugar'' status) or a decision of
the MGCRB or the Secretary under section 1886(d)(10), by treating
hospitals located in a rural county or counties as not being located in
the rural area in a state, reduces the wage index for that rural area,
the Secretary shall calculate and apply such wage index as if the
hospitals so treated had not been excluded from calculation of the wage
index for that rural area. Section 1886(d)(8)(C)(iii) provides that the
application of section 1886(d)(8)(B) of the Act (``Lugar'' status) or a
decision of the MGCRB or the Secretary under section 1886(d)(10) of the
Act may not result in the reduction of any county's wage index to a
level below the wage index for rural areas in the state in which the
county is located.
In the FY 2006 IPPS final rule (70 FR 47378 and 47379), we adopted
a regulatory hold harmless policy for situations where hospitals
reclassify into a state's rural area under section 1886(d)(8)(E) of the
Act. We stated that the wage data of an urban hospital reclassifying
into the rural area are included in the rural area's wage index, if
including the urban hospital's data increase the wage index of the
rural area. Otherwise, the wage data are excluded. It has been CMS's
policy since then to include hospitals with state-to-state MGCRB
reclassifications to a nearby state's rural area along with hospitals
reclassified under section 1886(d)(8)(E) of the Act in this regulatory
hold harmless policy.
In the FY 2010 IPPS/LTCH PPS final rule (74 FR 43837 and 43838), as
part of a summary of reclassification policies we had adopted, we
stated that in cases where hospitals have reclassified to rural areas,
such as urban hospitals reclassifying to rural areas under 42 CFR
412.103, the hospital's wage data are: (a) included in the rural wage
index calculation, unless doing so would reduce the rural wage index;
and (b) included in the urban area where the hospital is physically
located. We further stated that the effect of this policy, in
combination with the statutory requirement at section 1886(d)(8)(C)(ii)
of the Act, is that rural areas may receive a wage index based upon the
highest of: (1) wage data from hospitals geographically located in the
rural area (calculation 1 in the table in this section of this rule);
(2) wage data from hospitals geographically located in the rural area,
but excluding all data associated with hospitals reclassifying out of
the rural area under section 1886(d)(8)(B) or section 1886(d)(10) of
the Act (calculation 2 in the table in this section of this rule); or
(3) wage data associated with hospitals geographically located in the
area plus all hospitals reclassified into the rural area (calculation 3
in the table in this section of this rule).
In the April 21, 2016 IFC (81 FR 23428 through 23438), referenced
earlier in section III.G.1.a. of the preamble of this proposed rule, as
a result of the Geisinger decision, we adopted a policy allowing
hospitals to hold simultaneous Sec. 412.103 and MGCRB
reclassifications. In our wage index development process, we refer to
these hospitals as having ``dual reclass'' status. We further stated in
the IFC that we will exclude hospitals with Sec. 412.103
reclassifications from the calculation of the reclassified rural wage
index if they also have an active MGCRB reclassification to another
area (81 FR 23434).
We also clarified in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR
25070) that if a hospital qualified for ``Lugar'' status and obtained
Sec. 412.103 rural status, we would apply the urban ``Lugar'' status
for wage index purposes only. These geographically rural hospitals
would be included in the rural wage index calculation in accordance
with the previously described hold harmless policy.
The following chart summarizes the current calculation of the rural
wage index algebraically and in accordance with the statutes and
policies previously described:
[GRAPHIC] [TIFF OMITTED] TP01MY23.249
[GRAPHIC] [TIFF OMITTED] TP01MY23.250
[[Page 26976]]
c. Proposed Modification to the Rural Wage Index Calculation
Methodology
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 45181 and 45182), we
responded to a comment disagreeing with our treatment of ``dual
reclass'' hospitals when calculating the rural floor. The commenter
stated that CMS's policy of considering the hospital's geographic CBSA
and the urban CBSA to which the hospital is reclassified under the
MGCRB for the wage index calculation violates the statutory requirement
to treat Sec. 412.103 hospitals the same as hospitals geographically
located in the rural area of the state. The commenter requested that
CMS include the wages of Sec. 412.103 hospitals that also have an
active MGCRB reclassification in calculating the rural wage of the
state if not doing so would reduce the wage index for that area, in the
same manner that geographically rural hospitals with a MGCRB
reclassification are treated according to section 1886(d)(8)(C)(ii) of
the Act.
We responded that we did not propose the policy the commenter
suggested, and noted that it would constitute a significant change with
numerous and potentially negative effects on the IPPS wage index. We
stated that we did not believe it would be appropriate to adopt such a
policy without describing it in a proposed rule and obtaining public
comments. Therefore, we did not adopt the policy the commenter
suggested, but we stated that we will consider further addressing the
issue in future rulemaking. We also received and responded to a similar
comment in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49003). After
further consideration of these comments and our proposed
reinterpretation of section 1886(d)(8)(E) of the Act discussed earlier
in this section, we propose changing the rural wage index calculation
methodology consistent with that proposed reinterpretation. We
acknowledge the ongoing risk of the pending lawsuits cited previously,
and recognize the challenge should we need to implement any future
remedy in a budget neutral manner.
Beginning with FY 2024, we are proposing to include hospitals with
Sec. 412.103 reclassification along with geographically rural
hospitals in all rural wage index calculations, and to exclude ``dual
reclass'' hospitals (hospitals with simultaneous Sec. 412.103 and
MGCRB reclassifications) implicated by the hold harmless provision at
section 1886(d)(8)(C)(ii) of the Act. The following chart summarizes
the current (as described in the table earlier in this section) and
proposed rural wage index calculation algebraically:
[GRAPHIC] [TIFF OMITTED] TP01MY23.251
[GRAPHIC] [TIFF OMITTED] TP01MY23.252
BILLING CODE 4120-01-C
As shown in the current calculation policy, as previously
described, Sec. 412.103 hospitals enter the rural wage index
calculation in calculation 3, which reflects the regulatory hold
harmless policy described in the FY 2006 IPPS final rule (70 FR 47378
and 47379) and previously referenced, preventing reclassification into
a state's rural area from reducing the rural wage index. That is, we
determine the effects for outbound reclassification (from the rural
area to another area) and inbound reclassification (from another area
into the rural area) separately when determining the highest rural wage
index value. Under our proposal, as shown in the proposed calculation
policy, as previously described, Sec. 412.103 hospitals would no
longer be treated as an inbound reclassification (calculation 3 of the
current policy), but would instead be included in all calculations in
which geographically rural hospitals are included (calculations 1-3 of
the proposed policy). ``Dual reclass'' hospitals would be excluded
(calculation 2 of the proposed policy) in accordance with the hold
harmless provision at section 1886(d)(8)(C)(ii) of the Act, along with
other geographically rural hospitals with MGCRB or ``Lugar''
reclassification status.
As discussed earlier in section III.G.1.a. of the preamble of this
proposed rule, in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49004),
we stated that we will apply the same policy as prior to the FY 2020
IPPS/LTCH PPS final rule for calculating the rural floor, in which the
rural wage index sets the rural floor. For FY 2023 and subsequent
years, our current policy is to include the wage data of Sec. 412.103
hospitals that have no MGCRB reclassification in the calculation of the
rural floor, and to include the wage data of such hospitals in 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. Consistent with the previously discussed proposal, beginning
with FY 2024 we are proposing to include the data of all Sec. 412.103
hospitals (including those that have an MGCRB reclassification) in the
calculation of the rural floor and the
[[Page 26977]]
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.
We acknowledge that these proposals would have significant effects
on wage index values. As discussed in prior rulemaking (72 FR 47371
through 47373, 84 FR 42332, 85 FR 58788) and in this rule, CMS has
expressed concern with hospitals' use of Sec. 412.103 reclassification
to increase the rural wage index and rural floor. However, as already
mentioned, ``this is simply a function of the many different roles that
hospitals play and the many different contexts in which they operate,''
Lawrence + Mem'l Hosp., 812 F.3d at 267, and follows from our proposed
interpretation of section 1886(d)(8)(E)--which encompasses the
calculation of the State's rural wage index. We discuss the overall
impact of these proposed changes on the rural wage index calculation
methodology in detail in section II.A.4. of Appendix A of this proposed
rule.
As discussed in the previous section, in the FY 2006 IPPS final
rule (70 FR 47378 and 47379), we adopted a regulatory hold harmless
policy for situations where hospitals reclassify into a state's rural
area. Hospitals reclassified under Sec. 412.103 would no longer be
affected by this policy, as we are proposing to include them in the
rural wage index calculation in the same manner as geographically rural
hospitals. Therefore, only the effects of hospitals with state-to-state
MGCRB reclassifications to a nearby state's rural area would be
addressed by this policy. It has been CMS's longstanding policy that
hospitals with state-to-state MGCRB reclassifications to a nearby
state's rural area receive a ``combined'' wage index (calculation 3 of
the current rural wage index calculation, as previously detailed in the
chart) that includes the wage data for geographically rural hospitals
and all hospitals reclassified into that rural area. Given our
longstanding goal to mitigate potential negative impacts on rural
hospitals, we are proposing to continue the part of our hold harmless
policy that excludes the data of hospitals reclassifying into a state's
rural area if doing so would reduce that state's rural wage index. We
are proposing that these reclassified hospitals be assigned the
``combined'' wage index (calculation 3 of the proposed rural wage index
calculation as previously detailed in the chart) that includes the wage
data for geographically rural hospitals and all hospitals reclassified
into that rural area (subject to any additional wage index adjustment
policies for which those reclassified hospitals may be eligible).
Finally, we are proposing to continue the policy to apply the
deemed urban wage index value for Sec. 412.103 hospitals that also
qualify as ``Lugar'' under section 1886(d)(8)(B) of the Act. Prior to
Geisinger, since section 1886(d)(8)(E) requires CMS to treat a
reclassified hospital as being located in the rural area of the state,
and section 1886(d)(8)(B) requires CMS to treat a rural hospital as
being located in an urban area, our policy was that obtaining Sec.
412.103 status would effectively waive a hospital's deemed urban
``Lugar'' status. We discussed in the FY 2017 IPPS/LTCH PPS proposed
rule (81 FR 25070) that if a hospital qualified for ``Lugar'' status
and obtained Sec. 412.103 rural status, our policy is to apply the
urban ``Lugar'' status for wage index purposes only.
2. Imputed Floor
In the FY 2005 IPPS final rule (69 FR 49109 through 49111), we
adopted the imputed floor policy as a temporary 3-year regulatory
measure to address concerns from hospitals in all urban States that
have stated that they are disadvantaged by the absence of rural
hospitals to set a wage index floor for those States. We extended the
imputed floor policy eight times since its initial implementation, the
last of which was adopted in the FY 2018 IPPS/LTCH PPS final rule and
expired on September 30, 2018. We refer readers to further discussions
of the imputed floor in the IPPS/LTCH PPS final rules from FYs 2014
through 2019 (78 FR 50589 through 50590, 79 FR 49969 through 49971, 80
FR 49497 through 49498, 81 FR 56921 through 56922, 82 FR 38138 through
38142, and 83 FR 41376 through 41380, respectively) and to the
regulations at 42 CFR 412.64(h)(4). For FYs 2019, 2020, and 2021,
hospitals in all-urban states received a wage index that was calculated
without applying an imputed floor, and we no longer included the
imputed floor as a factor in the national budget neutrality adjustment.
Section 9831 of the American Rescue Plan Act of 2021 (Pub. L. 117-
2), enacted on March 11, 2021, amended section 1886(d)(3)(E)(i) of the
Act and added section 1886(d)(3)(E)(iv) of the Act to establish a
minimum area wage index for hospitals in all-urban States for
discharges occurring on or after October 1, 2021. Specifically, section
1886(d)(3)(E)(iv)(I) and (II) of the Act provides that for discharges
occurring on or after October 1, 2021, the area wage index applicable
to any hospital in an all-urban State may not be less than the minimum
area wage index for the fiscal year for hospitals in that State
established using the methodology described in Sec. 412.64(h)(4)(vi)
as in effect for FY 2018. Unlike the imputed floor that was in effect
from FYs 2005 through 2018, section 1886(d)(3)(E)(iv)(III) of the Act
provides that the imputed floor wage index shall not be applied in a
budget neutral manner. Section 1886(d)(3)(E)(iv)(IV) provides that, for
purposes of the imputed floor wage index under clause (iv), the term
all-urban State means a State in which there are no rural areas (as
defined in section 1886(d)(2)(D) of the Act) or a State in which there
are no hospitals classified as rural under section 1886 of the Act.
Under this definition, given that it applies for purposes of the
imputed floor wage index, we consider a hospital to be classified as
rural under section 1886 of the Act if it is assigned the State's rural
area wage index value.
Effective beginning October 1, 2021 (FY 2022), section
1886(d)(3)(E)(iv) of the Act reinstates the imputed floor wage index
policy for all-urban States, with no expiration date, using the
methodology described in 42 CFR 412.64(h)(4)(vi) as in effect for FY
2018. We refer readers to the FY 2022 IPPS/LTCH PPS final rule (86 FR
45176 through 45178) for further discussion of the original imputed
floor calculation methodology implemented in FY 2005 and the
alternative methodology implemented in FY 2013.
Based on data available for this proposed rule, States that would
be all-urban States as defined in section 1886(d)(3)(E)(iv)(IV) of the
Act, and thus hospitals in such States would be eligible to receive an
increase in their wage index due to application of the imputed floor
for FY 2024 are identified in Table 3 associated with this proposed
rule. States with a value in the column titled ``State Imputed Floor''
are eligible for the imputed floor.
The regulations at Sec. 412.64(e)(1) and (4) and (h)(4) and (5)
implement the imputed floor required by section 1886(d)(3)(E)(iv) of
the Act for discharges occurring on or after October 1, 2021. The
imputed floor would continue to be applied for FY 2024 in accordance
with the policies adopted in the FY 2022 IPPS/LTCH PPS final rule. For
more information regarding our implementation of the imputed floor
required by section 1886(d)(3)(E)(iv) of the Act, we refer readers to
the discussion in the FY 2022 IPPS/LTCH PPS final rule (86 FR 45176
through 45178).
[[Page 26978]]
3. State Frontier Floor for FY 2024
Section 10324 of Public Law 111-148 requires that hospitals in
frontier States cannot be assigned a wage index of less than 1.0000.
(We refer readers to the regulations at 42 CFR 412.64(m) and to a
discussion of the implementation of this provision in the FY 2011 IPPS/
LTCH PPS final rule (75 FR 50160 through 50161).) In this FY 2024 IPPS/
LTCH PPS proposed rule, we are not proposing any changes to the
frontier floor policy for FY 2024. In this proposed rule, 43 hospitals
would receive the frontier floor value of 1.0000 for their FY 2024
proposed 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 are projected to receive a wage index
value greater than 1.0000 prior to the application of the frontier
floor policy for FY 2024.
The areas affected by the rural and frontier floor policies for the
proposed FY 2024 wage index are identified in Table 2 associated with
this proposed rule, which is available via the internet on the CMS
website.
4. Proposed Continuation of the Low Wage Index Hospital Policy and
Budget Neutrality Adjustment
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42325 through
42339), we finalized a policy to address the artificial magnification
of wage index disparities, based in part on comments we received in
response to our request for information included in our FY 2019 IPPS/
LTCH PPS proposed rule (83 FR 20372 through 20377). In the FY 2020
IPPS/LTCH final rule, based on those public comments and the growing
disparities between wage index values for high- and low-wage-index
hospitals, we explained that those growing disparities are likely
caused by the use of historical wage data being used to prospectively
set hospitals' wage indexes. That lag creates barriers to hospitals
with low wage index values from being able to increase employee
compensation because those hospitals will not receive corresponding
increases in their Medicare payment for several years (84 FR 42327).
Accordingly, we finalized a policy that provided certain low wage index
hospitals with an opportunity to increase employee compensation without
the usual lag in those increases being reflected in the calculation of
the wage index.\157\ We accomplished this by temporarily 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. As explained in the FY 2020 IPPS/LTCH
proposed rule (84 FR 19396) and final rule (84 FR 42329), we indicated
that the Secretary has authority to implement the lowest quartile wage
index proposal under both section 1886(d)(3)(E) of the Act and under
his exceptions and adjustments authority under section 1886(d)(5)(I) of
the Act.
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\157\ In the FY 2020 IPPS/LTCH proposed rule, we agreed with
respondents to a request for information who indicated that some
current wage index policies create barriers to hospitals with low
wage index values from being able to increase employee compensation
due to the lag between when hospitals increase the compensation and
when those increases are reflected in the calculation of the wage
index. (We noted that this lag results from the fact that the wage
index calculations rely on historical data.) We also agreed that
addressing this systemic issue did not need to wait for
comprehensive wage index reform given the growing disparities
between low and high wage index hospitals, including rural hospitals
that may be in financial distress and facing potential closure (84
FR 19394 and 19395).
---------------------------------------------------------------------------
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 (the low wage index hospital
policy). We stated in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42326
through 42328) our intention is 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.
We note that the FY 2020 low wage index hospital policy and the
related budget neutrality adjustment are the subject of pending
litigation, including in Bridgeport Hospital, et al., v. Becerra, No.
1:20-cv-01574 (D.D.C.) (hereafter referred to as Bridgeport). The
district court in Bridgeport found that the Secretary did not have
authority under section 1886(d)(3)(E) or 1886(d)(5)(I)(i) of the Act to
adopt the low wage index hospital policy for FY 2020 and remanded the
policy to the agency without vacatur. We have appealed the court's
decision.
At the time the policy was originally promulgated, we stated in the
FY 2020 IPPS/LTCH PPS final rule (84 FR 42326 through 42328) our
intention that it would be in effect for at least 4 fiscal years
beginning October 1, 2019. We stated we intended to revisit the issue
of the duration of this policy in future rulemaking as we gained
experience under the policy. At this time, we only have one year of
relevant data (from FY 2020) that we could use to evaluate any
potential impacts of this policy. As discussed in section III.B. of the
preamble of this proposed rule, consistent with the IPPS and LTCH PPS
ratesettings, our policy principles with regard to the wage index
include generally using the most current data and information
available, which is usually data on a 4-year lag (for example, for the
FY 2023 wage index we used cost report data from FY 2019). Given our
current lack of sufficient data with which to evaluate the low wage
index hospital policy, we believe it is necessary to wait until we have
useable data from additional fiscal years before making any decision to
modify or discontinue the policy. Therefore, for FY 2024, we are
proposing to continue the low wage index hospital policy and the
related budget neutrality adjustment (discussed in this section of this
rule). We may decide to take a different approach in the final rule,
depending on public comments or developments in the court proceedings.
In order to offset the estimated increase in IPPS payments to
hospitals with wage index values below the 25th percentile wage index
value, for FY 2024 and for subsequent fiscal years during which the low
wage index hospital policy is in effect, we are proposing to apply a
budget neutrality adjustment in the same manner as we applied it since
FY 2020 as a uniform budget neutrality factor applied to the
standardized amount. We refer readers to section II.A.4.f. of the
Addendum to this proposed rule for further discussion of the budget
neutrality adjustment for FY 2024. For purposes of the low wage index
hospital policy, based on the data for this proposed rule, the table
displays the 25th percentile wage index value across all hospitals for
FY 2024.
[[Page 26979]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.253
5. Permanent Cap on Wage Index Decreases and Budget Neutrality
Adjustment
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49018 through
49021), we finalized a wage index cap policy and associated budget
neutrality adjustment for FY 2023 and subsequent fiscal years. Under
this policy, we apply a 5-percent cap on any decrease to a hospital's
wage index from its wage index in the prior FY, regardless of the
circumstances causing the decline. A hospital's wage index will not be
less than 95 percent of its final wage index for the prior FY. If a
hospital's prior FY wage index is calculated with the application of
the 5-percent cap, the following year's wage index will not be less
than 95 percent of the hospital's capped wage index in the prior FY.
Except for newly opened hospitals, we apply the cap for a FY using the
final wage index applicable to the hospital on the last day of the
prior FY. A newly opened hospital will be paid the wage index for the
area in which it is geographically located for its first full or
partial fiscal year, and it will not receive a cap for that first year
because it would not have been assigned a wage index in the prior year.
The wage index cap policy is reflected at 42 CFR 412.64(h)(7). We apply
the cap in a budget neutral manner through a national adjustment to the
standardized amount each fiscal year. For more information about the
wage index cap policy and associated budget neutrality adjustment, we
refer readers to the discussion in the FY 2023 IPPS/LTCH PPS final rule
(87 FR 49018 through 49021).
For FY 2024, we would apply the wage index cap and associated
budget neutrality adjustment in accordance with the policies adopted in
the FY 2023 IPPS/LTCH PPS final rule. We note that the budget
neutrality adjustment would be updated, as appropriate, based on the
final rule data. We refer readers to the Addendum of this proposed rule
for further information regarding the budget neutrality calculations.
H. FY 2023 Wage Index Tables
In this FY 2024 IPPS/LTCH PPS proposed rule, we have included the
following wage index tables: Table 2 titled ``Case-Mix Index and Wage
Index Table by CCN''; Table 3 titled ``Wage Index Table by CBSA'';
Table 4A 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
proposed rule for a discussion of the wage index tables for FY 2024.
I. Proposed Revisions to the Wage Index Based on Hospital
Redesignations and Reclassifications
1. General Policies and Effects of Reclassification and Redesignation
Under section 1886(d)(10) of the Act, the Medicare Geographic
Classification Review Board (MGCRB) considers applications by hospitals
for geographic reclassification for purposes of payment under the IPPS.
Hospitals must apply to the MGCRB to reclassify not later than 13
months prior to the start of the fiscal year for which reclassification
is sought (usually by September 1). Generally, hospitals must be
proximate to the labor market area to which they are seeking
reclassification and must demonstrate characteristics similar to
hospitals located in that area. The MGCRB issues its decisions by the
end of February for reclassifications that become effective for the
following fiscal year (beginning October 1). The regulations applicable
to reclassifications by the MGCRB are located in 42 CFR 412.230 through
412.280. (We refer readers to a discussion in the FY 2002 IPPS final
rule (66 FR 39874 and 39875) regarding how the MGCRB defines mileage
for purposes of the proximity requirements.) The general policies for
reclassifications and redesignations and the policies for the effects
of hospitals' reclassifications and redesignations on the wage index
are discussed in the FY 2012 IPPS/LTCH PPS final rule for the FY 2012
final wage index (76 FR 51595 and 51596). We note that rural hospitals
reclassifying under the MGCRB to another State's rural area are not
eligible for the rural floor, because the rural floor may apply only to
urban, not rural, hospitals.
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, but we reverted back to the
pre-FY 2020 policy in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49002
through 49004). Hospitals that are geographically located in States
without any rural areas are ineligible to apply for rural
reclassification in accordance with the provisions of 42 CFR 412.103.
On April 21, 2016, we published an interim final rule with comment
period (IFC) in the Federal Register (81 FR 23428 through 23438) that
included provisions amending our regulations to allow hospitals
nationwide to have simultaneous Sec. 412.103 and MGCRB
reclassifications. For reclassifications effective beginning FY 2018, a
hospital may acquire rural status under Sec. 412.103 and subsequently
apply for a reclassification under the MGCRB using distance and average
hourly wage criteria designated for rural hospitals. In addition, we
provided that a hospital that has an active MGCRB reclassification and
is then approved for redesignation under Sec. 412.103 will not lose
its MGCRB reclassification; such a hospital receives a reclassified
urban wage index during the years of its active MGCRB reclassification
and is still considered rural under section 1886(d) of the Act and for
other purposes.
We discussed that when there is both a Sec. 412.103 redesignation
and an MGCRB reclassification, the MGCRB reclassification controls for
wage index calculation and payment purposes. Prior to FY 2024, we
excluded hospitals with Sec. 412.103 redesignations from the
calculation of the reclassified rural wage index if they also have an
active MGCRB reclassification to another area. That is, if an
application for urban reclassification through the MGCRB is approved,
and is not withdrawn or terminated by the hospital within the
established timelines, we consider the hospital's geographic CBSA and
the urban CBSA to which the hospital is reclassified under the MGCRB
for the wage index calculation. We refer readers to the April 21, 2016
IFC (81 FR 23428 through 23438) and the FY 2017 IPPS/LTCH PPS final
rule (81 FR 56922 through 56930), in which we finalized the April 21,
2016 IFC, for a full discussion of the effect of simultaneous
reclassifications under both the Sec. 412.103 and the MGCRB processes
on wage index calculations. For FY 2024 and subsequent years, we refer
readers
[[Page 26980]]
to section III.G.1 of the preamble of this proposed rule for discussion
of our proposal to include hospitals with a Sec. 412.103 redesignation
that also have an active MGCRB reclassification to another area in the
calculation of the reclassified rural wage index.
On May 10, 2021, we published an interim final rule with comment
period (IFC) in the Federal Register (86 FR 24735 through 24739) that
included provisions amending our regulations to allow hospitals with a
rural redesignation to reclassify through the MGCRB using the rural
reclassified area as the geographic area in which the hospital is
located. We revised our regulation so that the redesignated rural area,
and not the hospital's geographic urban area, is considered the area a
Sec. 412.103 hospital is located in for purposes of meeting MGCRB
reclassification criteria, including the average hourly wage
comparisons required by Sec. 412.230(a)(5)(i) and (d)(1)(iii)(C).
Similarly, we revised the regulations to consider the redesignated
rural area, and not the geographic urban area, as the area a Sec.
412.103 hospital is located in for the prohibition at Sec.
412.230(a)(5)(i) on reclassifying to an area with a pre-reclassified
average hourly wage lower than the pre-reclassified average hourly wage
for the area in which the hospital is located. Effective for
reclassification applications due to the MGCRB for reclassification
beginning in FY 2023, a Sec. 412.103 hospital could apply for a
reclassification under the MGCRB using the State's rural area as the
area in which the hospital is located. We refer readers to the May 10,
2021 IFC (86 FR 24735 through 24739) and the FY 2022 IPPS/LTCH PPS
final rule (86 FR 45187 through 45190), in which we finalized the May
10, 2021 IFC, for a full discussion of these policies.
2. MGCRB Reclassification and Redesignation Issues for FY 2024
a. FY 2024 Reclassification Application Requirements and Approvals
As previously stated, under section 1886(d)(10) of the Act, the
MGCRB considers applications by hospitals for geographic
reclassification for purposes of payment under the IPPS. The specific
procedures and rules that apply to the geographic reclassification
process are outlined in regulations under 42 CFR 412.230 through
412.280. At the time this proposed rule was drafted, the MGCRB had
completed its review of FY 2024 reclassification requests. Based on
such reviews, there are 621 hospitals approved for wage index
reclassifications by the MGCRB starting in FY 2024. Because MGCRB wage
index reclassifications are effective for 3 years, for FY 2024,
hospitals reclassified beginning in FY 2022 or FY 2023 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 262 hospitals approved for wage index reclassifications in
FY 2022 that will continue for FY 2024, and 266 hospitals approved for
wage index reclassifications in FY 2023 that will continue for FY 2024.
Of all the hospitals approved for reclassification for FY 2022, FY 2023
and FY 2024, based upon the review at the time of the proposed rule,
1,149 (approximately 35 percent) hospitals are in a MGCRB
reclassification status for FY 2024 (with 196 of these hospitals
reclassified back to their geographic location).
Under the regulations at 42 CFR 412.273, hospitals that have been
reclassified by the MGCRB are permitted to withdraw their applications
if the request for withdrawal is received by the MGCRB any time before
the MGCRB issues a decision on the application, or after the MGCRB
issues a decision, provided the request for withdrawal is received by
the MGCRB within 45 days of the date that CMS' annual notice of
proposed rulemaking is issued in the Federal Register concerning
changes to the inpatient hospital prospective payment system and
proposed payment rates for the fiscal year for which the application
has been filed. For information about withdrawing, terminating, or
canceling a previous withdrawal or termination of a 3-year
reclassification for wage index purposes, we refer readers to Sec.
412.273, as well as the FY 2002 IPPS final rule (66 FR 39887 through
39888) and the FY 2003 IPPS final rule (67 FR 50065 through 50066).
Additional discussion on withdrawals and terminations, and
clarifications regarding reinstating reclassifications and ``fallback''
reclassifications were included in the FY 2008 IPPS final rule (72 FR
47333) and the FY 2018 IPPS/LTCH PPS final rule (82 FR 38148 through
38150).
We note that in the FY 2021 IPPS/LTCH final rule (85 FR 58771
through 58778), CMS finalized an assignment policy for hospitals
reclassified to CBSAs from which one or more counties moved to a new or
different urban CBSA under the revised OMB delineations based on OMB
Bulletin 18-04. We provided a table in that rule (85 FR 58777 and
58778) which described the assigned CBSA for all the MGCRB cases
subject to this policy. For such reclassifications that continue to be
active or are reinstated for FY 2024, the CBSAs assigned in the FY 2021
IPPS/LTCH final rule continue to be in effect.
Applications for FY 2025 reclassifications are due to the MGCRB by
September 1, 2023. We note that this is also the deadline for canceling
a previous wage index reclassification withdrawal or termination under
42 CFR 412.273(d). Applications and other information about MGCRB
reclassifications may be obtained beginning in mid-July 2023 via the
internet on the CMS website at https://www.cms.gov/Regulations-andGuidance/Review-Boards/MGCRB/index.html. This collection of
information was previously approved under OMB Control Number 0938-0573
which expired on January 31, 2021. A reinstatement of this PRA package
is currently being developed. The public will have an opportunity to
review and submit comments regarding the reinstatement of this PRA
package through a public notice and comment period separate from this
rulemaking.
3. Redesignations Under Section 1886(d)(8)(B) of the Act (Lugar Status
Determinations)
In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51599 through
51600), we adopted the policy that, beginning with FY 2012, an eligible
hospital that waives its Lugar status in order to receive the out-
migration adjustment has effectively waived its deemed urban status
and, thus, is rural for all purposes under the IPPS effective for the
fiscal year in which the hospital receives the 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 year within this 3-year period, it must send a
request to CMS within 45 days of publication of the proposed rule for
that particular fiscal year. We indicated that such reinstatement
requests may be sent electronically to [email protected]. In the FY
2018 IPPS/LTCH PPS final rule (82 FR 38147 through
[[Page 26981]]
38148), we finalized a policy revision to require a Lugar hospital that
qualifies for and accepts the out-migration adjustment, or that no
longer wishes to accept the out-migration adjustment and instead elects
to return to its deemed urban status, to notify CMS within 45 days from
the date of public display of the proposed rule at the Office of the
Federal Register. These revised notification timeframes were effective
beginning October 1, 2017. In addition, in the FY 2018 IPPS/LTCH PPS
final rule (82 FR 38148), we clarified that both requests to waive and
to reinstate ``Lugar'' status may be sent to [email protected]. To
ensure proper accounting, we request hospitals to include their CCN,
and either ``waive Lugar'' or ``reinstate Lugar'', in the subject line
of these requests.
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.
J. Proposed Out-Migration Adjustment Based on Commuting Patterns of
Hospital Employees
In accordance with section 1886(d)(13) of the Act, as added by
section 505 of Public Law 108-173, beginning with FY 2005, we
established a process to make adjustments to the hospital wage index
based on commuting patterns of hospital employees (the ``out-
migration'' adjustment). The process, outlined in the FY 2005 IPPS
final rule (69 FR 49061), provides for an increase in the wage index
for hospitals located in certain counties that have a relatively high
percentage of hospital employees who reside in the county but work in a
different county (or counties) with a higher wage index.
Section 1886(d)(13)(B) of the Act requires the Secretary to use
data the Secretary determines to be appropriate to establish the
qualifying counties. When the provision of section 1886(d)(13) of the
Act was implemented for the FY 2005 wage index, we analyzed commuting
data compiled by the U.S. Census Bureau that were derived from a
special tabulation of the 2000 Census journey-to-work data for all
industries (CMS extracted data applicable to hospitals). These data
were compiled from responses to the ``long-form'' survey, which the
Census Bureau used at that time and which contained questions on where
residents in each county worked (69 FR 49062). However, the 2010 Census
was ``short form'' only; information on where residents in each county
worked was not collected as part of the 2010 Census. The Census Bureau
worked with CMS to provide an alternative dataset based on the latest
available data on where residents in each county worked in 2010, for
use in developing a new outmigration adjustment based on new commuting
patterns developed from the 2010 Census data beginning with FY 2016.
To determine the out-migration adjustments and applicable counties
for FY 2016, we analyzed commuting data compiled by the Census Bureau
that were derived from a custom tabulation of the American Community
Survey (ACS), an official Census Bureau survey, utilizing 2008 through
2012 (5-year) Microdata. The data were compiled from responses to the
ACS questions regarding the county where workers reside and the county
to which workers commute. As we discussed in prior IPPS/LTCH PPS final
rules, most recently in the FY 2023 IPPS/LTCH PPS final rule (87 FR
49012), we have applied the same policies, procedures, and computations
since FY 2012. We are proposing to use them again for FY 2024, as we
believe they continue to be appropriate. 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 2024, 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 2024, we
are not proposing any changes to the methodology or data source that we
used for FY 2016 (81 FR 25071). (We refer readers to a full discussion
of the out-migration adjustment, including rules on deeming hospitals
reclassified under section 1886(d)(8) or section 1886(d)(10) of the Act
to have waived the out-migration adjustment, in the FY 2012 IPPS/LTCH
PPS final rule (76 FR 51601 through 51602).)
Table 2 associated with this proposed rule (which is available via
the CMS website) includes the proposed out-migration adjustments for
the FY 2024 wage index. In addition, Table 4A associated with this
proposed 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 2024
identified by FIPS county code, the proposed FY 2024 out-migration
adjustment, and the number of years the adjustment will be in effect.
We refer readers to section V.I. of the Addendum of this proposed rule
for instructions on accessing IPPS tables that are posted on the CMS
websites identified in this proposed rule.
K. Reclassification From Urban to Rural Under Section 1886(d)(8)(E) of
the Act Implemented at 42 CFR 412.103
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 2023 IPPS/LTCH PPS
final rule (87 FR 49004) for a discussion of our current policy to
calculate the rural floor with the wage
[[Page 26982]]
data of urban hospitals reclassifying to rural areas under 412.103. We
also refer readers to section III.G.1. of the preamble of this proposed
rule with regard to our proposal to modify how we calculate the rural
wage index and its implications for the rural floor.
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41369 through
41374), we codified certain policies regarding multicampus hospitals in
the regulations at 42 CFR 412.92, 412.96, 412.103, and 412.108. We
stated that reclassifications from urban to rural under 42 CFR 412.103
apply to the entire hospital (that is, the main campus and its remote
location(s)). We also stated that a main campus of a hospital cannot
obtain an SCH, RRC, or MDH status, or rural reclassification under 42
CFR 412.103, independently or separately from its remote location(s),
and vice versa. In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49012
and 49013), we added 42 CFR 412.103(a)(8) to clarify that for a
multicampus hospital, approved rural reclassification status applies to
the main campus and any remote location located in an urban area,
including a main campus or any remote location deemed urban under
section 1886(d)(8)(B) of the Act. If a remote location of a hospital is
located in a different CBSA than the main campus of the hospital, it is
CMS's longstanding policy to assign that remote location a wage index
based on its own geographic area in order to comply with the statutory
requirement to adjust for geographic differences in hospital wage
levels (section 1886(d)(3)(E) of the Act). Hospitals are required to
identify and allocate wages and hours based on FTEs for remote
locations located in different CBSA on Worksheet S-2, Part I, Lines 165
and 166 of form CMS-2552-10. In calculating wage index values, CMS
identifies the allocated wage data for these remote locations in Table
2 with a ``B'' in the 3rd position of the CCN. These remote locations
of hospitals with 412.103 rural reclassification status in a different
CBSA are identified in Table 2, and hospitals should evaluate potential
wage index outcomes for its remote location(s) when withdrawing or
terminating MGCRB reclassification, or canceling Sec. 412.103 rural
reclassification status.
Finally, in section V.C.2. of the preamble of this proposed rule,
we are proposing to change the effective date of rural reclassification
for a hospital qualifying for rural reclassification under Sec.
412.103(a)(3) by meeting the criteria for SCH status (other than being
located in a rural area), and also applying to obtain SCH status under
Sec. 412.92, where eligibility for SCH classification depends on a
hospital merger. Specifically, we are proposing that in these
circumstances, and subject to the requirements set forth at proposed
new Sec. 412.92(b)(2)(vi), the effective date for rural
reclassification would be as of the effective date set forth in
proposed new Sec. 412.92(b)(2)(vi).
We are also proposing in section V.C.2 of the preamble of this
proposed rule to make a conforming change to the regulations at Sec.
412.103(d) to modify the effective date of rural reclassification for a
hospital qualifying for rural reclassification under Sec.
412.103(a)(3) by meeting the criteria for SCH status (other than being
located in a rural area), and also applying to obtain SCH status under
Sec. 412.92 where eligibility for SCH classification depends on a
hospital merger. We are proposing to amend Sec. 412.103(d)(1) and to
add new paragraph Sec. 412.103(d)(3) to provide that, subject to the
hospital meeting the requirements set forth at proposed Sec.
412.92(b)(2)(vi), the effective date for rural reclassification for
such hospital would be as of the effective date determined under Sec.
412.92(b)(2)(vi).
We refer the reader to section V.C.2 of the preamble of this
proposed rule for complete details on these proposals.
L. Process for Requests for Wage Index Data Corrections
1. Process for Hospitals To Request Wage Index Data Corrections
The preliminary, unaudited Worksheet S-3 wage data files and the CY
2019 occupational mix data files for the proposed FY 2024 wage index
were made available on May 23, 2022, through the internet on the CMS
website at https://www.cms.gov/medicaremedicare-fee-service-paymentacuteinpatientppswage-index-files/fy-2024-wage-index-home-page.
On January 30, 2023, we posted a public use file (PUF) at https://www.cms.gov/medicaremedicare-fee-service-paymentacuteinpatientppswage-index-files/fy-2024-wage-index-home-page containing FY 2024 wage index
data available as of January 30, 2023. This PUF contains a tab with the
Worksheet S-3 wage data (which includes Worksheet S-3, Parts II and III
wage data from cost reporting periods beginning on or after October 1,
2019 through September 30, 2020; that is, FY 2020 wage data), a tab
with the occupational mix data (which includes data from the CY 2019
occupational mix survey, Form CMS-10079), a tab containing the
Worksheet S-3 wage data of hospitals deleted from the January 30, 2023
wage data PUF, and a tab containing the CY 2019 occupational mix data
of the hospitals deleted from the January 30, 2023 occupational mix
PUF. In a memorandum dated January 31, 2023, we instructed all MACs to
inform the IPPS hospitals that they service of the availability of the
January 30, 2023 wage index data PUFs, and the process and timeframe
for requesting revisions in accordance with the FY 2024 Hospital Wage
Index Development Time Table available at https://www.cms.gov/files/document/fy-2024-hospital-wage-index-development-time-table.pdf.
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 https://www.cms.gov/Outreach-and-Education/Outreach/OpenDoorForums.
In a memorandum dated May 3, 2022, 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 2019 occupational mix
survey data files posted on May 23, 2022, and the process and timeframe
for requesting revisions.
If a hospital wished to request a change to its data as shown in
the May 23, 2022, preliminary wage data files 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 2, 2022. Hospitals were notified of these deadlines
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 4, 2022, 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 2023. CMS published the wage
index PUFs that included hospitals' revised wage index data on January
30, 2023. Hospitals had until February 15, 2023, to submit requests to
the MACs to correct errors in
[[Page 26983]]
the January 30, 2023 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 30, 2023, 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 15, 2023, for
the FY 2024 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 20, 2023. 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) is April 3,
2023. Data that were incorrect in the preliminary or January 30, 2023
wage index data PUFs, but for which no correction request was received
by the February 15, 2023 deadline, are not considered for correction at
this stage. In addition, April 3, 2023, is the deadline for hospitals
to dispute data corrections made by CMS of which the hospital was
notified after the January 30, 2023, PUF and at least 14 calendar days
prior to April 3, 2023 (that is, March 20, 2023), 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 3, 2023, for the
FY 2024 wage index). We refer readers to the FY 2024 Hospital Wage
Index Development Time Table for complete details.
Hospitals are given the opportunity to examine Table 2 associated
with this proposed rule, which is listed in section VI. of the Addendum
to the proposed rule and available via the internet on the CMS website
at https://www.cms.gov/medicaremedicare-fee-service-paymentacuteinpatientppswage-index-files/fy-2024-wage-index-home-page.
Table 2 associated with the proposed rule contained each hospital's
proposed adjusted average hourly wage used to construct the wage index
values for the past 3 years, including the proposed FY 2024 wage index
which was constructed from FY 2020 data. We note that the proposed
hospital average hourly wages shown in Table 2 only reflected changes
made to a hospital's data that were transmitted to CMS by early
February 2023.
We plan to post the final wage index data PUFs on April 28, 2023,
on the CMS website at https://www.cms.gov/medicaremedicare-fee-service-paymentacuteinpatientppswage-index-files/fy-2024-wage-index-home-page.
The April 2023 PUFs are made available solely for the limited purpose
of identifying any potential errors made by CMS or the MAC in the entry
of the final wage index data that resulted from the correction process
(the process for disputing revisions submitted to CMS by the MACs by
March 20, 2023, and the process for disputing data corrections made by
CMS that did not arise from a hospital's request for wage data
revisions as discussed earlier), as previously described.
After the release of the April 2023 wage index data PUFs, changes
to the wage and occupational mix data can only be made in those very
limited situations involving an error by the 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 20, 2023.
Requests for correction of errors that were not, but could
have been, identified during the hospital's review of the January 30,
2023, 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 2023 final wage index data PUFs, a
hospital believes that its wage or occupational mix data are incorrect
due to a MAC or CMS error in the entry or tabulation of the final data,
the hospital is given the opportunity to notify both its MAC and CMS
regarding why the hospital believes an error exists and provide all
supporting information, including relevant dates (for example, when it
first became aware of the error). The hospital is required to send its
request to CMS and to the MAC so that it was received no later than May
26, 2023. May 26, 2023, is also the deadline for hospitals to dispute
data corrections made by CMS of which the hospital is notified on or
after 13 calendar days prior to April 1, 2023 (that is, March 19,
2023), and at least 14 calendar days prior to May 26, 2023 (that is,
May 12, 2023), that do 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 26, 2023 (that is,
May 13, 2023), may be appealed to the Provider Reimbursement Review
Board (PRRB)). In accordance with the FY 2024 Hospital Wage Index
Development Time Table posted on the CMS website at https://www.cms.gov/files/document/fy-2024-hospital-wage-index-development-time-table.pdf, the May appeals are required to be sent via mail and
email to CMS and the MACs. We refer readers to the FY 2024 Hospital
Wage Index Development Time Table for complete details.
Verified corrections to the wage index data received timely (that
is, by May 26, 2023) by CMS and the MACs will be incorporated into the
final FY 2024 wage index, which will be effective October 1, 2023.
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 2024 payment rates.
Accordingly, hospitals that do not meet the procedural deadlines set
forth earlier will not be afforded a later opportunity to submit wage
index data corrections or to dispute the MAC's decision with respect to
requested changes. Specifically, our policy is that hospitals that do
not meet the procedural deadlines 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
[[Page 26984]]
attention. Moreover, because hospitals will have access to the final
wage index data PUFs by late April 2023, they have an opportunity to
detect any data entry or tabulation errors made by the MAC or CMS
before the development and publication of the final FY 2024 wage index
by August 2023, and the implementation of the FY 2024 wage index on
October 1, 2023. 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 26,
2023, 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 26, 2023, for the FY 2024
wage index). This provision is not available to a hospital seeking to
revise another hospital's data that may be affecting the requesting
hospital's wage index for the labor market area. As indicated earlier,
because CMS makes the wage index data available to hospitals on the CMS
website prior to publishing both the proposed and final IPPS rules, and
the MACs notify hospitals directly of any wage index data changes after
completing their desk reviews, we do not expect that midyear
corrections will be necessary. However, under our current policy, if
the correction of a data error changes the wage index value for an
area, the revised wage index value will be effective prospectively from
the date the correction is made.
In the FY 2006 IPPS final rule (70 FR 47385 through 47387 and
47485), we revised 42 CFR 412.64(k)(2) to specify that, effective on
October 1, 2005, that is, beginning with the FY 2006 wage index, a
change to the wage index can be made retroactive to the beginning of
the Federal fiscal year only when CMS determines all of the following:
(1) The MAC or CMS made an error in tabulating data used for the wage
index calculation; (2) the hospital knew about the error and requested
that the MAC and CMS correct the error using the established process
and within the established schedule for requesting corrections to the
wage index data, before the beginning of the fiscal year for the
applicable IPPS update (that is, by the May 26, 2023, deadline for the
FY 2024 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 26, 2023 deadline for the FY 2024 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; it can only be used for the
current Federal fiscal year. In situations where our policies would
allow midyear corrections other than those specified in 42 CFR
412.64(k)(2)(ii), we continue to believe that it is appropriate to make
prospective-only corrections to the wage index.
We note that, as with prospective changes to the wage index, the
final retroactive correction will be made irrespective of whether the
change increases or decreases a hospital's payment rate. In addition,
we note that the policy of retroactive adjustment will still apply in
those instances where a final judicial decision reverses a CMS denial
of a hospital's wage index data revision request.
2. Process for Data Corrections by CMS After the January 30 Public Use
File (PUF)
The process set forth with the wage index time table discussed in
section III.L.1. of the preamble of this proposed rule allows hospitals
to request corrections to their wage index data within prescribed
timeframes. In addition to hospitals' opportunity to request
corrections of wage index data errors or MACs' mishandling of data, CMS
has the authority under section 1886(d)(3)(E) of the Act to make
corrections to hospital wage index and occupational mix data in order
to ensure the accuracy of the wage index. As we explained in the FY
2016 IPPS/LTCH PPS final rule (80 FR 49490 through 49491) and the FY
2017 IPPS/LTCH PPS final rule (81 FR 56914), section 1886(d)(3)(E) of
the Act requires the Secretary to adjust the proportion of hospitals'
costs attributable to wages and wage-related costs for area differences
reflecting the relative hospital wage level in the geographic areas of
the hospital compared to the national average hospital wage level. We
believe that, under section 1886(d)(3)(E) of the Act, we have
discretion to make corrections to hospitals' data to help ensure that
the costs attributable to wages and wage-related costs in fact
accurately reflect the relative hospital wage level in the hospitals'
geographic areas.
We have an established multistep, 15-month process for the review
and correction of the hospital wage data that is used to create the
IPPS wage index for the upcoming fiscal year. Since the origin of the
IPPS, the wage index has been subject to its own annual review process,
first by the MACs, and then by CMS. As a standard practice, after each
annual desk review, CMS reviews the results of the MACs' desk reviews
and focuses on items flagged during the desk review, requiring that, if
necessary, hospitals provide additional documentation, adjustments, or
corrections to the data. This ongoing communication with hospitals
about their wage data may result in the discovery by CMS of additional
items that were reported incorrectly or other data errors, even after
the posting of the January 30 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
[[Page 26985]]
housekeeping and dietary services, we imputed estimates, in accordance
with policies established in the FY 2015 IPPS/LTCH PPS final rule (79
FR 49965 through 49967). Furthermore, if CMS discovers after conclusion
of the desk review, for example, that a MAC inadvertently failed to
incorporate positive adjustments resulting from a prior year's wage
index appeal of a hospital's wage-related costs such as pension, CMS
would correct that data error and the hospital's average hourly wage
would likely increase as a result.
While we maintain CMS' authority to conduct additional review and
make resulting corrections at any time during the wage index
development process, in accordance with the policy finalized in the FY
2018 IPPS/LTCH PPS final rule (82 FR 38154 through 38156) and as first
implemented with the FY 2019 wage index (83 FR 41389), hospitals are
able to request further review of a correction made by CMS that did not
arise from a hospital's request for a wage index data correction.
Instances where CMS makes a correction to a hospital's data after the
January 30 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 review of 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 30 PUF, and provide
opportunities for hospitals to request further review of CMS changes in
time for the most accurate data to be reflected in the final wage index
calculations. These additional appeals opportunities are described
earlier and in the FY 2024 Hospital Wage Index Development Time Table,
as well as in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38154 through
38156).
M. Proposed Labor-Related Share for the FY 2023 Wage Index
Section 1886(d)(3)(E) of the Act directs the Secretary to adjust
the proportion of the national prospective payment system base payment
rates that are attributable to wages and wage-related costs by a factor
that reflects the relative differences in labor costs among geographic
areas. It also directs the Secretary to estimate from time to time the
proportion of hospital costs that are labor-related and to adjust the
proportion (as estimated by the Secretary from time to time) of
hospitals' costs that are attributable to wages and wage-related costs
of the DRG prospective payment rates. We refer to the portion of
hospital costs attributable to wages and wage-related costs as the
labor-related share. The labor-related share of the prospective payment
rate is adjusted by an index of relative labor costs, which is referred
to as the wage index.
Section 403 of Public Law 108-173 amended section 1886(d)(3)(E) of
the Act to provide that the Secretary must employ 62 percent as the
labor-related share unless this would result in lower payments to a
hospital than would otherwise be made. However, this provision of
Public Law 108-173 did not change the legal requirement that the
Secretary estimate from time to time the proportion of hospitals' costs
that are attributable to wages and wage-related costs. Thus, hospitals
receive payment based on either a 62-percent labor-related share, or
the labor-related share estimated from time to time by the Secretary,
depending on which labor-related share resulted in a higher payment.
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 45194 through
45208), we rebased and revised the hospital market basket. We
established a 2018-based IPPS hospital market basket to replace the FY
2014-based IPPS hospital market basket, effective October 1, 2021.
Using the 2018-based IPPS market basket, we finalized a labor-related
share of 67.6 percent for discharges occurring on or after October 1,
2021. In addition, in FY 2022, we implemented this revised and rebased
labor-related share in a budget neutral manner (86 FR 45193 and 86 FR
45529-45530). 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.
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 2022 IPPS/LTCH PPS final rule (86 FR 45204 through 45207), we
included in the labor-related share the national average proportion of
operating costs that are attributable to the following cost categories
in the 2018-based IPPS market basket: 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. In this proposed rule,
for FY 2024, we are not proposing to make any further changes to the
labor-related share. For FY 2024, we are proposing to continue to use a
labor-related share of 67.6 percent for discharges occurring on or
after October 1, 2023.
As discussed in section V.B. of the preamble of this proposed rule,
prior to January 1, 2016, Puerto Rico hospitals were paid based on 75
percent of the national standardized amount and 25 percent of the
Puerto Rico-specific standardized amount. As a result, we applied the
Puerto Rico-specific labor-related share percentage and nonlabor-
related share percentage to the Puerto Rico-specific standardized
amount. Section 601 of the Consolidated Appropriations Act, 2016 (Pub.
L. 114-113) amended section 1886(d)(9)(E) of the Act to specify that
the payment calculation with respect to operating costs of inpatient
hospital services of a subsection (d) Puerto Rico hospital for
inpatient hospital discharges on or after January 1, 2016, shall use
100 percent of the national standardized amount. Because Puerto Rico
hospitals are no longer paid with a Puerto Rico-specific standardized
amount as of January 1, 2016, under section 1886(d)(9)(E) of the Act as
amended by section 601 of the Consolidated Appropriations Act, 2016,
there is no longer a need for us to calculate a Puerto Rico-specific
labor-related share percentage and nonlabor-related share percentage
for application to the Puerto Rico-specific standardized amount.
Hospitals in Puerto Rico are now paid 100 percent of the national
standardized amount and, therefore, are subject to the national labor-
related share and nonlabor-related share percentages that are applied
to the national standardized amount. Accordingly, for FY 2024, we are
not proposing a Puerto Rico-specific labor-related share percentage or
a nonlabor-related share percentage.
Tables 1A and 1B, which are published in section VI. of the
Addendum to this FY 2024 IPPS/LTCH PPS proposed rule and available via
the internet on the CMS website, reflect the proposed national labor-
related share. Table 1C, in section VI. of the Addendum to this FY 2024
IPPS/LTCH PPS proposed rule and available via the internet on the CMS
website, reflects the proposed national labor-related share for
hospitals located in Puerto Rico. For FY 2024, for all IPPS hospitals
(including Puerto Rico hospitals) whose wage indexes are less than or
equal to 1.0000, we are proposing to apply the wage index to a labor-
related share of 62 percent of the national standardized amount. For
all IPPS hospitals
[[Page 26986]]
(including Puerto Rico hospitals) whose wage indexes are greater than
1.000, for FY 2024, we are proposing to apply the wage index to a
proposed labor-related share of 67.6 percent of the national
standardized amount.
IV. Payment Adjustment for Medicare Disproportionate Share Hospitals
(DSHs) for FY 2024 (Sec. 412.106)
A. General Discussion
Section 1886(d)(5)(F) of the Act provides for additional Medicare
payments to subsection (d) hospitals that serve a significantly
disproportionate number of low-income patients. The Act specifies two
methods by which a hospital may qualify for the Medicare
disproportionate share hospital (DSH) adjustment. Under the first
method, hospitals that are located in an urban area and have 100 or
more beds may receive a Medicare DSH payment adjustment if the hospital
can demonstrate that, during its cost reporting period, more than 30
percent of its net inpatient care revenues are derived from State and
local government payments for care furnished to 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.
[GRAPHIC] [TIFF OMITTED] TP01MY23.254
Because the DSH payment adjustment is part of the IPPS, the
statutory references to ``days'' in section 1886(d)(5)(F) of the Act
have been interpreted to apply only to hospital acute care inpatient
days. Regulations located at 42 CFR 412.106 govern the Medicare DSH
payment adjustment and specify how the DPP is calculated as well as how
beds and patient days are counted in determining the Medicare DSH
payment adjustment. Under Sec. 412.106(a)(1)(i), the number of beds
for the Medicare DSH payment adjustment is determined in accordance
with bed counting rules for the IME adjustment under Sec. 412.105(b).
Section 3133 of the Patient Protection and Affordable Care Act
(Pub. L. 111-148), 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. 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.
Since FY 2014, section 1886(r) of the Act has required that
hospitals that are eligible for DSH payments under section
1886(d)(5)(F) of the Act receive 2 separately calculated payments:
[GRAPHIC] [TIFF OMITTED] TP01MY23.255
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
[[Page 26987]]
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.\158\ We refer to this payment as the ``empirically
justified Medicare DSH payment.''
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\158\ https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/Mar07_EntireReport.pdf.
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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 a
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 hospitals that receive Medicare DSH payments in the
applicable fiscal year, expressed as a percent.
For each hospital, the product of these three factors represents
its additional payment for uncompensated care for the applicable fiscal
year. We refer to the additional payment determined by these factors as
the ``uncompensated care payment.'' In brief, the uncompensated care
payment for an individual hospital is determined as the product of the
following 3 factors:
[GRAPHIC] [TIFF OMITTED] TP01MY23.256
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 was 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.
B. Eligibility for Empirically Justified Medicare DSH Payments and
Uncompensated Care Payments
As explained earlier, the payment methodology under section 3133 of
the Affordable Care Act applies to ``subsection (d) hospitals'' that
would otherwise receive a DSH payment made under section 1886(d)(5)(F)
of the Act. Therefore, hospitals must receive empirically justified
Medicare DSH payments in a fiscal year in order to receive an
additional Medicare uncompensated care payment for that year.
Specifically, section 1886(r)(2) of the Act states that, in addition to
the payment made to a subsection (d) hospital under section 1886(r)(1)
of the Act, the Secretary shall pay to such subsection (d) hospitals an
additional amount. Because section 1886(r)(1) of the Act refers to
empirically justified Medicare DSH payments, the additional payment
under section 1886(r)(2) of the Act is limited to hospitals that
receive empirically justified Medicare DSH payments in accordance with
section 1886(r)(1) of the Act for the applicable fiscal year.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50622) and the FY
2014 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
[[Page 26988]]
that are available). For this proposed rule, we estimated DSH status
for all hospitals using the most recent available SSI ratios and
information from the most recent available Provider Specific File. We
note that FY 2020 SSI ratios available on the CMS website were the most
recent available SSI ratios at the time of developing this proposed
rule.\159\ If more recent data on DSH eligibility become available
before the final rule, we would use such data in the final rule.
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\159\ https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/dsh.
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Our final determination of a hospital's eligibility for
uncompensated care payments will be based on the hospital's actual DSH
status at cost report settlement for FY 2024.
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.
Eligible hospitals include the following:
Subsection (d) Puerto Rico hospitals that are
eligible for DSH payments also are eligible to receive empirically
justified Medicare DSH payments and uncompensated care payments under
section 1886(r) of the Act (78 FR 50623 and 79 FR 50006).
SCHs that are paid under the IPPS Federal rate
receive interim payments based on what we estimate and project their
DSH status to be prior to the beginning of the Federal fiscal year
(based on the best available data at that time) subject to settlement
through the cost report, and if they receive interim empirically
justified Medicare DSH payments in a fiscal year, they also will
receive interim uncompensated care payments for that fiscal year on a
per discharge basis, subject as well to settlement through the cost
report. Final eligibility determinations will be made at the end of the
cost reporting period at settlement, and both interim empirically
justified Medicare DSH payments and uncompensated care payments will be
adjusted accordingly (78 FR 50624 and 79 FR 50007).
Medicare-dependent, small rural hospitals (MDHs)
are paid based on the IPPS Federal rate or, if higher, the IPPS Federal
rate plus 75 percent of the amount by which the Federal rate is
exceeded by the updated hospital-specific rate from certain specified
base years (76 FR 51684). The IPPS Federal rate that is used in the MDH
payment methodology is the same IPPS Federal rate that is used in the
SCH payment methodology. Because MDHs are paid based on the IPPS
Federal rate, they continue to be eligible to receive empirically
justified Medicare DSH payments and uncompensated care payments if
their DPP is at least 15 percent, and we apply the same process to
determine MDHs' eligibility for interim empirically justified Medicare
DSH and interim uncompensated care payments as we do for all other IPPS
hospitals. Legislation has extended the MDH program into FY 2024. The
MDH program was initially extended through December 17, 2022, by
section 102 of the Continuing Appropriations and Ukraine Supplemental
Appropriations Act, 2023 (Pub. L. 117-180), and through December 24,
2022, by section 102 of the Further Continuing Appropriations and
Extensions Act, 2023 (Pub. L. 117-229). Section 4102 of the Continuing
Appropriations Act, 2023 (Pub. L. 117-328), enacted on December 29,
2022, amended sections 1886(d)(5)(G)(i) and 1886(d)(5)(G)(ii)(II) of
the Act to provide for an extension of the MDH program through October
1, 2024 (that is, for discharges occurring on or before September 30,
2024). We refer readers to section V.F. of the preamble of this
proposed rule for further discussion of the MDH program. We continue to
make determinations concerning an MDH's eligibility for interim
uncompensated care payments based on the hospital's estimated DSH
status for the applicable fiscal year.
IPPS hospitals that elect to participate in the
Bundled Payments for Care Improvement Advanced (BPCI Advanced) model,
which started October 1, 2018, will continue to be paid under the IPPS
and, therefore, are eligible to receive empirically justified Medicare
DSH payments and uncompensated care payments. On October 13, 2022, CMS
announced that the BPCI Advanced Model would be extended for two years.
Accordingly, the Model's final performance year will end on December
31, 2025. For further information regarding the BPCI Advanced model, we
refer readers to the CMS website at https://innovation.cms.gov/innovation-models/bpci-advanced.
IPPS hospitals that participate in the
Comprehensive Care for Joint Replacement Model (80 FR 73300) continue
to be paid under the IPPS and, therefore, are eligible to receive
empirically justified Medicare DSH payments and uncompensated care
payments. We refer the reader to the interim final rule with request
for comments that appeared in the November 6, 2020 Federal Register for
a discussion of the Model (85 FR 71167 through 71173). In that interim
final rule, we extended the Model's Performance Year 5 to September 30,
2021. In a subsequent final rule that appeared in the May 3, 2021
Federal Register (86 FR 23496), we further extended the Model for an
additional three performance years. The Model's Performance Year 8 will
end on December 31, 2024.
Ineligible hospitals include the following:
Maryland hospitals are not eligible to receive
empirically justified Medicare DSH payments and uncompensated care
payments under the payment methodology of section 1886(r) of the Act
because they are not paid under the IPPS. As discussed in the FY 2019
IPPS/LTCH PPS final rule (83 FR 41402 through 41403), CMS and the State
have entered into an agreement to govern payments to Maryland hospitals
under a new payment model, the Maryland Total Cost of Care (TCOC)
Model, which began on January 1, 2019. Under the Maryland TCOC Model,
which concludes on December 31, 2026, Maryland hospitals are not paid
under the IPPS and are ineligible to receive empirically justified
Medicare DSH payments and uncompensated care payments under section
1886(r) of the Act.
Sole community hospitals (SCHs) that are paid
under their hospital-specific rate are not eligible for Medicare DSH
and uncompensated care payments. (78 FR 50623 and 50624).
Hospitals participating in the Rural Community
Hospital Demonstration Program are not eligible to receive empirically
justified Medicare DSH payments and uncompensated care payments under
section 1886(r) of the Act because they are not paid under the IPPS (78
FR 50625 and 79 FR 50008). The Rural Community Hospital Demonstration
Program was originally authorized for a 5-year period by section 410A
of the Medicare Prescription Drug, Improvement, and Modernization Act
of 2003 (MMA) (Pub. L. 108-173), and extended for another 5-year period
by sections 3123 and 10313 of the Affordable Care Act (Pub. L. 111-
148). The period of performance for this 5-year extension period ended
December 31, 2016. Section 15003 of the 21st Century Cures Act (Pub. L.
114-255), enacted December 13, 2016, again amended section 410A of
Public Law 108-173 to require a 10-year extension period (in place of
the 5-year extension required by the Affordable Care Act), therefore
requiring an additional 5-year participation period for the
demonstration program. Section 15003 of Public Law 114-255 also
required a
[[Page 26989]]
solicitation for applications for additional hospitals to participate
in the demonstration program. The period of performance for this 5-year
extension period ended December 31, 2021. The Consolidated
Appropriations Act, 2021 (Pub. L. 116-260) amended section 410A of
Public Law 108-173 to extend the Rural Community Hospital Demonstration
Program for an additional 5-year period. The period of participation
for the last hospital in the demonstration under this most recent
legislative authorization would extend until June 30, 2028. Under the
payment methodology that applies during the third 5-year extension
period for the demonstration program, participating hospitals do not
receive empirically justified Medicare DSH payments, and they are also
excluded from receiving interim and final uncompensated care payments.
At the time of development of this proposed rule, we believe 26
hospitals may participate in the demonstration program at the start of
FY 2024.
C. Empirically Justified Medicare DSH Payments
As we have discussed earlier, section 1886(r)(1) of the Act
requires the Secretary to pay 25 percent of the amount of the Medicare
DSH payment that would otherwise be made under section 1886(d)(5)(F) of
the Act to a subsection (d) hospital. Because section 1886(r)(1) of the
Act merely requires the program to pay a designated percentage of these
payments, without revising the criteria governing eligibility for DSH
payments or the underlying payment methodology, we stated in the FY
2014 IPPS/LTCH PPS final rule that we did not believe that it was
necessary to develop any new operational mechanisms for making such
payments. Therefore, in the FY 2014 IPPS/LTCH PPS final rule (78 FR
50626), we implemented this provision by advising Medicare
Administrative Contractors (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 https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2014-Transmittals-Items/R5P240.html.
D. Supplemental Payment for Indian Health Service (IHS) and Tribal
Hospitals and Puerto Rico Hospitals
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49047 through
49051), we established a new supplemental payment for IHS/Tribal
hospitals and hospitals located in Puerto Rico for FY 2023 and
subsequent fiscal years. This payment was established to help to
mitigate the impact of the decision to discontinue the use of low-
income insured days as proxy for uncompensated care costs for these
hospitals and to prevent undue long-term financial disruption for these
providers. The regulations located at 42 CFR 412.106(h) govern the
supplemental payment. In brief, the supplemental payment for a fiscal
year is determined as the difference between the hospital's base year
amount and its uncompensated care payment for the applicable fiscal
year as determined under Sec. 412.106(g)(1). The base year amount is
the hospital's FY 2022 uncompensated care payment adjusted by one plus
the percent change in the total uncompensated care amount between the
applicable year (that is, FY 2024 for purposes of this rulemaking) and
FY 2022, where the total uncompensated care amount for a year is
determined as the product of Factor 1 and Factor 2 for the applicable
year. If the base year amount is equal to or lower than the hospital's
uncompensated care payment for the current fiscal year, then the
hospital would not receive a supplemental payment because the hospital
would not be experiencing financial disruption in that year as a result
of the use of uncompensated care data from the Worksheet S-10 in
determining Factor 3 of the uncompensated care payment methodology.
As discussed in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49048
and 49049), the eligibility and payment processes for the supplemental
payment are consistent with the processes for determining eligibility
to receive interim and final uncompensated care payments adopted in FY
2014 IPPS/LTCH final rule. We note that the MAC will make a final
determination with respect to a hospital's eligibility to receive the
supplemental payment for a fiscal year, in conjunction with its final
determination of the hospital's eligibility for DSH payments and
uncompensated care payments for that fiscal year.
E. Uncompensated Care Payments
As we discussed earlier, section 1886(r)(2) of the Act provides
that, for each eligible hospital in FY 2014 and subsequent years, the
uncompensated care payment is the product of three factors. These three
factors represent our estimate of 75 percent of the amount of Medicare
DSH payments that would otherwise have been paid, an adjustment to this
amount for the percent change in the national rate of uninsurance
compared to the rate of uninsurance in 2013, and each eligible
hospital's estimated uncompensated care amount relative to the
estimated uncompensated care amount for all eligible hospitals. In this
section of this proposed rule, we discuss the data sources and
methodologies for computing each of these factors, our final policies
for FYs 2014 through 2023, and our proposed policies for FY 2024.
1. Proposed Calculation of Factor 1 for FY 2024
Section 1886(r)(2)(A) of the Act establishes Factor 1 in the
calculation of the uncompensated care payment. Section 1886(r)(2)(A) of
the Act states that this factor is equal to the difference between: (1)
the aggregate amount of payments that would be made to subsection (d)
hospitals under section 1886(d)(5)(F) of the Act if section 1886(r) of
the Act did not apply for such fiscal year (as estimated by the
Secretary); and (2) the aggregate amount of payments that are made to
subsection (d) hospitals under section 1886(r)(1) of the Act for such
fiscal year (as so estimated). Therefore, section 1886(r)(2)(A)(i) of
the Act represents the estimated Medicare DSH payments that would have
been made under section 1886(d)(5)(F) of the Act if section 1886(r) of
the Act did not apply for such fiscal year. Under a prospective payment
system, we would not know the precise aggregate Medicare DSH payment
amount that would be paid for a Federal fiscal year until cost report
settlement for all IPPS hospitals is completed, which occurs several
years after the end of the Federal fiscal year. Therefore, section
1886(r)(2)(A)(i) of the Act provides authority to estimate this amount,
by specifying that, for each fiscal year to which the provision
applies, such amount is to be estimated by the Secretary. Similarly,
section 1886(r)(2)(A)(ii) of the Act represents the estimated
empirically justified Medicare DSH payments to be made in a fiscal
year, as prescribed under section 1886(r)(1) of the Act. Again, section
1886(r)(2)(A)(ii) of the Act provides authority to estimate this
amount. Therefore, Factor 1 is the difference between our estimates of:
(1) the amount that would have been paid in Medicare
[[Page 26990]]
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.
In this FY 2024 IPPS/LTCH PPS proposed rule, in order to determine
Factor 1 in the uncompensated care payment formula for FY 2024, we are
proposing to continue the policy established in the FY 2014 IPPS/LTCH
PPS final rule (78 FR 50628 through 50630) and in the FY 2014 IPPS
interim final rule with comment period (78 FR 61194) of determining
Factor 1 by developing estimates of both the aggregate amount of
Medicare DSH payments that would be made for FY 2024 in the absence of
section 1886(r)(1) of the Act and the aggregate amount of empirically
justified Medicare DSH payments to hospitals under section 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 the FY 2024 IPPS/LTCH PPS final
rule.
Therefore, in order to determine the two elements of proposed
Factor 1 for FY 2024 (Medicare DSH payments prior to the application of
section 1886(r)(1) of the Act, and empirically justified Medicare DSH
payments after application of section 1886(r)(1) of the Act), for this
proposed rule, we used the most recently available projections of
Medicare DSH payments for the fiscal year, as calculated by CMS' Office
of the Actuary (OACT) 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 OACT'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
2021 through FY 2024 are discussed in the table titled ``Factors
Applied for FY 2021 through FY 2024 to Estimate Medicare DSH
Expenditures Using FY 2020 Baseline''.
For purposes of calculating Factor 1 and modeling the impact of
this FY 2024 IPPS/LTCH PPS proposed rule, we used the Office of the
Actuary's January 2023 Medicare DSH estimates, which were based on data
from the September 2022 update of the Medicare Hospital Cost Report
Information System (HCRIS) and the FY 2023 IPPS/LTCH PPS final rule
IPPS Impact File, published in conjunction with the publication of the
FY 2023 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 January 2023 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 January 2023 Medicare DSH estimates. The 26 hospitals
that are anticipated to participate in the Rural Community Hospital
Demonstration Program in FY 2024 were also excluded from these
estimates, because under the payment methodology that applies during
the third 5-year extension period, these hospitals are not eligible to
receive empirically justified Medicare DSH payments or uncompensated
care payments.
For this proposed rule, using the data sources as previously
discussed, the Office of the Actuary's January 2023 estimate of
Medicare DSH payments for FY 2024 without regard to the application of
section 1886(r)(1) of the Act, is approximately $13.621 billion.
Therefore, also based on the January 2023 estimate, the estimate of
empirically justified Medicare DSH payments for FY 2024, with the
application of section 1886(r)(1) of the Act, is approximately $3.405
billion (or 25 percent of the total amount of estimated Medicare DSH
payments for FY 2024). Under Sec. 412.106(g)(1)(i) of the regulations,
Factor 1 is the difference between these two OACT estimates. Therefore,
we are proposing that Factor 1 for FY 2024 would be $10,216,040,319.50,
which is equal to 75 percent of the total amount of estimated Medicare
DSH payments for FY 2024 ($13.621 billion minus $3.405 billion). We
note that consistent with our approach in previous rulemakings, OACT
intends to use more recent data that may become available for purposes
of projecting the final Factor 1 estimates for the FY 2024 IPPS/LTCH
PPS final rule.
We note that the Factor 1 estimates for proposed rules are
generally consistent with the economic assumptions and actuarial
analysis used to develop the President's Budget estimates under current
law, and the Factor 1 estimates for the final rules are generally
consistent with those used for the Midsession Review of the President's
Budget. As we have in the past, for additional information on the
development of the President's Budget, we refer readers to the Office
of Management and Budget website at https://www.whitehouse.gov/omb/budget. Consistent with historical practice, we expect that the
Midsession Review will have updated economic assumptions and actuarial
analysis, which will be used for the development of Factor 1 estimates
in the final rule.
For a general overview of the principal steps involved in
projecting future inpatient costs and utilization, we refer readers to
the ``2022 Annual Report of the Boards of Trustees of the Federal
Hospital Insurance and Federal Supplementary Medical Insurance Trust
Funds,'' available on the CMS website at https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/reportstrustfunds under ``Downloads.'' We note that the annual reports
of the Medicare Boards of Trustees to Congress represent the Federal
Government's official evaluation of the financial status of the
Medicare Program. The actuarial projections contained in these reports
are based on numerous assumptions regarding future trends in program
enrollment, utilization and costs of health care services covered by
Medicare, as well as other factors affecting program expenditures. In
addition, although the methods used to estimate future costs based on
these assumptions are complex, they are subject to periodic review by
independent experts to ensure their validity and reasonableness. We
also refer readers to the 2018 Actuarial Report on the Financial
Outlook for Medicaid for a discussion of general issues regarding
Medicaid projections (available at https://www.cms.gov/Research-Statistics-Data-and-Systems/Research/ActuarialStudies/MedicaidReport).
In this proposed rule, we include information regarding the data
sources, methods, and assumptions employed by the actuaries in
determining the OACT's estimate of Factor 1. In summary, we indicate
the historical HCRIS data
[[Page 26991]]
update OACT used to identify Medicare DSH payments, we explain that the
most recent Medicare DSH payment adjustments provided in the IPPS
Impact File were used, and we provide the components of all the update
factors that were applied to the historical data to estimate the
Medicare DSH payments for the upcoming fiscal year, along with the
associated rationale and assumptions. This discussion also includes a
description of the ``Other'' and ``Discharges'' assumptions, and also
provides additional information regarding how we address the Medicaid
and CHIP expansion.
The Office of the Actuary's estimates for FY 2024 for this proposed
rule began with a baseline of $13.257 billion in Medicare DSH
expenditures for FY 2020. The following table shows the factors applied
to update this baseline through the current estimate for FY 2024:
[GRAPHIC] [TIFF OMITTED] TP01MY23.257
In this table, the discharges column shows the changes in the
number of Medicare fee-for-service (FFS) inpatient hospital discharges.
The discharge figures for FY 2021 and FY 2022 are based on Medicare
claims data that have been adjusted by a completion factor to account
for incomplete claims data. We note that these claims data reflect the
impact of the pandemic. The discharge figure for FY 2023 is based on
preliminary data. The discharge figure for FY 2024 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 FY 2021 to FY
2024 incorporate the actual impact and estimated future impact from the
COVID-19 pandemic. The case-mix column shows the estimated change in
case-mix for IPPS hospitals. The case-mix figures for FY 2021 and FY
2022 are based on actual claims data adjusted by a completion factor.
We note that these claims data reflect the impact of the pandemic. The
case-mix figure for FY 2023 is based on preliminary data and the case-
mix figure for FY 2024 is an assumption based on recent trends
recovering back to the long-term trend. The case-mix factor figures for
FY 2021 to FY 2024 incorporate the actual impact and estimated future
impact from 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 20 percent add-
on for COVID-19 discharges). In addition, the ``Other'' column includes
a factor for the estimated changes in Medicaid enrollment. We note that
this factor also includes the estimated impacts on Medicaid enrollment
from the COVID-19 pandemic and the end of the PHE declaration. On
January 30, 2023, the Biden Administration announced its plan to end
the national emergency declaration and PHE declaration on May 11, 2023.
Based on the most recent available data, Medicaid enrollment is
estimated to change as follows: 12.3 percent in FY 2021, 8.1 percent in
FY 2022, 2.0 percent in FY 2023, and -11.1 percent in FY 2024. In the
future, the assumptions regarding Medicaid enrollment may change based
on actual enrollment in the States.
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 https://www.cms.gov/Research-Statistics-Data-and-Systems/Research/ActuarialStudies/MedicaidReport. We note that, in developing their
estimates of the effect of Medicaid expansion on Medicare DSH
expenditures, our actuaries have assumed that the new Medicaid
enrollees are healthier than the average Medicaid recipient and,
therefore, use fewer hospital services. Specifically, based on the most
recent available data at the time of developing this proposed rule, the
OACT assumed per capita spending for Medicaid beneficiaries who
enrolled due to the expansion to be approximately 80 percent of the
average per capita expenditures for a pre-expansion Medicaid
beneficiary due to the better health of these beneficiaries. The same
assumption was used for the new Medicaid beneficiaries who enrolled in
2020 and thereafter due to the COVID-19 pandemic. This assumption is
consistent with recent internal estimates of Medicaid per capita
spending pre-expansion and post-expansion. In the future, the
assumption about the average per-capita expenditures of Medicaid
beneficiaries who enrolled due to the COVID-19 pandemic may change.
The following table shows the factors that are included in the
``Update'' column of the previous table:
[[Page 26992]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.258
2. Calculation of Proposed Factor 2 for FY 2024
a. Background
Section 1886(r)(2)(B) of the Act establishes Factor 2 in the
calculation of the uncompensated care payment. Section
1886(r)(2)(B)(ii) of the Act provides that, for FY 2018 and subsequent
fiscal years, the second factor is 1 minus the percent change in the
percent of individuals who are uninsured, as determined by comparing
the percent of individuals who were uninsured in 2013 (as estimated by
the Secretary, based on data from the Census Bureau or other sources
the Secretary determines appropriate, and certified by the Chief
Actuary of CMS) and the percent of individuals who were uninsured in
the most recent period for which data are available (as so estimated
and certified), minus 0.2 percentage point for FYs 2018 and 2019. In FY
2020 and subsequent fiscal years, there is no longer a reduction. We
note that, unlike section 1886(r)(2)(B)(i) of the Act, which governed
the calculation of Factor 2 for FYs 2014, 2015, 2016, and 2017, section
1886(r)(2)(B)(ii) of the Act permits the use of a data source other
than the CBO estimates to determine the percent change in the rate of
uninsurance beginning in FY 2018. In addition, for FY 2018 and
subsequent years, the statute does not require that the estimate of the
percent of individuals who are uninsured be limited to individuals who
are under 65 years of age. We are proposing to continue to use a
methodology similar to the one that was used in FY 2018 through FY 2023
to determine Factor 2 for FY 2024.
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38197 and 38198), we
explained that we determined the data source for the rate of
uninsurance that, on balance, best meets all of our considerations and
is consistent with the statutory requirement that the estimate of the
rate of uninsurance be based on data from the Census Bureau or other
sources the Secretary determines appropriate, is the uninsured
estimates produced by 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. A full description of the methodology used to develop the
NHEA is available on the CMS website at https://www.cms.gov/files/document/definitions-sources-and-methods.pdf. We note that the NHEA
estimates of uninsurance are for the total resident-based U.S.
population, including all people who usually reside in the 50 States or
the District of Columbia, but excluding individuals 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
the U.S., plus a small (typically less that 0.2 percent of population)
adjustment to reflect Census undercounts. Thus, the NHEA estimates of
uninsurance are for U.S. residents of all ages and are not limited to a
specific age cohort, such as the population under the age of 65. 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 U.S. across all age groups. In addition, we continue
to believe that a resident-based population estimate more fully
reflects the levels of uninsurance in the U.S. that influence
uncompensated care for hospitals than an estimate that reflects only
legal residents.
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 2021, 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 2021. The NHEA data are publicly available
on the CMS website at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/index.html.
In order to compute Factor 2, the first metric that is needed is
the proportion of the total U.S. population that was uninsured in 2013.
In developing the estimates for the NHEA, OACT's methodology included
using the number of uninsured individuals for 1987 through 2009 based
on the enhanced Current Population Survey (CPS) from the State Health
Access Data Assistance Center (SHADAC). The CPS, sponsored jointly by
the U.S. Census Bureau and the U.S. Bureau of Labor Statistics (BLS),
is the primary source of labor force statistics for the population of
the United States. (We refer readers to the website at https://www.census.gov/programs-surveys/cps.html.) The enhanced CPS, available
from SHADAC (available at http://datacenter.shadac.org) accounts for
changes in the CPS methodology over
[[Page 26993]]
time. OACT further adjusts the enhanced CPS for an estimated undercount
of Medicaid enrollees (a population that is often not fully captured in
surveys that include Medicaid enrollees due to a perceived stigma
associated with being enrolled in the Medicaid program or confusion
about the source of their health insurance).
To estimate the number of uninsured individuals for 2010 through
2018, OACT extrapolates from the 2009 CPS data through 2018 using data
from the National Health Interview Survey (NHIS). The NHIS is one of
the major data collection programs of the National Center for Health
Statistics (NCHS), which is part of the Centers for Disease Control and
Prevention (CDC). The 2019 estimate was extrapolated using the 2019/
2018 trend from the American Community Survey (ACS). Because the 2020
ACS data were not available, the ACS data were not used for purposes of
estimating the number of uninsured individuals for 2020.\160\ Rather,
the 2020 estimate was extrapolated using the 2020/2018 trend from the
CPS as published by the Census Bureau. The 2021 estimate was based on
the population share of the uninsured from the NHIS. The U.S. Census
Bureau is the data collection agent for the NHIS, the ACS, and the CPS.
The results from these data sources have been instrumental over the
years in providing data to track health status, health care access, and
progress toward achieving national health objectives. For further
information regarding the NHIS, we refer readers to the CDC website at
https://www.cdc.gov/nchs/nhis/index.htm. For further information
regarding the ACS, we refer readers to the Census Bureau's website at
https://www.census.gov/programs-surveys/acs/.
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\160\ For information regarding the data collection issues
regarding the 2020 ACS, we refer readers to the Census Bureau's
website at https://www.census.gov/newsroom/blogs/random-samplings/2021/10/pandemic-impact-on-2020-acs-1-year-data.html.
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The next metrics needed to compute Factor 2 for FY 2024 are
projections of the rate of uninsurance in both CY 2023 and CY 2024. On
an annual basis, OACT projects enrollment and spending trends for the
coming 10-year period. The most recent projections are for 2021 through
2030. Those projections used the latest NHEA historical data that were
available at the time of their construction (that is, through 2020).
The NHEA projection methodology accounts for expected changes in
enrollment across all of the categories of insurance coverage
previously listed. The projected growth rates in enrollment for
Medicare, Medicaid, and CHIP are developed to be consistent with the
2021 Medicare Trustees Report,\161\ updated where possible with more
recent data. Projected rates of growth in enrollment for private health
insurance and the uninsured are based largely on OACT's econometric
models, which rely on a set of macroeconomic assumptions that are
generally based on the 2021 Medicare Trustees Report. Greater detail
can be found in OACT's report titled ``Projections of National Health
Expenditure and Health Insurance Enrollment: Methodology and Model
Specification,'' which is available on the CMS website at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/ProjectionsMethodology.pdf.
---------------------------------------------------------------------------
\161\ https://www.cms.gov/files/document/2022-medicare-trustees-report.pdf.
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b. Proposed Factor 2 for FY 2024
Using these data sources and the previously described
methodologies, at the time of developing this proposed rule, OACT has
estimated that the uninsured rate for the historical, baseline year of
2013 was 14 percent and for CYs 2023 and 2024 is 9.3 percent and 9.2
percent, respectively. As required by section 1886(r)(2)(B)(ii) of the
Act, the Chief Actuary of CMS has certified these estimates. We refer
readers to OACT's Memorandum on Certification of Rates of Uninsured
prepared for this FY 2024 IPPS/LTCH PPS proposed rule for further
details on the methodology and assumptions that were used in the
projection of these rates of uninsurance.\162\
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\162\ OACT Memorandum on Certification of Rates of Uninsured.
March 3, 2023. Available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInPatientPPS/dsh.html.
---------------------------------------------------------------------------
As with the CBO estimates on which we based Factor 2 for fiscal
years before FY 2018, the NHEA estimates are for a calendar year. Under
the approach originally adopted in the FY 2014 IPPS/LTCH PPS final
rule, we have used a weighted average approach to project the rate of
uninsurance for each fiscal year. We continue to believe that, in order
to estimate the rate of uninsurance during a fiscal year accurately,
Factor 2 should reflect the estimated rate of uninsurance that
hospitals will experience during the fiscal year, rather than the rate
of uninsurance during only one of the calendar years that the fiscal
year spans. Accordingly, we are proposing to continue to apply the
weighted average approach used in past fiscal years in order to
estimate the rate of uninsurance for FY 2024.
The OACT certified the estimate of the rate of uninsurance for FY
2024 determined using this weighted average approach to be reasonable
and appropriate for purposes of section 1886(r)(2)(B)(ii) of the Act.
We note that we may also consider the use of more recent data that may
become available for purposes of estimating the rates of uninsurance
used in the calculation of the final Factor 2 for FY 2024. For example,
(1) more recent data may become available regarding the impacts of the
expiration of the Families First Coronavirus Response Act's continuous
enrollment provision for Medicaid (which, once no longer in effect,
will permit states to actively begin disenrolling beneficiaries no
longer eligible for the program starting on April 1, 2023); (2) the
Inflation Reduction Act's extension of enhanced Marketplace premium tax
credits through 2025; and (3) the impacts associated with the Internal
Revenue Services' amended regulations that expanded eligibility for
Marketplace subsidies by revising the affordability test of employer
coverage for family members of employees (87 FR 61979 and 62003). The
calculation of the proposed Factor 2 for FY 2024 is as follows:
Percent of individuals without insurance for CY 2013: 14 percent.
Percent of individuals without insurance for CY 2023: 9.3 percent.
Percent of individuals without insurance for CY 2024: 9.2 percent.
Percent of individuals without insurance for FY 2024 (0.25 times 0.093)
+ (0.75 times 0.092): 9.2 percent. 1- [bond]((0.14-0.092)/0.14)[bond] =
1-0.3429 = 0.6571 (65.71 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
in order to determine Factor 2. Therefore, we are proposing that Factor
2 for FY 2024 would be 65.71 percent.
The proposed FY 2024 uncompensated care amount is equivalent to
proposed Factor 1 multiplied by proposed Factor 2, which is
$10,216,040,319.50 * 0.6571 = $6,712,960,093.94.
We are inviting public comments on our proposed Factor 2 for FY
2024.
3. Calculation of Proposed Factor 3 for FY 2024
a. General Background
Section 1886(r)(2)(C) of the Act defines Factor 3 in the
calculation of the uncompensated care payment. As we have discussed
earlier, section
[[Page 26994]]
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 for which section
1886(r) of the Act 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 would potentially provide the most complete data regarding
uncompensated care costs for Medicare hospitals. However, because of
concerns regarding variations in the data reported on Worksheet S-10
and the completeness of these data, we did not use Worksheet S-10 data
to determine Factor 3 for FY 2014, or for FYs 2015, 2016, or 2017.
Instead, we used alternative data on the utilization of insured low-
income patients, as measured by patient days, which we believed would
be a better proxy for the costs of hospitals in treating the uninsured
and therefore appropriate to use in calculating Factor 3 for these
years. However, we indicated our belief that Worksheet S-10 could
ultimately serve as an appropriate source of more direct data regarding
uncompensated care costs for purposes of determining Factor 3 once
hospitals were submitting more accurate and consistent data through
this reporting mechanism.
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38202), we stated
that we could no longer conclude that alternative data to the Worksheet
S-10 are available for FY 2014 that are a better proxy for the costs of
subsection (d) hospitals for treating individuals who are uninsured.
Hospitals were on notice as of FY 2014 that Worksheet S-10 could
eventually become the data source for CMS to calculate uncompensated
care payments. Furthermore, hospitals' cost reports from FY 2014 had
been publicly available for some time, and CMS had analyses of
Worksheet S-10, conducted both internally and by stakeholders,
demonstrating that Worksheet S-10 accuracy had improved over time. In
the FY 2018 IPPS/LTCH PPS final rule, we finalized a methodology under
which we calculated Factor 3 for all eligible hospitals, with the
exception of Puerto Rico hospitals and Indian Health Service (IHS) and
Tribal hospitals, using Worksheet S-10 data from FY 2014 cost reports
in conjunction with low-income insured days proxy data based on
Medicaid days and SSI days. The time period for the Medicaid days data
was FY 2012 and FY 2013 cost reports, which reflected the most recent
available information regarding these hospitals' low-income insured
days before any expansion of Medicaid. We refer readers to the FY 2018
IPPS/LTCH PPS final rule (82 FR 38208 through 38212) for a further
discussion of the methodology used to determine Factor 3 for FY 2018.
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41414), we stated
that with the additional steps we had taken to ensure the accuracy and
consistency of the data reported on Worksheet S-10 since the
publication of the FY 2018 IPPS/LTCH PPS final rule, we continued to
believe that we could no longer conclude that alternative data to the
Worksheet S-10 were currently available for FY 2014 or FY 2015 that
would be a better proxy for the costs of subsection (d) hospitals for
treating individuals who are uninsured. In the FY 2019 IPPS/LTCH PPS
final rule (83 FR 41428), we advanced the time period of the data used
in the calculation of Factor 3 forward by 1 year and used Worksheet S-
10 data from FY 2014 and FY 2015 cost reports in combination with the
low income insured days proxy for FY 2013 to determine Factor 3 for FY
2019. We note that, as discussed in the FY 2020 IPPS/LTCH PPS final
rule (84 FR 42366), the use of 3 years of data to determine Factor 3
for FY 2018 and FY 2019 had the effect of smoothing the transition from
the use of low-income insured days to the use of Worksheet S-10 data.
As discussed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41424),
we received overwhelming feedback from commenters emphasizing the
importance of audits in ensuring the accuracy and consistency of data
reported on the Worksheet S-10. 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.
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42368), we finalized
our proposal to use a single year of audited Worksheet S-10 cost report
data from FY 2015 in the methodology for determining Factor 3 for FY
2020. Although some commenters expressed support for the alternative
policy of using the more recent 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
[[Page 26995]]
in July 2019, with the goal of having the FY 2017 audited data
available for future rulemaking.
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58823 through
58825), we finalized our proposal to use the most recent available
single year of audited Worksheet S-10 data to determine Factor 3 for FY
2021 and subsequent fiscal years. We explained our belief that using
the most recent audited data available before the applicable Federal
fiscal year, would more accurately reflect a hospital's uncompensated
care costs, as opposed to averaging multiple years of unaudited and
audited data. We explained that mixing audited and unaudited data for
individual hospitals by averaging multiple years of data could
potentially lead to a less smooth result. We also noted that 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 also believed using a single year of audited cost report data would
be an appropriate methodology to determine Factor 3 for FY 2021 and
subsequent years, except for IHS and Tribal hospitals and hospitals
located in Puerto Rico. For IHS and Tribal hospitals and Puerto Rico
hospitals, we finalized the use of a low-income insured days proxy to
determine Factor 3 for FY 2021(85 FR 58825).
In the FY 2021 IPPS/LTCH PPS final rule, we also finalized the
definition of ``uncompensated care'' for FY 2021 and subsequent fiscal
years, for purposes of determining uncompensated care costs and
calculating Factor 3 (85 FR 58825 through 58828). Specifically,
``uncompensated care'' is 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).
This is the same definition that we initially adopted in the FY 2018
IPPS/LTCH PPS final rule. We refer readers to the FY 2021 IPPS/LTCH PPS
final rule (85 FR 58825 through 58828) for a discussion of additional
topics related to the definition of uncompensated care.
In the FY 2022 IPPS/LTCH PPS final rule, consistent with the policy
adopted in the FY 2021 IPPS/LTCH PPS final rule, we used a single year
of Worksheet S-10 data from FY 2018 cost reports to calculate Factor 3
for FY 2022 for all eligible hospitals with the exception of IHS and
Tribal hospitals and Puerto Rico hospitals that have a cost report for
2013 (86 FR 45236 through 45243). We continued to use the low-income
insured days proxy to calculate Factor 3 for these IHS and Tribal
hospitals and Puerto Rico hospitals for FY 2022.
b. Background on the Methodology Used To Calculate Factor 3 for FY 2023
and Subsequent Years
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 a
subsection (d) 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.
As described in the FY 2022 IPPS/LTCH PPS final rule, commenters
expressed concerns that the use of only 1 year of data to determine
Factor 3 would lead to significant variations in year-to-year
uncompensated care payments. Some stakeholders recommended the use of 2
years of historical Worksheet S-10 data (86 FR 45237). In the FY 2022
IPPS/LTCH PPS final rule, we stated that we would consider using
multiple years of data when the vast majority of providers had been
audited for more than 1 fiscal year under the revised reporting
instructions. Audited FY 2019 cost reports were available for the
development of the FY 2023 IPPS/LTCH PPS proposed and final rule.
Feedback from previous audits and lessons learned were incorporated
into the audit process for the FY 2019 reports.
In consideration of the comments discussed in the FY 2022 IPPS/LTCH
PPS final rule, in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49036
through 49047), we finalized a policy of using a multi-year average of
audited Worksheet S-10 data to determine Factor 3 for FY 2023 and
subsequent fiscal years. We explained our belief that this approach
would be generally consistent with our past practice of using the most
recent single year of audited data from the Worksheet S-10, while also
addressing commenters' concerns regarding year-to-year fluctuations in
uncompensated care payments. Under this policy, we used a 2-year
average of audited FY 2018 and FY 2019 Worksheet S-10 data to calculate
Factor 3 for FY 2023. However, we also indicated that we expected FY
2024 would be the first year that 3 years of audited data would be
available at the time of rulemaking. Accordingly, for FY 2024 and
subsequent fiscal years, we finalized a policy of using a 3-year
average of the uncompensated care data from the 3 most recent fiscal
years for which audited data are available to determine Factor 3.
Consistent with the approach that we followed when multiple years of
data were previously used in the Factor 3 methodology, if a hospital
does not have data for all 3 years used in the Factor 3 calculation, we
will determine Factor 3 based on an average of the hospital's available
data. We also discontinued the use of the low-income days proxy to
determine Factor 3 for IHS and Tribal hospitals and Puerto Rico
hospitals and instead finalized use of the same multi-year average of
Worksheet S-10 data to determine Factor 3 for FY 2023 and subsequent
fiscal years as is used to determine Factor 3 for all other DSH-
eligible hospitals.
Because we finalized our proposal to use multiple years of cost
reports to determine Factor 3 starting in FY 2023, we determined that
it would also be necessary to make a further modification to the policy
regarding cost reports that start in one fiscal year and span the
entirety of the following fiscal year. Specifically, in the rare cases
when we use a cost report that starts in one fiscal year and spans the
entirety of the subsequent Federal fiscal year to determine
uncompensated care costs for the subsequent Federal fiscal year, we
would not use the same cost report to determine the hospital's
uncompensated care costs for the earlier fiscal year. We explained that
using the same cost report to determine uncompensated care
[[Page 26996]]
costs for both fiscal years would not be consistent with our intent to
smooth year-to-year variation in uncompensated care costs. As an
alternative, we finalized our proposal to use the hospital's most
recent prior cost report, if that cost report spans the applicable
period. In other words, in determining Factor 3 for FY 2023, we did not
use the same cost report to determine the hospital's uncompensated care
costs for both FY 2018 and FY 2019. Rather, we used the cost report
that spans the entirety of FY 2019 to determine uncompensated care
costs for FY 2019 and we used the hospital's most recent prior cost
report to determine its uncompensated care costs for FY 2018, provided
that cost report spans some portion of Federal fiscal year 2018.
(1) Scaling Factor
To address the effects of calculating Factor 3 using data from
multiple fiscal years, in the FY 2023 IPPS/LTCH PPS final rule (87 FR
49042) we finalized a policy under which we apply a scaling factor to
the Factor 3 values calculated for all DSH eligible hospitals so that
total uncompensated care payments to hospitals that are projected to be
eligible for DSH for a fiscal year will be consistent with the
estimated amount available to make uncompensated care payments for that
fiscal year. Specifically, we adopted a policy under which we divide 1
(the expected sum of all DSH-eligible hospitals' Factor 3 values) by
the actual sum of all DSH eligible hospitals' Factor 3 values and then
multiply the quotient by the uncompensated care payment determined for
each DSH eligible hospital to obtain a scaled uncompensated care
payment amount for each hospital. This process is designed to ensure
that the sum of the scaled uncompensated care payments for all
hospitals that are projected to be DSH eligible is consistent with the
estimate of the total amount available to make uncompensated care
payments for the applicable fiscal year. We noted that a similar
scaling factor methodology was previously used in both FY 2018 (82 FR
38214 and 38215) and FY 2019 (83 FR 41414), when the Factor 3
calculation also included multiple years of data.
(2) New Hospital Policy for Purposes of Factor 3
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49042), we modified
the new hospital policy that was initially adopted in the FY 2020 IPPS/
LTCH PPS final rule to determine Factor 3 for new hospitals. Consistent
with our final policy of using multiple years of cost reports to
determine Factor 3, we defined new hospitals as hospitals that do not
have cost report data for the most recent year of data being used in
the Factor 3 calculation. Under this definition, the cut-off date for
the new hospital policy is the beginning of the Federal fiscal year
after the most recent year for which audits of the Worksheet S-10 data
have been conducted. For FY 2023, the FY 2019 cost reports were the
most recent year of cost reports for which audits of Worksheet S-10
data had been conducted. Thus, hospitals with CCNs established on or
after October 1, 2019, were subject to the new hospital policy for FY
2023.
Under this modification to the new hospital policy, we continued
the policy established in the FY 2020 IPPS/LTCH PPS final rule (84 FR
42370) that if a new hospital has a preliminary projection of being
eligible for DSH payments based on its most recent available
disproportionate patient percentage, it may receive interim empirically
justified DSH payments. However, new hospitals will not receive interim
uncompensated care payments because we would have no uncompensated care
data on which to determine what those interim payments should be. The
MAC will make a final determination concerning whether the hospital is
eligible to receive Medicare DSH payments at cost report settlement.We
also modified the methodology used to calculate Factor 3 for new
hospitals. Specifically, while we continued to determine the numerator
of the Factor 3 calculation using the new hospital's uncompensated care
costs reported on Worksheet S-10 of the hospital's cost report for the
current fiscal year, we adopted an approach under which we determine
Factor 3 for new hospitals using a denominator based solely on
uncompensated care costs from cost reports for the most recent fiscal
year for which audits have been conducted. In addition, we applied a
scaling factor to the Factor 3 calculation for a new hospital. We
explained our belief that applying the scaling factor is appropriate
for purposes of calculating Factor 3 for all hospitals, including new
hospitals and hospitals that are treated as new hospitals, in order to
improve consistency and predictability across all hospitals.
(3) Newly Merged Hospital Policy
In the FY 2023 IPPS/LTCH PPS final rule, we stated that we would
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 will 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, in the FY 2023 IPPS/LTCH PPS final rule, we stated that we would
continue to treat newly merged hospitals in a similar manner to new
hospitals, such that the newly merged hospital's final uncompensated
care payment will be determined at cost report settlement where the
numerator of the newly merged hospital's Factor 3 will 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,
the data from the newly merged hospital's cost report will be
annualized for purposes of the Factor 3 calculation. Consistent with
the modification to the methodology used to determine Factor 3 for new
hospitals described previously, we finalized a policy for determining
Factor 3 for newly merged hospitals using a denominator that is the sum
of the uncompensated care costs for all DSH-eligible hospitals, as
reported on Worksheet S-10 of their cost reports for the most recent
fiscal year for which audits have been conducted. In addition, we apply
a scaling factor, as discussed previously, to the Factor 3 calculation
for a newly merged hospital. We stated our belief that applying the
scaling factor is appropriate for purposes of calculating Factor 3 for
all hospitals, including new hospitals and hospitals that are treated
as new hospitals, in order to improve consistency and predictability
across all hospitals. We also explained that consistent with past
policy, interim uncompensated care payments for the newly merged
hospital will be based only on the data for the surviving hospital's
CCN available at the time of the development of the final rule.
(4) CCR Trim Methodology
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). In the FY
[[Page 26997]]
2023 IPPS/LTCH PPS final rule (87 FR 49043), we adopted a process for
trimming CCRs under which we apply the following steps to determine the
applicable CCR separately for each fiscal year that is included as part
of the multi-year average used to determine Factor 3:
Step 1: Remove Maryland hospitals. In addition, we will remove all-
inclusive rate providers because their CCRs are not comparable to the
CCRs calculated for other IPPS hospitals.
Step 2: Calculate a CCR ``ceiling'' for the applicable fiscal year
with the following data: for each IPPS hospital that was not removed in
Step 1 (including non-DSH eligible hospitals), we use cost report data
to calculate a CCR by dividing the total costs on Worksheet C, Part I,
Line 202, Column 3 by the charges reported on Worksheet C, Part I, Line
202, Column 8. (Combining data from multiple cost reports from the same
fiscal year is not necessary, as the longer cost report will be
selected.) The ceiling is calculated as 3 standard deviations above the
national geometric mean CCR for the applicable fiscal year. This
approach is consistent with the methodology for calculating the CCR
ceiling used for high-cost outliers. Remove all hospitals that exceed
the ceiling so that these aberrant CCRs do not skew the calculation of
the statewide average CCR.
Step 3: Using the CCRs for the remaining hospitals in Step 2,
determine the urban and rural statewide average CCRs for the applicable
fiscal year for hospitals within each State (including non-DSH eligible
hospitals), weighted by the sum of total hospital discharges from
Worksheet S-3, Part I, Line 14, Column 15.
Step 4: Assign the appropriate statewide average CCR (urban or
rural) calculated in Step 3 to all hospitals, excluding all-inclusive
rate providers, with a CCR for the applicable fiscal year greater than
3 standard deviations above the national geometric mean for that fiscal
year (that is, the CCR ``ceiling'').
Step 5: For hospitals that did not report a CCR on Worksheet S-10,
Line 1, we assign them the statewide average CCR for the applicable
fiscal year as determined in step 3.
After completing the previously described steps, we re-calculate
the hospital's uncompensated care costs (Line 30) for the applicable
fiscal year using the trimmed CCR (the statewide average CCR (urban or
rural, as applicable)).
(5) Uncompensated Care Data Trim Methodology
After applying the CCR trim methodology, there are rare situations
where a hospital has potentially aberrant uncompensated care data for a
fiscal year that are unrelated to its CCR. Therefore, under the trim
methodology for potentially aberrant UCC that was included as part of
the methodology for purposes of determining Factor 3 in the FY 2021
IPPS/LTCH PPS final rule (85 FR 58832), if the hospital's uncompensated
care costs for any fiscal year that is included as a part of the multi-
year average are an extremely high ratio (greater than 50 percent) of
its total operating costs in the applicable fiscal year, we will
determine the ratio of uncompensated care costs to the hospital's total
operating costs from another available cost report, and apply that
ratio to the total operating expenses for the potentially aberrant
fiscal year to determine an adjusted amount of uncompensated care costs
for the applicable fiscal year. For example, if a hospital's FY 2018
cost report is determined to include potentially aberrant data, data
from its FY 2019 cost report would be used for the ratio calculation.
However, we note that we have audited the Worksheet S-10 data that
will be used in the Factor 3 calculation for a number of hospitals.
Because the UCC data for these hospitals have been subject to audit, we
believe that there is increased confidence that if high uncompensated
care costs are reported by these audited hospitals, the information is
accurate. Therefore, consistent with the policy that was adopted in the
FY 2021 IPPS/LTCH PPS final rule, it is unnecessary to apply the trim
methodology for a fiscal year for which a hospital's UCC data have been
audited.
In rare cases, hospitals that are not currently projected to be DSH
eligible and that do not have audited Worksheet S-10 data may have a
potentially aberrant amount of insured patients' charity care costs
(line 23 column 2). Accordingly, in the FY 2023 IPPS/LTCH PPS final
rule (87 FR 49044), we stated that in addition to the UCC trim
methodology, we will continue to apply a trim specific to certain
hospitals that do not have audited Worksheet S-10 data for one or more
of the fiscal years that are used in the Factor 3 calculation. For FY
2023 and subsequent fiscal years, in the rare case that a hospital's
insured patients' charity care costs for a fiscal year are greater than
$7 million and the ratio of the hospital's cost of insured patient
charity care (line 23 column 2) to total uncompensated care costs (line
30) is greater than 60 percent, we will exclude the hospital from the
prospective Factor 3 calculation. This trim will only impact hospitals
that are not currently projected to be DSH-eligible; and therefore, are
not part of the calculation of the denominator of Factor 3, which
includes only uncompensated care costs for projected DSH-eligible
hospitals. Consistent with the approach adopted in the FY 2022 IPPS/
LTCH PPS final rule, if a hospital would be trimmed under both the UCC
trim methodology and this alternative trim, we will apply this trim in
place of the existing UCC trim methodology. We continue to believe this
alternative trim more appropriately addresses potentially aberrant
insured patient charity care costs compared to the UCC trim
methodology, because the UCC trim is based solely on the ratio of total
uncompensated care costs to total operating costs and does not consider
the level of insured patients' charity care costs.
Similar to the approach initially adopted in the FY 2022 IPPS/LTCH
PPS final rule (86 FR 45245 and 45246), in the FY 2023 IPPS/LTCH PPS
final rule (87 FR 49044), we also stated that we would continue to use
a threshold of 3 standard deviations from the mean ratio of insured
patients' charity care costs to total uncompensated care costs (line 23
column 2 divided by line 30) and a dollar threshold that is the median
total uncompensated care cost reported on most recent audited cost
reports for hospitals that are projected to be DSH-eligible. We stated
that we continue to believe these thresholds are appropriate, in order
to address potentially aberrant data. However, we modified the
calculation to include Worksheet S-10 data from IHS/Tribal hospitals
and Puerto Rico hospitals consistent with our final policy decision to
begin using Worksheet S-10 data to determine Factor 3 for these
hospitals. In addition, we finalized a policy of applying the same
threshold amounts originally calculated for the FY 2018 reports to
identify potentially aberrant data for FY 2023 and subsequent fiscal
years in order to facilitate transparency and predictability. If a
hospital subject to this trim is determined to be DSH-eligible at cost
report settlement, the MAC will calculate the hospital's Factor 3 using
the same methodology used to calculate Factor 3 for new hospitals.
c. Methodology for Calculating Factor 3 for FY 2024
For FY 2024, we are proposing to follow the same methodology as
applied in FY 2023 and that is described in the
[[Page 26998]]
previous section of this proposed rule to determine Factor 3 using the
most recent 3 years of audited cost reports from FY 2018, FY 2019, and
2020. For purposes of this FY 2024 IPPS/LTCH PPS proposed rule, we are
using reports from the December 2022 HCRIS extract to calculate Factor
3. We intend to use the March 2023 update of HCRIS to calculate the
final Factor 3 for the FY 2024 IPPS/LTCH PPS final rule.
In the FY 2023 IPPS/LTCH PPS final rule, we finalized our proposal
to determine Factor 3 for IHS and Tribal hospitals and Puerto Rico
hospitals based on uncompensated care data reported on Worksheet S-10,
and discontinued the use of low-income insured days as a proxy for the
uncompensated care costs of these hospitals. Beginning in FY 2023, we
established a new supplemental payment for IHS/Tribal hospitals and
Puerto Rico hospitals, because we recognized that discontinuing the use
of the low-income insured days proxy and relying solely on Worksheet S-
10 data to calculate Factor 3 of the uncompensated care payment
methodology for IHS/Tribal hospitals and Puerto Rico hospitals could
result in significant financial disruption for these hospitals. We
refer readers to section IV.D of this proposed rule for a further
discussion of these payments. We note that we are not proposing any
changes to the methodology for determining supplemental payments, and
we will calculate the supplemental payments to eligible IHS/Tribal and
Puerto Rico hospitals consistent with the methodology described in the
FY 2023 IPPS/LTCH PPS final rule (87 FR 49047 through 49051) and in the
regulation at Sec. 412.106(h).
Consistent with the policy adopted in the FY 2023 IPPS/LTCH PPS
final rule and codified in the regulations at Sec.
412.106(g)(1)(iii)(C)(11) for FY 2024 and subsequent fiscal years, we
will use 3 years of audited Worksheet S-10 data to calculate Factor 3
for all eligible hospitals, including IHS and Tribal hospitals and
Puerto Rico hospitals that have a cost report for 2013.
Step 1: Select the hospital's longest cost report for each of the
most recent 3 years of Federal fiscal year (FY) audited cost reports
(FY 2018, FY 2019, and FY 2020). (Alternatively, in the rare case when
the hospital has no cost report for a particular year because the cost
report for the previous Federal fiscal year spanned the more recent
Federal fiscal year, the previous Federal fiscal year cost report will
be used in this step. In the rare case that using a previous Federal
fiscal year cost report results in a period without a report, we will
use the prior year report, if that cost report spanned the applicable
period. (For example, if a hospital does not have a FY 2019 cost report
because the hospital's FY 2018 cost report spanned the FY 2019 time
period, then we will use the FY 2018 cost report that spanned the FY
2019 time period for this step. Using the same example, where the
hospital's FY 2018 report is used for the FY 2019 time period, then we
will use the hospital's FY 2017 report if it spans some of the FY 2018
time period. In other words, we will not use the same cost report for
both the FY 2019 and the FY 2018 time periods.) In general, we note
that, for purposes of the Factor 3 methodology, references to a fiscal
year cost report are to the cost report that spans the relevant Federal
fiscal year period.
Step 2: Annualize the uncompensated care costs (UCC) from Worksheet
S-10 Line 30, if a cost report is more than or less than 12 months. (If
applicable, use the statewide average CCR (urban or rural) to calculate
uncompensated care costs.)
Step 3: Combine adjusted and/or annualized uncompensated care costs
for hospitals that merged using the merger policy.
Step 4: Calculate Factor 3 for all DSH eligible hospitals using
annualized uncompensated care costs (Worksheet S-10 Line 30) based on
cost report data from the most recent 3 years of audited cost reports
(from Step 1, 2 or 3). New hospitals and other hospitals that are
treated as if they are new hospitals for purposes of Factor 3 are
excluded from this calculation.
Step 5: Average the Factor 3 values from Step 4; that is, add the
Factor 3 values, and divide that amount by the number of cost reporting
periods with data to compute an average Factor 3 for the hospital.
Multiply by a scaling factor.
For purposes of identifying new hospitals, for FY 2024, the FY 2020
cost reports are the most recent year of cost reports for which audits
of Worksheet S-10 data have been conducted. Thus, hospitals with CCNs
established on or after October 1, 2020, will be subject to the new
hospital policy in FY 2024. If a new hospital is ultimately determined
to be eligible for Medicare DSH payments for FY 2024, 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 2024 cost report, and the
denominator is the sum of the uncompensated care costs reported on
Worksheet S-10 of the FY 2020 cost reports for all DSH-eligible
hospitals. In addition, we will apply a scaling factor, as discussed
previously, to the Factor 3 calculation for a new hospital. As we
explained in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49042), we
believe applying the scaling factor is appropriate for purposes of
calculating Factor 3 for all hospitals, including new hospitals and
hospitals that are treated as new hospitals, in order to improve
consistency and predictability across all hospitals.
For FY 2024, the eligibility of a newly merged hospital to receive
interim uncompensated care payments and the amount of any interim
uncompensated care payments, will be based on the uncompensated care
costs from the FY 2018, FY 2019, and FY 2020 cost reports available for
the surviving CCN at the time the final rule is developed. However, at
cost report settlement, we will determine the newly merged hospital's
final uncompensated care payment based on the uncompensated care costs
reported on its FY 2024 cost report. That is, we will 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
2024 cost report. The denominator will be the sum of the uncompensated
care costs reported on Worksheet S-10 of the FY 2020 cost reports for
all DSH-eligible hospitals, which is the most recent fiscal year for
which audits have been conducted. We will also apply a scaling factor,
as described previously.
Under the CCR trim methodology, for purposes of this FY 2024
proposed rule, the statewide average CCR was applied to 7 hospitals' FY
2018 reports, of which 3 hospitals had FY 2018 Worksheet S-10 data. The
statewide average CCR was applied to 13 hospitals' FY 2019 reports, of
which 6 hospitals had FY 2019 Worksheet S-10 data. The statewide
average CCR was applied to 10 hospitals' FY 2020 reports, of which 3
hospitals had FY 2020 Worksheet S-10 data.
For a hospital that is subject to the trim for potentially aberrant
data and are ultimately determined to be DSH-eligible at cost report
settlement, its uncompensated care payment will be calculated only
after the hospital's reporting of insured charity care costs on its FY
2024 Worksheet S-10 has been reviewed. Accordingly, the MAC will
calculate a Factor 3 for the hospital only after reviewing the
uncompensated care information reported on Worksheet S-10 of the
hospital's FY 2024 cost report. Then we will calculate Factor 3 for a
hospital subject to this alternative trim using the same methodology
used to determine Factor 3 for new hospitals.
[[Page 26999]]
Specifically, the numerator will reflect the uncompensated care costs
reported on the hospital's FY 2024 cost report, while the denominator
will reflect the sum of the uncompensated care costs reported on
Worksheet S-10 of the FY 2020 cost reports of all DSH-eligible
hospitals. In addition, we will apply a scaling factor, as discussed
previously, to the Factor 3 calculation for the hospital. We continue
to believe applying the scaling factor is appropriate for purposes of
calculating Factor 3 for all hospitals, including new hospitals and
hospitals that are treated as new hospitals, in order to improve
consistency and predictability across all hospitals.
For purposes of the FY 2024 IPPS/LTCH PPS final rule, we intend to
use data from the March 2023 HCRIS extract for this calculation, which
will be the latest quarterly HCRIS extract that is publicly available
at the time of the development of that final rule.
Regarding requests from providers to amend and/or reopen previously
audited Worksheet S-10 data for the most recent 3 cost reporting years
that are used in the methodology for calculating Factor 3, we note that
MACs follow normal timelines and procedures. For purposes of the Factor
3 calculation for FY 2024, any amended reports and/or reopened reports
would need to have completed the amended report and/or reopened report
submission processes by the end of March 2023. In other words, if the
amended report and/or reopened report is not available for the March
HCRIS extract, then that amended and/or reopened report data will not
be part of the FY 2024 IPPS/LTCH PPS final rule's Factor 3 calculation.
We note that the March HCRIS data extract will be available during the
comment period for this proposed rule if providers want to verify that
their amended and/or reopened data is reflected in the March HCRIS
extract.
d. Per Discharge Amount of Interim Uncompensated Care Payments
Since FY 2014, we have made interim uncompensated care payments
during the fiscal year on a per discharge basis. Typically, we use a 3-
year average of the number of discharges for a hospital to produce an
estimate of the amount of the hospital's uncompensated care payment per
discharge. Specifically, the hospital's total uncompensated care
payment amount for the applicable fiscal year, is divided by the
hospital's historical 3-year average of discharges computed using the
most recent available data to determine the uncompensated care payment
per discharge for that fiscal year.
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 45247 and 45248), we
modified this calculation for FY 2022 to be based on an average of FY
2018 and FY 2019 historical discharge data, rather than a 3-year
average that included data from FY 2018, FY 2019, and FY 2020. We
explained our belief that computing a 3-year average with the FY 2020
discharge data would underestimate discharges, due to the decrease in
discharges during the COVID-19 pandemic. In the FY 2023 IPPS/LTCH PPS
final rule (87 FR 49045), we calculated interim uncompensated care
payments based on the 3-year average of discharges from FY 2018, FY
2019, and FY 2021.
Consistent with the approach adopted in the FY 2023 IPPS/LTCH PPS
final rule, for FY 2024, we are proposing to calculatethe average of FY
2019, FY 2021, and FY 2022 historical discharge data, rather than a 3-
year average of the most recent 3 years of discharge data from FY 2020,
FY 2021, and FY 2022. We continue to believe that computing a 3-year
average using the most recent 3 years of discharge data would
potentially underestimate the number of discharges for FY 2024, due to
the effects of the COVID-19 pandemic during FY 2020, which was the
first year of the COVID-19 pandemic. Therefore, we believe that our
proposed approach may result in a better estimate of the number of
discharges during FY 2024, for purposes of the interim uncompensated
care payment calculation. In addition, we note that including discharge
data from FY 2022 to compute this 3-year average is consistent with the
proposed use of FY 2022 Medicare claims in the IPPS ratesetting, as
discussed in section I.E. of the preamble of this FY 2024 IPPS/LTCH PPS
proposed rule. Under this proposal, the resulting 3-year average of the
number of discharges would be used to calculate a per discharge payment
amount that will be used to make interim uncompensated care payments to
each projected DSH-eligible hospital during FY 2024. The interim
uncompensated care payments made to a hospital during the fiscal year
will be 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 FY 2024.
We are requesting comments on our proposal to use data from FY
2019, FY 2021, and FY 2022 to compute a 3-year average of the number of
discharges in order to calculate the per discharge amount for purposes
of making interim uncompensated care payments to projected DSH eligible
hospitals during FY 2024. In the FY 2021 IPPS/LTCH PPS final rule (85
FR 58833 and 58834), we finalized a voluntary process through which a
hospital may submit a request to its 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 must provide supporting documentation demonstrating that 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 is 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 per discharge uncompensated care payment
amount. As another example, a hospital might request that its per
discharge uncompensated care payment amount be reduced to zero midyear
if the hospital's interim uncompensated care payments during the year
have already surpassed the total uncompensated care payment calculated
for the hospital.
Under the policy we finalized in the FY 2021 IPPS/LTCH PPS final
rule, the hospital's MAC will evaluate these requests and the
supporting documentation before the beginning of the Federal fiscal
year and/or with midyear requests when the historical average number of
discharges is lower than the hospital's projected FY 2023 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 will be made is 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. If
the MAC determines it would be appropriate to reduce the interim
Medicare uncompensated care payment per discharge amount, that updated
amount will be used for purposes of the outlier payment calculation for
the remainder of the Federal fiscal year. We refer readers to the
Addendum in the FY 2023 IPPS/LTCH final rule for a more detailed
discussion of the steps for
[[Page 27000]]
determining the operating and capital Federal payment rate and the
outlier payment calculation (87 FR 49431 through 49432). 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, any
change to the per discharge uncompensated care payment amount will not
change how the total uncompensated care payment amount will be
reconciled at cost report settlement.
e. Process for Notifying CMS of Merger Updates and To Report Upload
Issues
As we have done for every proposed and final rule beginning in FY
2014, in conjunction with this proposed rule, we will publish on the
CMS website a table listing Factor 3 for hospitals that we estimate
will receive empirically justified Medicare DSH payments in FY 2024
(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 an uncompensated care payment in the event that
they receive an empirically justified Medicare DSH payment for the
fiscal year as determined at cost report settlement. However, we note
that a Factor 3 will not be published for new hospitals and hospitals
that are subject to the alternative trim for hospitals with potentially
aberrant data that are not projected to be DSH-eligible.
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. In the DSH uncompensated care
supplemental data file, we list new hospitals and the 11 hospitals that
would be subject to the alternative trim for hospitals with potentially
aberrant data that are not projected to be DSH-eligible, with a N/A in
the Factor 3 column.
Hospitals have 60 days from the date of public display of this FY
2024 IPPS/LTCH PPS proposed rule in the Federal Register to review the
table and supplemental data file published on the CMS website in
conjunction with this 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 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). Comments
raising issues or concerns that are specific to the information
included in the table and supplemental data file should be submitted by
email to the CMS inbox at [email protected]. We will address
comments related to mergers and/or reporting upload discrepancies
submitted to the CMS DSH inbox as appropriate in the table and the
supplemental data file that we publish on the CMS website in
conjunction with the publication of the FY 2024 IPPS/LTCH PPS final
rule. All other comments submitted in response to our proposals for FY
2024 must be submitted in one of the three ways found in the ADDRESSES
section of the proposed rule before the close of the comment period in
order to be assured consideration. In addition, we note that the CMS
DSH inbox is not intended for Worksheet S-10 audit process related
emails, which should be directed to the MACs.
Hospitals had 15 business days from the date of public display of
the FY 2023 IPPS/LTCH PPS final rule to review and submit via email any
updated information on mergers and/or to report upload discrepancies
(87 FR 49047). We did not receive comments during this notification
period regarding mergers or data upload issues. In the FY 2023 IPPS/
LTCH PPS final rule, we also noted that the historical cost reports are
publicly available on a quarterly basis on the CMS website for analysis
and additional review of cost report data, separate from the
supplemental data file published with the annual final rule.
As we have stated in previous rulemaking (see, for example, 87 FR
49046 and 86 FR 45249), we believe hospitals 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. Hospitals do not enter into mergers without advanced
planning. A hospital can inform CMS during the comment period for the
proposed rule regarding any merger activity not reflected in
supplemental file published in conjunction with the proposed rule.
Therefore, for FY 2024 and subsequent fiscal years, we are proposing to
no longer have the 15 business day time period after display of the
final rule for hospitals to submit any updated information on mergers
and/or to report upload discrepancies, because there will have been
sufficient opportunity for hospitals to provide information on these
issues during the comment period for the proposed rule. We are inviting
public comments on this proposal.
V. Other Decisions and Changes to the IPPS for Operating System
A. Proposed Changes to MS-DRGs Subject to Postacute Care Transfer
Policy and MS-DRG Special Payments Policies (Sec. 412.4)
1. Background
Existing regulations at 42 CFR 412.4(a) define discharges under the
IPPS as situations in which a patient is formally released from an
acute care hospital or dies in the hospital. Section 412.4(b) defines
acute care transfers, and Sec. 412.4(c) defines postacute care
transfers. Our policy set forth in Sec. 412.4(f) provides that when a
patient is transferred and his or her length of stay is less than the
geometric mean length of stay for the MS-DRG to which the case is
assigned, the transferring hospital is generally paid based on a
graduated per diem rate for each day of stay, not to exceed the full
MS-DRG payment that would have been made if the patient had been
discharged without being transferred.
The per diem rate paid to a transferring hospital is calculated by
dividing the full MS-DRG payment by the geometric mean length of stay
for the MS-DRG. Based on an analysis that showed that the first day of
hospitalization is the most expensive (60 FR 45804), our policy
generally provides for payment that is twice the per diem amount for
the first day, with each subsequent day paid at the per diem amount up
to the full MS-DRG payment (Sec. 412.4(f)(1)). Transfer cases also are
eligible for outlier payments. In general, the outlier threshold for
transfer cases, as described in Sec. 412.80(b), is equal to the fixed-
loss outlier threshold for nontransfer cases (adjusted for geographic
variations in costs), divided by the geometric mean length of stay for
the MS-DRG, and multiplied by the length of stay for the case, plus 1
day.
We established the criteria set forth in Sec. 412.4(d) for
determining which DRGs qualify for postacute care transfer payments in
the FY 2006 IPPS final rule (70 FR 47419 through 47420). The
determination of whether a DRG is subject to the postacute care
transfer policy was initially based on the Medicare Version 23.0
GROUPER (FY 2006) and data from the FY 2004 MedPAR file. However, if a
DRG did not exist in Version 23.0 or a DRG included in Version 23.0 is
revised, we use the current version of the Medicare GROUPER and the
most recent complete year of MedPAR data to determine if the DRG is
subject to the postacute care transfer policy. Specifically, if the MS-
DRG's total number of discharges to
[[Page 27001]]
postacute care equals or exceeds the 55th percentile for all MS-DRGs
and the proportion of short-stay discharges to postacute care to total
discharges in the MS-DRG exceeds the 55th percentile for all MS-DRGs,
CMS will apply the postacute care transfer policy to that MS-DRG and to
any other MS-DRG that shares the same base MS-DRG. The statute directs
us to identify MS-DRGs based on a high volume of discharges to
postacute care facilities and a disproportionate use of postacute care
services. As discussed in the FY 2006 IPPS final rule (70 FR 47416), we
determined that the 55th percentile is an appropriate level at which to
establish these thresholds. In that same final rule (70 FR 47419), we
stated that we will not revise the list of DRGs subject to the
postacute care transfer policy annually unless we are making a change
to a specific MS-DRG.
To account for MS-DRGs subject to the postacute care policy that
exhibit exceptionally higher shares of costs very early in the hospital
stay, Sec. 412.4(f) also includes a special payment methodology. For
these MS-DRGs, hospitals receive 50 percent of the full MS-DRG payment,
plus the single per diem payment, for the first day of the stay, as
well as a per diem payment for subsequent days (up to the full MS-DRG
payment (Sec. 412.4(f)(6)). For an MS-DRG to qualify for the special
payment methodology, the geometric mean length of stay must be greater
than 4 days, and the average charges of 1-day discharge cases in the
MS-DRG must be at least 50 percent of the average charges for all cases
within the MS-DRG. MS-DRGs that are part of an MS-DRG severity level
group will qualify under the MS-DRG special payment methodology policy
if any one of the MS-DRGs that share that same base MS-DRG qualifies
(Sec. 412.4(f)(6)).
Prior to the enactment of the Bipartisan Budget Act of 2018 (Pub.
L. 115-123), under section 1886(d)(5)(J) of the Act, a discharge was
deemed a ``qualified discharge'' if the individual was discharged to
one of the following postacute care settings:
A hospital or hospital unit that is not a subsection (d)
hospital.
A skilled nursing facility.
Related home health services provided by a home health
agency provided within a timeframe established by the Secretary
(beginning within 3 days after the date of discharge).
Section 53109 of the Bipartisan Budget Act of 2018 amended section
1886(d)(5)(J)(ii) of the Act to also include discharges to hospice care
provided by a hospice program as a qualified discharge, effective for
discharges occurring on or after October 1, 2018. In the FY 2019 IPPS/
LTCH PPS final rule (83 FR 41394), we made conforming amendments to
Sec. 412.4(c) of the regulation to include discharges to hospice care
occurring on or after October 1, 2018 as qualified discharges. We
specified that hospital bills with a Patient Discharge Status code of
50 (Discharged/Transferred to Hospice--Routine or Continuous Home Care)
or 51 (Discharged/Transferred to Hospice, General Inpatient Care or
Inpatient Respite) are subject to the postacute care transfer policy in
accordance with this statutory amendment.
2. Proposed Changes for FY 2024
As discussed in section II.C. of the preamble of this proposed
rule, based on our analysis of FY 2022 MedPAR claims data, we are
proposing to make changes to a number of MS-DRGs, effective for FY
2024. Specifically, we are proposing to do the following:
Reassign procedures describing thrombolysis when performed
for pulmonary embolism from MS-DRGs 166, 167, and 168 (Other
Respiratory System O.R. Procedures with MCC, with CC, and without CC/
MCC, respectively) to proposed new MS-DRG 173 (Ultrasound Accelerated
and Other Thrombolysis for Pulmonary Embolism).
Create proposed new base MS-DRG 212 (Concomitant Aortic
and Mitral Valve Procedures) for cases reporting an aortic valve repair
or replacement procedure and a mitral valve repair or replacement
procedure in addition to another concomitant cardiovascular procedure.
Reassign the procedures involving cardiac defibrillator
implants by deleting MS-DRGs 222 through 227 (Cardiac Defibrillator
Implant, with and without Cardiac Catheterization, with and without
AMI/HF/shock, with and without MCC, respectively) and create proposed
new MS-DRG 275 (Cardiac Defibrillator Implant with Cardiac
Catheterization and MCC) for cases reporting cardiac defibrillator
implant with cardiac catheterization with MCC, and proposed new MS-DRGs
276 and 277 (Cardiac Defibrillator Implant with MCC and without MCC,
respectively) for cases reporting cardiac defibrillator implant.
Reassign procedures describing thrombolysis performed on
peripheral vascular structures from MS-DRGs 252, 253, and 254 (Other
Vascular Procedures with MCC, with CC, and without CC/MCC,
respectively) to proposed new MS-DRG 278 (Ultrasound Accelerated and
Other Thrombolysis of Peripheral Vascular Structures with MCC) and
proposed new MS-DRG 279 (Ultrasound Accelerated and Other Thrombolysis
of Peripheral Vascular Structures without MCC).
Create proposed new MS-DRGs 323 and 324 (Coronary
Intravascular Lithotripsy with Intraluminal Device with MCC and without
MCC, respectively) for cases reporting C-IVL with placement of an
intraluminal device, create proposed new base MS-DRG 325 (Coronary
Intravascular Lithotripsy without Intraluminal Device) for cases
reporting C-IVL without the placement of an intraluminal device, delete
MS-DRG 246 (Percutaneous Cardiovascular Procedures with Drug-Eluting
Stent with MCC or 4+ Arteries or Stents), MS-DRG 247 (Percutaneous
Cardiovascular Procedures with Drug-Eluting Stent without MCC), MS-DRG
248 (Percutaneous Cardiovascular Procedures with Non-Drug-Eluting Stent
with MCC or 4+ Arteries or Stents) and MS-DRG 249 (Percutaneous
Cardiovascular Procedures with Non-Drug-Eluting Stent without MCC) and
create proposed new MS-DRG 321(Percutaneous Cardiovascular Procedures
with Intraluminal Device with MCC or 4+ Arteries/Intraluminal Devices)
and proposed new MS-DRG 322 (Percutaneous Cardiovascular Procedures
with Intraluminal Device without MCC).
Delete MS-DRGs 338 through 340 (Appendectomy with
Complicated Principal Diagnosis with MCC, with CC, and without CC/MCC,
respectively) and MS-DRGs 341 through 343 (Appendectomy without
Complicated Principal Diagnosis with MCC, with CC, and without CC/MCC,
respectively) describing appendectomy with and without a complicated
principal diagnosis and create proposed new MS-DRGs 397, 398, and 399
(Appendix Procedures with MCC, with CC, without CC/MCC, respectively).
In light of the proposed changes to the MS-DRGs for FY 2024,
according to the regulations under Sec. 412.4(d), we have evaluated
the MS-DRGs using the general postacute care transfer policy criteria
and data from the FY 2022 MedPAR file. If an MS-DRG qualified for the
postacute care transfer policy, we also evaluated that MS-DRG under the
special payment methodology criteria according to regulations at Sec.
412.4(f)(6). We continue to believe it is appropriate to 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 note that while CMS is proposing the
[[Page 27002]]
reassignment of procedure codes from MS-DRGs 252, 253, and 254 to
proposed new MS-DRGs 278 and 279, we do not consider this proposed
revision to constitute a material change that would warrant
reevaluation of the postacute care status of MS-DRGs 252, 253, and 254.
We note this base MS-DRG (MS-DRG 252) does not currently qualify for
postacute care transfer status. CMS may further evaluate what degree of
shifts in cases for existing MS-DRGs warrant consideration for the
review of postacute care transfer and special payment policy status in
future rulemaking.
Proposed new MS-DRG 276 would qualify to be included on the list of
MS-DRGs that are subject to the postacute care transfer policy. As
described in the regulations at Sec. 412.4(d)(3)(ii)(D), MS-DRGs that
share the same base MS DRG will all qualify under the postacute care
transfer policy if any one of the MS-DRGs that share that same base MS-
DRG qualifies. We therefore propose to add proposed new MS-DRGs 276 and
277 to the list of MS-DRGs that are subject to the postacute care
transfer policy. MS-DRGs 166, 167, and 168 are currently subject to the
postacute care transfer policy. As a result of our review, these MS-
DRGs, as proposed to be revised, would continue to qualify to be
included on the list of MS-DRGs that are subject to the postacute care
transfer policy.
Using the December 2022 update of the FY 2022 MedPAR file, we have
developed the following chart which sets forth the most recent analysis
of the postacute care transfer policy criteria completed for this
proposed rule with respect to each of these proposed new or revised MS-
DRGs. For the FY 2024 final rule, we intend to update this analysis
using the most recent available data at that time.
BILLING CODE 4120-01-P
[[Page 27003]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.259
BILLING CODE 4120-01-C
During our annual review of proposed new or revised MS-DRGs and
analysis of the December 2022 update of the FY 2022 MedPAR file, we
reviewed the list
[[Page 27004]]
of proposed revised or new MS-DRGs that qualify to be included on the
list of MS-DRGs subject to the postacute care transfer policy for FY
2024 to determine if any of these MS-DRGs would also be subject to the
special payment methodology policy for FY 2024. Based on our analysis
of proposed changes to MS-DRGs included in this proposed rule, we
determined that proposed new MS-DRG 276 meets the criteria for the MS-
DRG special payment methodology. As described in the regulations at
Sec. 412.4(f)(6)(iv), MS-DRGs that share the same base MS-DRG will all
qualify under the MS-DRG special payment policy if any one of the MS-
DRGs that share that same base MS-DRG qualifies. Therefore, we are
proposing that proposed new MS-DRG 277 also would be subject to the MS-
DRG special payment methodology, effective for FY 2024. For the FY 2024
final rule, we intend to update this analysis using the most recent
available data at that time.
[GRAPHIC] [TIFF OMITTED] TP01MY23.260
The proposed postacute care transfer and special payment policy
status of these MS-DRGs is reflected in Table 5 associated with this
proposed rule, which is listed in section VI. of the Addendum to this
proposed rule and available on the CMS website.
B. Proposed Changes in the Inpatient Hospital Update for FY 2024 (Sec.
412.64(d))
1. Proposed FY 2024 Inpatient Hospital Update
In accordance with section 1886(b)(3)(B)(i) of the Act, each year
we update the national standardized amount for inpatient hospital
operating costs by a factor called the ``applicable percentage
increase.'' For FY 2024, we are setting the applicable percentage
increase by applying the adjustments listed in this section in the same
sequence as we did for FY 2023. (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 2024 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 multifactor
productivity (MFP) (the productivity 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 productivity
adjustment may result in the applicable percentage increase being less
than zero.
We note, in compliance with section 404 of the MMA, in the FY 2022
IPPS/LTCH PPS final rule (86 FR 45194 through 45204), we replaced the
2014-based IPPS operating and capital market baskets with the rebased
and revised 2018-based IPPS operating and capital market baskets
beginning in FY 2022.
We are proposing to base the FY 2024 market basket update used to
determine the applicable percentage increase for the IPPS on IHS Global
Inc.'s (IGI's) fourth quarter 2022 forecast of the 2018-based IPPS
market basket rate-of-increase with historical data through third
quarter 2022, which is estimated to be 3.0 percent. We also are
proposing that if more recent data subsequently become available (for
example, a more recent estimate of the market basket update), we would
use such data, if appropriate, to determine the FY 2024 market basket
update in the final rule. We also refer commenters to the discussion at
Appendix B to this proposed rule.
In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51689 through
51692), we finalized our methodology for calculating and applying the
productivity 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
[[Page 27005]]
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, year, cost reporting period, or
other annual period). The U.S. Department of Labor's Bureau of Labor
Statistics (BLS) publishes the official measures of private nonfarm
business productivity for the U.S. economy. We note that previously the
productivity measure referenced in section 1886(b)(3)(B)(xi)(II) was
published by BLS as private nonfarm business multifactor productivity.
Beginning with the November 18, 2021 release of productivity data, BLS
replaced the term multifactor productivity (MFP) with total factor
productivity (TFP). BLS noted that this is a change in terminology only
and will not affect the data or methodology. As a result of the BLS
name change, the productivity measure referenced in section
1886(b)(3)(B)(xi)(II) is now published by BLS as private nonfarm
business total factor productivity. However, as mentioned, the data and
methods are unchanged. Please see www.bls.gov for the BLS historical
published TFP data. A complete description of IGI's TFP projection
methodology is available on the CMS website at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch. In addition, we note
that beginning with the FY 2022 IPPS/LTCH PPS final rule, we refer to
this adjustment as the productivity adjustment rather than the MFP
adjustment to more closely track the statutory language in section
1886(b)(3)(B)(xi)(II) of the Act. We note that the adjustment continues
to rely on the same underlying data and methodology.
For FY 2024, we are proposing a productivity adjustment of 0.2
percent. Similar to the proposed market basket update, for this
proposed rule, the estimate of the proposed FY 2024 productivity
adjustment is based on IGI's fourth quarter 2022 forecast. As noted
previously, we are proposing that if more recent data subsequently
become available, we would use such data, if appropriate, to determine
the FY 2024 productivity adjustment for the final rule.
Based on these data, we have determined four proposed applicable
percentage increases to the standardized amount for FY 2024, as
specified in the following table:
[GRAPHIC] [TIFF OMITTED] TP01MY23.261
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 Sec. 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 Sec. 412.64(d)(2) for
a hospital that does not submit quality data and Sec. 412.64(d)(3) for
a hospital that is not a meaningful EHR user, less a productivity
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. As discussed in section V.F. of
the preamble of this proposed rule, section 4102 of the Consolidated
Appropriations Act, 2023 (Pub. L. 117-328), enacted on December 29,
2022, extended the MDH program through FY 2024 (that is, for discharges
occurring on or before September 30, 2024). We refer readers to section
V.F. of the preamble of this proposed rule for further discussion of
the MDH program.
For FY 2024, we are proposing the following updates to the
hospital-specific rates applicable to SCHs and MDHs: A proposed update
of 2.8 percent for a hospital that submits quality data and is a
meaningful EHR user; a proposed update of 0.55 percent for a hospital
that submits quality data and is not a meaningful EHR user; a proposed
update of 2.05 percent for a hospital that fails to submit quality data
and is a meaningful EHR user; and a proposed update of -0.2 percent for
a hospital that fails to submit quality data
[[Page 27006]]
and is not an meaningful EHR user. As previously discussed, we are
proposing that if more recent data subsequently become available (for
example, a more recent estimate of the market basket update and the
productivity adjustment), we would use such data, if appropriate, to
determine the update in the final rule.
2. Proposed FY 2024 Puerto Rico Hospital Update
Section 602 of Public Law 114-113 amended section 1886(n)(6)(B) of
the Act to specify that subsection (d) Puerto Rico hospitals are
eligible for incentive payments for the meaningful use of certified EHR
technology, effective beginning FY 2016. In addition, section
1886(n)(6)(B) of the Act was amended to specify that the adjustments to
the applicable percentage increase under section 1886(b)(3)(B)(ix) of
the Act apply to subsection (d) Puerto Rico hospitals that are not
meaningful EHR users, effective beginning FY 2022. Accordingly, for FY
2022, section 1886(b)(3)(B)(ix) of the Act in conjunction with section
602(d) of Public Law 114-113 requires that any subsection (d) Puerto
Rico hospital that is not a meaningful EHR user as defined in section
1886(n)(3) of the Act and not subject to an exception under section
1886(b)(3)(B)(ix) of the Act will have ``three-quarters'' of the
applicable percentage increase (prior to the application of other
statutory adjustments), or three-quarters of the applicable market
basket rate-of-increase, reduced by 33\1/3\ percent. The reduction to
three-quarters of the applicable percentage increase for subsection (d)
Puerto Rico hospitals that are not meaningful EHR users increases to
66\2/3\ percent for FY 2023, and, for FY 2024 and subsequent fiscal
years, to 100 percent. (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.) The regulations at 42 CFR
412.64(d)(3)(ii) reflect the current law for the update for subsection
(d) Puerto Rico hospitals for FY 2022 and subsequent fiscal years. In
the FY 2019 IPPS/LTCH PPS final rule, we finalized the payment
reductions (83 FR 41674).
For FY 2024, consistent with section 1886(b)(3)(B) of the Act, as
amended by section 602 of Public Law 114-113, we are setting the
applicable percentage increase for Puerto Rico hospitals by applying
the following adjustments in the following sequence. Specifically, the
applicable percentage increase under the IPPS for Puerto Rico hospitals
will be equal to the rate of-increase in the hospital market basket for
IPPS hospitals in all areas, subject to 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 Puerto Rico
hospitals not considered to be meaningful EHR users in accordance with
section 1886(b)(3)(B)(ix) of the Act, and then subject to the
productivity adjustment at section 1886(b)(3)(B)(xi) of the Act. As
noted previously, section 1886(b)(3)(B)(xi) of the Act states that
application of the productivity adjustment may result in the applicable
percentage increase being less than zero.
[GRAPHIC] [TIFF OMITTED] TP01MY23.262
Based on IGI's fourth quarter 2022 forecast of the 2018-based IPPS
market basket update with historical data through third quarter 2022,
for this FY 2024 proposed rule, in accordance with section
1886(b)(3)(B) of the Act, as discussed previously, for Puerto Rico
hospitals we are proposing a market basket update of 3.0 percent less a
productivity adjustment of 0.2 percentage point. Therefore, for FY
2024, depending on whether a Puerto Rico hospital is a meaningful EHR
user, there are two possible applicable percentage increases that could
be applied to the standardized amount. Based on these data, we have
determined the following proposed applicable percentage increases to
the standardized amount for FY 2024 for Puerto Rico hospitals:
For a Puerto Rico hospital that is a meaningful EHR user,
we are proposing a FY 2024 applicable percentage increase to the
operating standardized amount of 2.8 percent (that is, the FY 2024
estimate of the proposed market basket rate-of-increase of 3.0 percent
less 0.2 percentage point for the proposed productivity adjustment).
For a Puerto Rico hospital that is not a meaningful EHR
user, we are proposing a FY 2024 applicable percentage increase to the
operating standardized amount of 0.55 percent (that is, the FY 2024
estimate of the proposed market basket rate-of-increase of 3.0 percent,
less an adjustment of 2.25 percentage point (the proposed market basket
rate-of-increase of 3.0 percent x 0.75 for failure to be a meaningful
EHR user), and less 0.2 percentage point for the proposed productivity
adjustment).
As noted previously, we are proposing that if more recent data
subsequently become available, we would use such data, if appropriate,
to determine the FY 2024 market basket update and the productivity
adjustment for the FY 2024 IPPS/LTCH PPS final rule.
[[Page 27007]]
C. Sole Community Hospitals (SCHs) (Sec. 412.92)
1. Background
Section 1886(d)(5)(D) of the Act provides special payment
protections under the IPPS to sole community hospitals (SCHs). 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).
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41430), effective
for SCH applications received on or after October 1, 2018, we modified
the effective date of SCH classification from 30 days after the date of
CMS's written notification of approval to the date that the MAC
receives the complete SCH application. As we explained in that final
rule, section 401 of the Medicare, Medicaid, and SCHIP Balanced Budget
Refinement Act (BBRA) of 1999 (Pub. L. 106-113, Appendix F) amended
section 1886(d)(8) of the Act to add paragraph (E) which authorizes
reclassification of certain urban hospitals as rural if the hospital
applies for such status and meets certain criteria. The effective date
for rural reclassification status under section 1886(d)(8)(E) of the
Act is set forth at 42 CFR 412.103(d)(1) as the filing date, which is
the date CMS receives the reclassification application (Sec.
412.103(b)(5)). One way that an urban hospital can reclassify as rural
under Sec. 412.103 (specifically, Sec. 412.103(a)(3)) is if the
hospital would qualify as a rural referral center (RRC) as set forth in
Sec. 412.96, or as an SCH as set forth in Sec. 412.92, if the
hospital were located in a rural area. A geographically urban hospital
may simultaneously apply for reclassification as rural under Sec.
412.103(a)(3) by meeting the criteria for SCH status (other than being
located in a rural area), and apply to obtain SCH status under Sec.
412.92 based on that acquired rural reclassification. However, as we
explained in the FY 2019 final rule, the rural reclassification is
effective as of the filing date, whereas under our policy at that time,
the SCH status was effective 30 days after approval. In addition, while
Sec. 412.103(c) states that the CMS Regional Office will review the
application and notify the hospital of its approval or disapproval of
the request within 60 days of the filing date, the regulations do not
set a timeframe by which CMS must decide on an SCH request. We stated
that therefore, geographically urban hospitals that obtain rural
reclassification under Sec. 412.103 for the purposes of obtaining SCH
status may face a payment disadvantage because, under the policy at
that time, they are paid as rural until the SCH application is approved
and the SCH classification and payment adjustment become effective 30
days after approval.
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41430), to minimize
the lag between the effective date of rural reclassification under
Sec. 412.103 and the effective date for SCH status, we revised our
policy so that the effective date for SCH classification and for the
payment adjustment would be the date that the MAC receives the complete
SCH application, effective for SCH applications received on or after
October 1, 2018, as reflected in Sec. 412.92(b)(2)(i) and (iv). We
stated that a complete application includes a request and all
supporting documentation needed to demonstrate that the hospital meets
criteria for SCH status as of the date of application. We also stated
that for an application to be complete, all criteria must be met as of
the date the MAC receives the SCH application. We further stated that a
hospital applying for SCH status on the basis of a Sec. 412.103 rural
reclassification must submit its Sec. 412.103 application no later
than its SCH application in order to be considered rural as of the date
the MAC receives the SCH application.
As we explained in the FY 2019 IPPS/LTCH PPS final rule, we
believed that updating the regulations at Sec. 412.92 to provide an
effective date for SCH status that is consistent with the effective
date for rural reclassification under Sec. 412.103 would benefit
hospitals by minimizing any payment disadvantage caused by the lag
between the effective date of rural reclassification and the effective
date of SCH status. We also stated that we believe that aligning the
SCH effective date with the Sec. 412.103 effective date supports
agency efforts to reduce regulatory burden because it would provide for
a more uniform policy.
In addition, we made parallel changes to the effective date for a
Medicare dependent hospital (MDH) status determination under Sec.
412.108(b)(4) such that for applications received on or after October
1, 2018, a determination of MDH status would be effective as of the
date that the MAC receives the complete application, rather than the
prior effective date of 30 days after the date the MAC provides written
notification to the hospital. Similar to applications for SCH status,
we stated that a complete application includes a request and all
supporting documentation needed to demonstrate that the hospital meets
criteria for MDH status as of the date of application. We further
stated that for an application to be complete, all criteria must be met
as of the date the MAC receives the MDH application. For example, a
cost report must be settled at the time of application for a hospital
to use that cost report as one of the cost reports required in Sec.
412.108(a)(1)(iv)(C).
We refer the reader to the FY 2019 IPPS/LTCH PPS final rule (83 FR
41430) for further discussion of these changes to the effective dates
of SCH and MDH status beginning with applications received on or after
October 1, 2018.
As explained in the FY 2019 IPPS/LTCH PPS final rule, we
specifically modified the effective date for SCH status for consistency
with the effective date for rural reclassification in order to minimize
any payment disadvantage caused by the lag between the effective date
of rural reclassification and the effective date of SCH status for
hospitals applying for both rural reclassification under Sec.
412.103(a)(3) by meeting the criteria for SCH status (other than being
located in a rural area), and applying to obtain SCH status under Sec.
412.92 based on that acquired rural reclassification. As previously
discussed, by meeting the criteria for SCH status (other than being
located in a rural area), a hospital can qualify for rural
reclassification per the regulations at Sec. 412.103(a)(3), which then
allows it to meet all the criteria for SCH status--including the rural
requirement at Sec. 412.92(a).
2. Proposed Change of Effective Date for SCH Status in the Case of a
Merger
For some hospitals, eligibility for SCH classification may depend
on the hospital's merger with a nearby ``like hospital'' as defined in
Sec. 412.92(c)(2) \163\ and meeting other criteria at Sec. 412.92(a).
[[Page 27008]]
The merger allows the two hospitals involved to operate under a single
provider agreement. The regulations at Sec. 412.92(c)(2) define a like
hospital as a nearby hospital that furnishes short-term acute care and
whose total inpatient days attributable to units of the nearby hospital
that provide a level of care characteristic of the level of care
payable under the acute care hospital inpatient prospective payment
system are greater than 8 percent of the similarly calculated total
inpatient days of the hospital seeking SCH designation. In this
scenario, prior to the merger, the applicant hospital was not eligible
for SCH classification due to its proximity to a nearby like hospital.
When the applicant hospital subsequently merges with the nearby like
hospital, it is potentially eligible for SCH classification.
---------------------------------------------------------------------------
\163\ 42 CFR 412.92(c)(2): Like hospital means a hospital
furnishing short-term, acute care. Effective with cost reporting
periods beginning on or after October 1, 2002, for purposes of a
hospital seeking sole community hospital designation, CMS will not
consider the nearby hospital to be a like hospital if the total
inpatient days attributable to units of the nearby hospital that
provides a level of care characteristic of the level of care payable
under the acute care hospital inpatient prospective payment system
are less than or equal to 8 percent of the similarly calculated
total inpatient days of the hospital seeking sole community hospital
designation.
---------------------------------------------------------------------------
If an SCH application is approved, under current policy, the
effective date of the SCH classification is the date the MAC receives
the complete application. In situations where SCH classification is
contingent on a merger, a hospital is not considered to have submitted
a complete application to the MAC unless the application contains the
notification that the merger was approved. We have heard concerns that
in these situations the time difference between the effective date of
the hospital merger, which may be retroactive, and the effective date
of the SCH status, which is based on the date the complete application
is received by the MAC, including the merger approval, may be
problematic for hospitals because they cannot benefit from the special
payment protections that are afforded to SCHs until the effective date
of the SCH classification. We have also heard concerns that different
merger requirements across states could potentially introduce an uneven
playing field for providers seeking SCH classification because the
timeframe for a merger approval could vary from one state or region to
another.
Therefore, in an effort to address these concerns and in light of
our continuing experience in applying these policies, we are proposing
to revise Sec. 412.92(b)(2) so that for SCH applications received on
or after October 1, 2023, where (1) a hospital's SCH approval is
dependent on its merger with another nearby hospital, and (2) the
hospital meets the other SCH classification requirements, the SCH
classification and payment adjustment would be effective as of the
effective date of the approved merger if the MAC receives the complete
application within 90 days of CMS' written notification to the hospital
of the approval of the merger. This 90-day timeframe will provide
sufficient time for a hospital to submit a complete SCH application,
while addressing the concerns, as previously discussed, that merger
approval may be delayed for reasons beyond a hospital's control. If the
MAC does not receive the complete application within 90 days of CMS'
notification of the merger approval, SCH classification would be
effective as of the date the MAC receives the complete application,
including documentation of the merger approval, and in accordance with
the regulations at Sec. 412.92(b)(2)(i).
In connection with this proposal, we are also proposing to change
the effective date of rural reclassification for a hospital qualifying
for rural reclassification under Sec. 412.103(a)(3) by meeting the
criteria for SCH status (other than being located in a rural area), and
also applying to obtain SCH status under Sec. 412.92, where
eligibility for SCH classification depends on a hospital merger.
Specifically, we are proposing that in these circumstances, and subject
to the requirements set forth at proposed new Sec. 412.92(b)(2)(vi),
the effective date for rural reclassification would be as of the
effective date set forth in proposed new Sec. 412.92(b)(2)(vi).
We note that we are not proposing to modify any SCH classification
requirements or what constitutes a ``complete application''. The SCH
application must, therefore, include all required documentation that
would constitute a ``complete application'' including documentation of
the hospital's merger approval. We also note that we are not proposing
any change to the effective date for an SCH application that does not
involve a merger.
We continue to believe that our current approach in determining the
effective date for SCH classification where the SCH application is
contingent on a hospital merger is reasonable. However, in light of our
experience in applying these policies and the concerns we have heard
about the timeframes involved, we believe that our proposed revision to
the effective date for hospitals applying for SCH classification where
that classification is dependent on a merger is also reasonable and
appropriate and would benefit hospitals by minimizing the time
difference between the effective date of the merger and the effective
date of SCH status. We note that we are not proposing a parallel change
to the effective date policy for MDH classification because eligibility
for MDH classification is not dependent on proximity to nearby
providers and, therefore, MDH classification would generally not be
contingent on a merger taking place. However, we seek comment on the
need for such a proposal, which we may consider for future rulemaking
as appropriate.
Therefore, we are proposing to revise Sec. 412.92 by adding a new
proposed paragraph (b)(2)(vi) to specify that for applications received
on or after October 1, 2023, where eligibility for SCH classification
is dependent on a merger, the effective date of the SCH classification
would be as of the effective date of the approved merger if the MAC
receives the complete application within 90 days of CMS' written
notification to the hospital of the approval of the merger. If the MAC
does not receive the complete application within 90 days of CMS'
written notification of the merger approval, SCH classification would
be effective as of the date the MAC receives the complete application
in accordance with the regulations at Sec. 412.92(b)(2)(i). We are
also proposing to make conforming changes to the existing regulations
at Sec. 412.92(b) by adding an exception referencing proposed
paragraph Sec. 412.92(b)(2)(vi) to the language describing the
effective date for applications received on or after October 1, 2018 at
Sec. 412.92(b)(2)(i), and by revising and streamlining the language at
Sec. 412.92(b)(2)(ii)(C) and (b)(2)(iv) to reference Sec.
412.92(b)(2)(i) as the effective date policy in effect for applications
received on or after October 1, 2018. In addition, we are proposing a
technical correction to paragraph (b)(1)(v) by revising the word
``forward'' to ``forwards''.
As discussed, we are also proposing to make a conforming change to
the regulations at Sec. 412.103(d) to modify the effective date of
rural reclassification for a hospital qualifying for rural
reclassification under Sec. 412.103(a)(3) by meeting the criteria for
SCH status (other than being located in a rural area), and also
applying to obtain SCH status under Sec. 412.92 where eligibility for
SCH classification depends on a hospital merger. We are proposing to
amend Sec. 412.103(d)(1) and to add new Sec. 412.103(d)(3) to provide
that, subject to the hospital meeting the requirements set forth at
proposed Sec. 412.92(b)(2)(vi), the effective date for rural
reclassification for such hospital would be as of the effective date
determined under Sec. 412.92(b)(2)(vi).
D. Rural Referral Centers (RRCs) Proposed Annual Updates to Case-Mix
Index (CMI) and Discharge Criteria (Sec. 412.96)
Under the authority of section 1886(d)(5)(C)(i) of the Act, the
regulations at Sec. 412.96 set forth the criteria that a hospital must
meet in order to qualify under the IPPS as a
[[Page 27009]]
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 (Sec.
412.96(b)(1)(ii)). A rural hospital that does not meet the bed size
requirement can qualify as an RRC if the hospital meets two mandatory
prerequisites (a minimum case-mix index (CMI) and a minimum number of
discharges), and at least one of three optional criteria (relating to
specialty composition of medical staff, source of inpatients, or
referral volume). (We refer readers to Sec. 412.96(c)(1) through (5)
and the September 30, 1988, Federal Register (53 FR 38513) for
additional discussion.) With respect to the two mandatory
prerequisites, a hospital may be classified as an RRC if the
hospital's--
CMI is at least equal to the lower of the median CMI for
urban hospitals in its census region, excluding hospitals with approved
teaching programs, or the median CMI for all urban hospitals
nationally; and
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.
In the FY 2022 final rule (86 FR 45217), in light of the COVID-19
PHE, we amended the regulations at Sec. 412.96(h)(1) to provide for
the use of the best available data rather than the latest available
data in calculating the national and regional CMI criteria. We also
amended the regulations at Sec. 412.96(c)(1) to indicate that the
individual hospital's CMI value for discharges during the same Federal
fiscal year used to compute the national and regional CMI values is
used for purposes of determining whether a hospital qualifies for RRC
classification. We also amended the regulations Sec. 412.96(i)(1) and
(2), which describe the methodology for calculating the number of
discharges criteria, to provide for the use of the best available data
rather than the latest available or most recent data when calculating
the regional discharges for RRC classification.
1. Case-Mix Index (CMI)
Section 412.96(c)(1) provides that CMS establish updated national
and regional CMI values in each year's annual notice of prospective
payment rates for purposes of determining RRC status. The methodology
we used to determine the national and regional CMI values is set forth
in the regulations at Sec. 412.96(c)(1)(ii). The proposed national
median CMI value for FY 2024 is based on the CMI values of all urban
hospitals nationwide, and the proposed regional median CMI values for
FY 2024 are based on the CMI values of all urban hospitals within each
census region, excluding those hospitals with approved teaching
programs (that is, those hospitals that train residents in an approved
GME program as provided in Sec. 413.75). These proposed values are
based on discharges occurring during FY 2022 (October 1, 2021 through
September 30, 2022), and include bills posted to CMS' records through
December 2022. We believe that this is the best available data for use
in calculating the proposed national and regional median CMI values and
is consistent with our proposal to use the FY 2022 MedPAR claims data
for FY 2024 ratesetting.
In this FY 2024 IPPS/LTCH PPS proposed rule, we are proposing that,
in addition to meeting other criteria, if rural hospitals with fewer
than 275 beds are to qualify for initial RRC status for cost reporting
periods beginning on or after October 1, 2023, they must have a CMI
value for FY 2022 that is at least--
1.8067 (national--all urban); or
The median CMI value (not transfer-adjusted) for urban
hospitals (excluding hospitals with approved teaching programs as
identified in Sec. 413.75) calculated by CMS for the census region in
which the hospital is located.
The proposed median CMI values by region are set forth in the table
in this section of this rule. We intend to update the proposed CMI
values in the FY 2024 final rule to reflect the updated FY 2022 MedPAR
file, which will contain data from additional bills received through
March 2023.
[[Page 27010]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.263
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.
3. Discharges
Section 412.96(c)(2)(i) provides that CMS set forth the national
and regional numbers of discharges criteria in each year's annual
notice of prospective payment rates for purposes of determining RRC
status. As specified in section 1886(d)(5)(C)(ii) of the Act, the
national standard is set at 5,000 discharges. For FY 2024, we are
proposing to update the regional standards based on discharges for
urban hospitals' cost reporting periods that began during FY 2021 (that
is, October 1, 2020 through September 30, 2021), which are the latest
cost report data available at the time this proposed rule was
developed. We believe that this is the best available data for use in
calculating the proposed median number of discharges by region and is
consistent with our data proposal to use cost report data from cost
reporting periods beginning during FY 2021 for FY 2024 ratesetting.
Therefore, we are proposing that, in addition to meeting other
criteria, a hospital, if it is to qualify for initial RRC status for
cost reporting periods beginning on or after October 1, 2023, must
have, as the number of discharges for its cost reporting period that
began during FY 2021, 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 proposed number of discharges as set forth in the
table in this section of this rule. We intend to update these numbers
in the FY 2024 final rule based on the latest available cost report
data.
[GRAPHIC] [TIFF OMITTED] TP01MY23.264
We note that because the median number of discharges for hospitals
in each census region is greater than the national standard of 5,000
discharges, under this proposed rule, 5,000 discharges is the minimum
criterion for all hospitals, except for osteopathic hospitals for which
the minimum criterion is 3,000 discharges.
E. Payment Adjustment for Low-Volume Hospitals (Sec. 412.101)
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 low-volume hospital payment adjustment is implemented in the
regulations at 42 CFR 412.101. The additional payment adjustment to a
low-volume hospital provided for under section 1886(d)(12) of the Act
is in addition to any payment calculated under section 1886 of the Act.
Therefore, the additional payment adjustment is based on the per
discharge amount paid to the qualifying hospital under section 1886 of
the Act. In other words, the low-volume hospital payment adjustment is
based on total per discharge payments made under section 1886 of the
Act, including capital, DSH, IME, and outlier payments. For SCHs and
MDHs, the
[[Page 27011]]
low-volume hospital payment adjustment is based in part on either the
Federal rate or the hospital-specific rate, whichever results in a
greater operating IPPS payment.
1. Recent Legislation
As discussed in the FY 2023 IPPS/LTCH PPS final rule, beginning
with FY 2023, the low-volume hospital qualifying criteria and payment
adjustment were set to revert to the statutory requirements that were
in effect prior to FY 2011 (87 FR 49060). Subsequent legislation
extended, for FYs 2023 and 2024, the temporary changes to the low-
volume hospital qualifying criteria and payment adjustment originally
provided for by section 50204 of the Bipartisan Budget Act of 2018 for
FYs 2019 through 2022 as follows:
Section 101 of the Continuing Appropriations and Ukraine
Supplemental Appropriations Act, 2023 (Pub. L. 117-180), enacted on
September 30, 2022, through December 16, 2022.
Section 101 of the Further Continuing Appropriations and
Extensions Act, 2023 (Pub. L. 117-229), enacted on December 16, 2022,
through December 23, 2022.
Section 4101 of the Consolidated Appropriations Act, 2023
(CAA 2023) (Pub. L. 117-328), enacted on December 29, 2022, through
September 30, 2024.
We discuss the extension of these temporary changes for FY 2023 and
FY 2024 in greater detail in this section of this rule. Beginning in FY
2025, the low-volume hospital definition and payment adjustment
methodology will revert back to the statutory requirements that were in
effect prior to the amendments made by the Affordable Care Act, which
were extended and modified through subsequent legislation.
2. Extension of the Temporary Changes to the Low-Volume Hospital
Definition and Payment Adjustment Methodology for FYs 2023 and 2024
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. 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 determines
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 FY 2022 that is similar to the continuous, linear sliding
scale formula used to determine the low-volume hospital payment
adjustment originally established by the Affordable Care Act and
implemented in the regulations at Sec. 412.101(c)(2)(ii) in the FY
2011 IPPS/LTCH PPS final rule (75 FR 50240 through 50241). Consistent
with the statute, we provided that qualifying hospitals with 500 or
fewer total discharges will receive a low-volume hospital payment
adjustment of 25 percent. For qualifying hospitals with fewer than
3,800 discharges but more than 500 discharges, the low-volume payment
adjustment is calculated by subtracting from 25 percent the proportion
of payments associated with the discharges in excess of 500. As such,
for qualifying hospitals with fewer than 3,800 total discharges but
more than 500 total discharges, the low volume hospital payment
adjustment for FYs 2019 through FY 2022 was calculated using the
following formula:
Low-Volume Hospital Payment Adjustment =
0.25-[0.25/3300] x (number of total discharges-500) =
(95/330)-(number of total discharges/13,200)
For this purpose, we specified that the ``number of total
discharges'' is determined as total discharges, which includes Medicare
and non-Medicare discharges during the fiscal year, based on the
hospital's most recently submitted cost report. The low-volume hospital
payment adjustment for FYs 2019 through 2022 is set forth in the
regulations at Sec. 412.101(c)(3).
As described previously, recent legislation extended through FY
2024 the definition of a low-volume hospital and the methodology for
calculating the payment adjustment for low-volume hospitals in effect
for FYs 2019 through FY 2022 pursuant to the Bipartisan Budget Act of
2018. Specifically, under sections 1886(d)(12)(C)(i) and
1886(d)(12)(C)(i)(III) of the Act, as amended, for FY 2023 and FY 2024,
a low-volume hospital must be more than 15 road miles from another
subsection (d) hospital and have less than 3,800 discharges during the
fiscal year. In addition, under section 1886(d)(12)(D)(ii) of the Act,
as amended, for FY 2023 and FY 2024, the low-volume hospital payment
adjustment is determined using a continuous linear sliding scale
ranging from 25 percent for low-volume hospitals with 500 or fewer
discharges to 0 percent for low-volume hospitals with greater than
3,800 discharges.
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Based on the current law, beginning with FY 2025, the low-volume
hospital qualifying criteria and payment adjustment will revert to the
statutory requirements that were in effect prior to FY 2011. Section
1886(d)(12)(C)(i) of the Act, as amended, defines a low-volume
hospital, for FYs 2005 through 2010 and FY 2025 and subsequent years,
as a subsection (d) hospital that the Secretary determines is located
more than 25 road miles from another subsection (d) hospital and that
has less than 800 discharges during the fiscal year. As previously
noted, section 1886(d)(12)(C)(ii) of the Act further stipulates that
the term ``discharge'' means an inpatient acute care discharge of an
individual, regardless of whether the individual is entitled to
benefits under Medicare Part A (except with respect to FYs 2011 through
2018). Therefore, for FYs 2005 through 2010 and FY 2019 and subsequent
years, the term ``discharge'' refers to total discharges, regardless of
payer (that is, Medicare and non-Medicare discharges). Furthermore, as
amended, section 1886(d)(12)(B) of the Act requires, for discharges
occurring in FYs 2005 through 2010 and FY 2025 and subsequent years,
that the Secretary determine an applicable percentage increase for
these low-volume hospitals based on the ``empirical relationship''
between the standardized cost-per-case for such hospitals and the total
number of discharges of such hospitals and the amount of the additional
incremental costs (if any) that are associated with such number of
discharges. The statute thus mandates that the Secretary develop an
empirically justifiable adjustment based on the relationship between
costs and discharges for these low-volume hospitals. Section
1886(d)(12)(B)(iii) of the Act limits the applicable percentage
increase adjustment to no more than 25 percent. Based on an analysis we
conducted for the FY 2005 IPPS final rule (69 FR 49099 through 49102),
a 25-percent low-volume adjustment to all qualifying hospitals with
less than 200 discharges was found to be most consistent with the
statutory requirement to provide relief to low-volume hospitals where
there is empirical evidence that higher incremental costs are
associated with low numbers of total discharges. In the FY 2006 IPPS
final rule (70 FR 47432 through 47434), we stated that multivariate
analyses supported the existing low-volume adjustment implemented in FY
2005. Therefore, in order for a hospital to continue to qualify as a
low-volume hospital on or after October 1, 2024, 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
Sec. 412.101(b)(2)(i)). We refer readers to the FY 2023 IPPS/LTCH PPS
final rule for further discussion.
As discussed in section V.E.4. of the preamble of this proposed
rule, we are proposing to make conforming changes to the regulation
text in Sec. 412.101 to reflect the extension of the changes to the
qualifying criteria and the payment adjustment methodology for low-
volume hospitals through FY 2024.
3. Extension of the Temporary Changes to the Low-Volume Hospital
Definition and Payment Adjustment Methodology for FY 2023
Prior to the enactment of Public Law 117-180, the temporary changes
to the low-volume hospital qualifying criteria and payment adjustment
originally provided by section 50204 of the Bipartisan Budget Act of
2018 were set to expire October 1, 2022. As previously discussed, these
temporary changes to the low-volume hospital payment policy were
extended through December 16, 2022 by section 101 of Public Law 117-
180, through December 23, 2022 by section 101 of Public Law 117-229,
and through September 30, 2024 by section 4102 of Public Law 117-328.
In accordance with section 1886(d)(12)(C)(i) of the Act, as amended,
for FY 2023 a low-volume hospital must be more than 15 road miles from
another subsection (d) hospital and must have less than 3,800
discharges during the fiscal year.
We addressed the extension provided by section 101 of the
Continuing Appropriations and Ukraine Supplemental Appropriations Act,
2023 (Pub. L. 117-180) for the portion of FY 2023 beginning on October
1, 2022, and ending on December 16, 2022 (in other words, occurring
before December 17, 2022) in Change Request 12970 (Transmittal 117400),
issued December 9, 2022. For additional information on this extension,
please refer to the transmittal https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Transmittals/r11740otn.
We subsequently addressed the additional extensions of these
provisions through December 23, 2022 as provided by section 101 of the
Further Continuing Appropriations and Extensions Act, 2023 (Pub. L.
117-229) and through September 30, 2023 as provided by section 4101 of
the CAA 2023 (Pub. L. 117-328) in Change Request 13103 (Transmittal
11878), issued February 23, 2023. For additional information, please
refer to the transmittal https://www.cms.gov/files/document/r11878otn.pdf.
We are proposing to make conforming changes to the regulations text
in Sec. 412.101 to codify these extensions for FY 2023 as discussed in
section V.E.4. of the preamble of this proposed rule.
4. Proposed Payment Adjustment for FY 2024 and Proposed Conforming
Changes to Regulations
As discussed earlier, section 4101 of the CAA 2023 extended through
FY 2024 the modified definition of a low-volume hospital and the
methodology for calculating the payment adjustment for low-volume
hospitals in effect for FYs 2019 through 2022. Specifically, under
section 1886(d)(12)(C)(i) of the Act, as amended, for FYs 2019 through
2024, 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
[[Page 27013]]
year. Under section 1886(d)(12)(D) of the Act, as amended, for
discharges occurring in FYs 2019 through 2024, the Secretary determines
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).
As previously discussed, in the FY 2019 IPPS/LTCH PPS final rule
(83 FR 41399), we specified a continuous, linear sliding scale formula
to determine the low volume payment adjustment, as reflected in the
regulations at Sec. 412.101(c)(3)(ii). 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 at Sec. 412.101(c)(3)(ii)
is calculated using the following formula:
Low-Volume Hospital Payment Adjustment =
0.25-[0.25/3300] x (number of total discharges-500) =
(95/330)-(number of total discharges/13,200)
For this purpose, 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, as explained previously.
Consistent with the extension of the methodology for calculating
the payment adjustment for low-volume hospitals through FY 2024, we are
proposing to continue using the previously specified continuous, linear
sliding scale formula to determine the low-volume hospital payment
adjustment for FY 2024. We are also proposing to make conforming
changes to the regulation text in Sec. 412.101 to reflect the
extensions of the changes to the qualifying criteria and the payment
adjustment methodology for low-volume hospitals in accordance with
provisions of the Continuing Appropriations and Ukraine Supplemental
Appropriations Act, 2023, the Further Continuing Appropriations and
Extensions Act, 2023, and the CAA 2023. Specifically, we are proposing
to make conforming changes to paragraphs (b)(2)(iii) and (c)(3)
introductory text of Sec. 412.101 to reflect that the low-volume
hospital payment adjustment policy in effect for FY 2023 and FY 2024 is
the same low-volume hospital payment adjustment policy in effect for
FYs 2019 through 2022 (as described in the FY 2019 IPPS/LTCH PPS final
rule (83 FR 41398 through 41399)). In addition, in accordance with the
provisions of the Continuing Appropriations and Ukraine Supplemental
Appropriations Act, 2023, the Further Continuing Appropriations and
Extensions Act, 2023, and the CAA 2023, for FY 2025 and subsequent
fiscal years, we are proposing to make conforming changes to paragraphs
(b)(2)(i) and (c)(1) of Sec. 412.101 to reflect that the low-volume
hospital payment adjustment policy in effect for those years is the
same as the low-volume hospital payment adjustment policy in effect for
FYs 2005 through 2010, as described previously.
5. Process for Requesting and Obtaining the Low-Volume Hospital Payment
Adjustment for FY 2024
In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50238 through 50275
and 50414) and subsequent rulemaking, most recently in the FY 2023
IPPS/LTCH PPS final rule (87 FR 49062 through 49063), we discussed the
process for requesting and obtaining the low-volume hospital payment
adjustment. Under this previously established process, a hospital makes
a written request for the low-volume payment adjustment under Sec.
412.101 to its MAC. This request must contain sufficient documentation
to establish that the hospital meets the applicable mileage and
discharge criteria. The MAC will determine if the hospital qualifies as
a low-volume hospital by reviewing the data the hospital submits with
its request for low-volume hospital status in addition to other
available data. Under this approach, a hospital will know in advance
whether or not it will receive a payment adjustment under the low-
volume hospital policy. The MAC and CMS may review available data such
as the number of discharges, in addition to the data the hospital
submits with its request for low-volume hospital status, 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 proposed revised Sec.
412.101(b)(2)(i) and (iii), a hospital's most recently submitted cost
report is used to determine if the hospital meets the discharge
criterion to receive the low-volume payment adjustment in the current
year. As discussed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41399
and 41400), we use cost report data to determine if a hospital meets
the discharge criterion because this is the best available data source
that includes information on both Medicare and non-Medicare discharges.
(For FYs 2011 through 2018, the most recently available MedPAR data
were used to determine the hospital's Medicare discharges because non-
Medicare discharges were not used to determine if a hospital met the
discharge criterion for those years.) Therefore, a hospital must refer
to its most recently submitted cost report for total discharges
(Medicare and non-Medicare) to decide whether or not to apply for low-
volume hospital status for a particular fiscal year.
As also discussed earlier, in addition to the discharge criterion,
for FY 2019 and subsequent fiscal years, eligibility for the low-volume
hospital payment adjustment is also dependent upon the hospital meeting
the applicable mileage criterion specified in proposed revised Sec.
412.101(b)(2)(i) or (iii) for the fiscal year. Specifically, to meet
the mileage criterion for FY 2024, as noted earlier, a hospital must be
located more than 15 road miles from the nearest subsection (d)
hospital, as was the case for FYs 2019 through 2023. (We define in
Sec. 412.101(a) the term ``road miles'' to mean ``miles'' as defined
in Sec. 412.92(c)(1) (75 FR 50238 through 50275 and 50414).) For
establishing that the hospital meets the mileage criterion, the use of
a web-based mapping tool as part of the documentation is acceptable.
The MAC will determine if the information submitted by the hospital,
such as the name and street address of the nearest hospitals, location
on a map, and distance from the hospital requesting low-volume hospital
status, is sufficient to document that it meets the mileage criterion.
If not, the MAC will follow up with the hospital to
[[Page 27014]]
obtain additional necessary information to determine whether or not the
hospital meets the applicable mileage criterion.
In accordance with our previously established process, a hospital
must make a written request for low-volume hospital status that is
received by its MAC by September 1 immediately preceding the start of
the Federal fiscal year for which the hospital is applying for low-
volume hospital status in order for the applicable low-volume hospital
payment adjustment to be applied to payments for its discharges for the
fiscal year beginning on or after October 1 immediately following the
request (that is, the start of the Federal fiscal year). For a hospital
whose request for low volume hospital status is received after
September 1, if the MAC determines the hospital meets the criteria to
qualify as a low-volume hospital, the MAC will apply the applicable
low-volume hospital payment adjustment to determine payment for the
hospital's discharges for the fiscal year, effective prospectively
within 30 days of the date of the MAC's low-volume status
determination.
Consistent with our previously established process, for FY 2024, we
are proposing that a hospital must submit a written request for low-
volume hospital status to its MAC that includes sufficient
documentation to establish that the hospital meets the applicable
mileage and discharge criteria (as described earlier). Specifically, we
are proposing that for FY 2024, a hospital must make a written request
for low-volume hospital status that is received by its MAC no later
than September 1, 2023, in order for the low-volume, add-on payment
adjustment to be applied to payments for its discharges beginning on or
after October 1, 2023. If a hospital's written request for low-volume
hospital status for FY 2024 is received after September 1, 2023, and if
the MAC determines the hospital meets the criteria to qualify as a low-
volume hospital, the MAC would apply the low-volume hospital payment
adjustment to determine the payment for the hospital's FY 2024
discharges, effective prospectively within 30 days of the date of the
MAC's low-volume hospital status determination.
Under this process, a hospital that qualified for the low-volume
hospital payment adjustment for FY 2023 may continue to receive a low-
volume hospital payment adjustment for FY 2024 without reapplying if it
continues to meet both the discharge and the mileage criteria (which,
as discussed previously, are the same qualifying criteria that apply
for FY 2023). In this case, a hospital's request can include a
verification statement that it continues to meet the mileage criterion
applicable for FY 2023. (Determination of meeting the discharge
criterion is discussed earlier in this section.) We note that a
hospital must continue to meet the applicable qualifying criteria as a
low-volume hospital (that is, the hospital must meet the applicable
discharge criterion and mileage criterion for the fiscal year) in order
to receive the payment adjustment in that fiscal year; that is, low-
volume hospital status is not based on a ``one-time'' qualification (75
FR 50238 through 50275). Consistent with historical policy, a hospital
must submit its request, including this written verification, for each
fiscal year for which it seeks to receive the low-volume hospital
payment adjustment, and in accordance with the timeline described
earlier.
F. Medicare-Dependent, Small Rural Hospital (MDH) Program (Sec.
412.108)
1. Background
Section 1886(d)(5)(G) of the Act provides special payment
protections, under the IPPS, to a Medicare-dependent, small rural
hospital (MDH). Section 1886(d)(5)(G)(iv) of the Act defines a MDH as a
hospital that is located in a rural area, or is located in an all-urban
State but meets one of the specified statutory criteria for rural
reclassification (as added by section 50205 of the Bipartisan Budget
Act of 2018, Pub. L. 115-123), has not more than 100 beds, is not an
sole community hospital (SCH), and has a high percentage of Medicare
discharges (that is, not less than 60 percent of its inpatient days or
discharges during the cost reporting period beginning in FY 1987 or two
of the three most recently audited cost reporting periods for which the
Secretary has a settled cost report were attributable to inpatients
entitled to benefits under Part A). The regulations at 42 CFR 412.108
set forth the criteria that a hospital must meet to be classified as an
MDH. (For additional information on the MDH program and the payment
methodology, we refer readers to the FY 2012 IPPS/LTCH PPS final rule
(76 FR 51683 through 51684).)
2. Implementation of Legislative Extension of MDH Program
Since the extension of the MDH program through FY 2012 provided by
section 3124 of the Affordable Care Act, the MDH program has been
extended multiple times by subsequent legislation, most recently for
FYs 2023 through 2024, as discussed further in this section (that is,
for discharges occurring before October 1, 2024.) (Additional
information on the extensions of the MDH program after FY 2012 and
through FY 2022 can be found in the FY 2023 IPPS/LTCH PPS final rule
(87 FR 49064).) As discussed in the FY 2023 IPPS/LTCH PPS final rule,
the MDH program provisions at section 1886(d)(5)(G) of the Act were set
to expire at the end of FY 2022 (87 FR 49064). Subsequently, the MDH
program was extended by additional legislation as follows:
Section 102 of the Continuing Appropriations and Ukraine
Supplemental Appropriations Act, 2023 (Pub. L. 117-180), enacted on
September 30, 2022, amended sections 1886(d)(5)(G)(i) and
1886(d)(5)(G)(ii)(II) of the Act to provide for an extension of the MDH
program through December 16, 2022.
Section 102 of the Further Continuing Appropriations and
Extensions Act, 2023 (Pub. L. 117-229), enacted on December 16, 2022,
amended sections 1886(d)(5)(G)(i) and 1886(d)(5)(G)(ii)(II) of the Act
to provide for an extension of the MDH program through December 23,
2022.
Section 4102 of the Consolidated Appropriations Act, 2023
(Pub. L. 117-328), enacted on December 29, 2022, amended sections
1886(d)(5)(G)(i) and 1886(d)(5)(G)(ii)(II) of the Act to provide for an
extension of the MDH program through FY 2024 (that is, for discharges
occurring on or before September 30, 2024).
Therefore, we are proposing to make conforming changes to the
regulations governing the MDH program at Sec. 412.108(a)(1) and
(c)(2)(iii) and the general payment rules at Sec. 412.90(j) to reflect
the extension of the MDH program through FY 2024.
We note that the legislative extensions of the MDH program provided
by section 102 of Pub. L. 117-180 and section 102 of Pub. L. 117-229,
which collectively extended the program through December 23, 2022, were
signed into law prior to a statutory expiration of the MDH program.
Generally, as a result of these extensions, a provider that was
classified as an MDH as of September 30, 2022 continued to be
classified as an MDH as of October 1, 2022, with no need to reapply for
MDH classification. (For more information on the MDH extensions through
December 23, 2022, see Change Request 12970 and Change Request 13103,
which are available online at https://www.cms.gov/files/document/R11740OTN.pdf and https://www.cms.gov/files/document/r11878otn.pdf,
respectively.) In contrast, the legislative extension provided by
section 4102 of Public Law 117-328 was
[[Page 27015]]
signed into law on December 29, 2022, after the December 24, 2022
expiration of the MDH program. Generally, as a result of this extension
and consistent with previous extensions of the MDH program, a provider
that was classified as an MDH as of December 23, 2022, was reinstated
as a MDH effective December 24, 2022, with no need to reapply for MDH
classification.
The regulations at Sec. 412.92(b)(2)(v) allow MDHs to apply for
classification as a SCH 30 days prior to the anticipated expiration of
the MDH program, and if approved, to be granted such status effective
with the expiration of the MDH program. As discussed in Change Requests
12970 and 13103, because the MDH program did not, in fact, expire as of
the anticipated October 1, 2022 or December 17, 2022 expiration dates,
any MDH that applied for SCH classification per the regulations at
Sec. 412.92(b)(2)(v) in anticipation of either of those expiration
dates would not have been classified as a SCH as of October 1, 2022, or
December 17, 2022, as applicable. Furthermore, we are not aware of any
hospitals that applied for SCH classification in this manner in advance
of the December 24, 2022 expiration of the MDH program. However, as
discussed in Change Request 13103, if there are any such hospitals and
those hospitals are unsure about their MDH status, those hospitals
should contact their MACs. We note that in accordance with Change
Request 13103, a provider affected by the MDH program extension that
also applied for SCH classification per the regulations at Sec.
412.92(b)(2)(v) or cancelled its rural reclassification under Sec.
412.103 in anticipation of the expiration of the MDH program will
receive a notice from its MAC detailing its status in light of the MDH
program extension.
Therefore, as collectively provided by section 102 of the
Continuing Appropriations and Ukraine Supplemental Appropriations Act,
2023, section 102 of the Further Continuing Appropriations and
Extensions Act, 2023, and section 4102 of the Consolidated
Appropriations and Extensions Act, 2023, providers that were classified
as MDHs as of September 30, 2022 generally continue to be classified as
MDHs as of October 1, 2022, with no need to reapply for MDH
classification. However, as discussed in Change Requests 12970 and
13103, if a MDH cancelled its rural classification under Sec.
412.103(g) effective on or after October 1, 2022, its MDH status may
not be applied continuously or automatically reinstated, as applicable
(and as described previously). In order to meet the criteria to become
an MDH, generally a hospital must be located in a rural area. To
qualify for MDH status, some MDHs may have reclassified as rural under
the regulations at Sec. 412.103. With the anticipated expiration of
the MDH provision, some of these providers may have requested a
cancellation of their rural classification. Therefore, in order to
qualify for MDH status, these providers must request to be reclassified
as rural under 42 CFR 412.103(b) and reapply for MDH classification in
accordance with the regulations at 42 CFR 412.108(b). As discussed, all
other hospitals with MDH status as of September 30, 2022 continue to be
classified as MDHs effective October 1, 2022. We refer readers to
Change Requests 12970 and 13103 for further discussion on the
extensions of the MDH program through FY 2023.
G. Payment for Indirect and Direct Graduate Medical Education Costs
(Sec. Sec. 412.105 and 413.75 Through 413.83)
1. Background
Section 1886(h) of the Act, as added by section 9202 of the
Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 (Pub. L.
99-272) and as currently implemented in the regulations at 42 CFR
413.75 through 413.83, establishes a methodology for determining
payments to hospitals for the direct costs of approved graduate medical
education (GME) programs. Section 1886(h)(2) of the Act sets forth a
methodology for the determination of a hospital-specific base-period
per resident amount (PRA) that is calculated by dividing a hospital's
allowable direct costs of GME in a base period by its number of full-
time equivalent (FTE) residents in the base period. The base period is,
for most hospitals, the hospital's cost reporting period beginning in
FY 1984 (that is, October 1, 1983, through September 30, 1984). The
base year PRA is updated annually for inflation. In general, Medicare
direct GME payments are calculated by multiplying the hospital's
updated PRA by the weighted number of FTE residents working in all
areas of the hospital complex (and at nonprovider sites, when
applicable), and the hospital's Medicare share of total inpatient days.
Section 1886(d)(5)(B) of the Act provides for a payment adjustment
known as the indirect medical education (IME) adjustment under the IPPS
for hospitals that have residents in an approved GME program, in order
to account for the higher indirect patient care costs of teaching
hospitals relative to nonteaching hospitals. The regulations regarding
the calculation of this additional payment are located at 42 CFR
412.105. The hospital's IME adjustment applied to the DRG payments is
calculated based on the ratio of the hospital's number of FTE residents
training in either the inpatient or outpatient departments of the IPPS
hospital (and, for discharges occurring on or after October 1, 1997, at
non-provider sites, when applicable) to the number of inpatient
hospital beds.
The calculation of both direct GME payments and the IME payment
adjustment is affected by the number of FTE residents that a hospital
is allowed to count. Generally, the greater the number of FTE residents
a hospital counts, the greater the amount of Medicare direct GME and
IME payments the hospital will receive. In an attempt to end the
implicit incentive for hospitals to increase the number of FTE
residents, Congress, through the Balanced Budget Act of 1997 (Pub. L.
105-33), established a limit on the number of allopathic and
osteopathic residents that a hospital could include in its FTE resident
count for direct GME and IME payment purposes. Under section
1886(h)(4)(F) of the Act, for cost reporting periods beginning on or
after October 1, 1997, a hospital's unweighted FTE count of residents
for purposes of direct GME may not exceed the hospital's unweighted FTE
count for direct GME in its most recent cost reporting period ending on
or before December 31, 1996. Under section 1886(d)(5)(B)(v) of the Act,
a similar limit based on the FTE count for IME during that same cost
reporting period is applied, effective for discharges occurring on or
after October 1, 1997. Dental and podiatric residents are not included
in this statutorily mandated cap.
2. Calculation of Prior Year IME Resident to Bed Ratio When There is a
Medicare GME Affiliation Agreement
Section 1886(d)(5)(B) of the Act provides that IPPS hospitals that
have residents in an approved graduate medical education (GME) program
receive an additional payment to reflect the higher indirect patient
care costs of teaching hospitals relative to nonteaching hospitals. The
regulations regarding the calculation of this additional payment, known
as the indirect medical education (IME) adjustment, are located at
Sec. 412.105. The IME adjustment factor is calculated using a
hospital's ratio of residents to beds, which is represented as r, and a
statutorily set multiplier, which is represented as c, in the following
equation: c x [(1 + r)\.405\-1]. Section
[[Page 27016]]
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. Thus, for FY 2024, the IME multiplier is 1.35. The
formula is traditionally described in terms of a certain percentage
increase in payment for every 10-percent increase in the resident-to-
bed ratio. 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 4621(b)(1) of the Balanced Budget Act of 1997 (Pub. L. 105-
33) amended section 1886(d)(5)(B) of the Act by adding a clause (vi) to
provide that, effective for cost reporting periods beginning on or
after October 1, 1997, the resident-to-bed ratio may not exceed the
ratio calculated during the prior cost reporting period (after
accounting for the cap on the hospital's number of full-time equivalent
(FTE) residents). We implemented this policy in the August 29, 1997
final rule with comment period (62 FR 46003) and the May 12, 1998 final
rule (63 FR 26323) under regulations at Sec. 412.105(a)(1). In
general, the resident-to-bed ratio from the prior cost reporting
period, which is to be used as the cap on the resident-to-bed ratio for
the current cost reporting period, should reflect the prior year FTE
count subject to the FTE cap on the number of allopathic and
osteopathic residents, but not subject to the three-year rolling
average. We note that the resident-to-bed ratio cap is a cap on the
resident-to-bed ratio calculated for all residents, including
allopathic, osteopathic, dental, and podiatry residents (63 FR 26324,
May 12, 1998). However, as described in existing Sec.
412.105(a)(1)(i), the numerator of the resident-to bed ratio cap may be
adjusted to reflect an increase in the current cost reporting period's
resident-to-bed ratio due to residents in a new GME program or new
Rural Track Program, a Medicare GME affiliation agreement, or due to
residents displaced by the closure of a hospital or a residency
program. Under other circumstances where the exception does not apply,
such as an increase in the number of podiatry or dentistry residents or
a decrease in the number of beds (that is, the denominator of the
resident-to-bed ratio), the ratio can increase after a 1-year delay.
The law requires a hospital's IME payment to be determined based on the
lower of the two ratios (see section 1886(d)(5)(B)(vi)(I) of the Act
and regulations at 42 CFR 412.105(a)(1)(i)). An increase in the current
cost reporting period's ratio (subject to the FTE cap on the overall
number of allopathic and osteopathic residents) thereby establishes a
higher cap for the following cost reporting period.
Sections 1886(h)(4)(F) and 1886(d)(5)(B)(v) of the Act established
limits on the number of allopathic and osteopathic residents that
hospitals may count for purposes of calculating direct GME payments and
the IME adjustment, respectively, thereby establishing hospital-
specific direct GME and IME full-time equivalent (FTE) resident caps.
However, under the authority granted by section 1886(h)(4)(H)(ii) of
the Act, the Secretary may issue rules to allow institutions that are
members of the same affiliated group to apply their direct GME and IME
FTE resident caps on an aggregate basis through a Medicare GME
affiliation agreement. The Secretary's regulations permit hospitals,
through a Medicare GME affiliation agreement, to increase or decrease
their IME and direct GME FTE resident caps to reflect the rotation of
residents among affiliated hospitals for agreed-upon academic years.
Consistent with the broad authority conferred by the statute, we
established criteria for defining an ``affiliated group'' and an
``affiliation agreement'' in both the August 29, 1997, final rule (62
FR 45966, 46006) and the May 12, 1998, final rule (63 FR 26318). In the
August 1, 2002, IPPS final rule (67 FR 50069), we amended our
regulations to require that each Medicare GME affiliation agreement
must have a shared rotational arrangement. The regulations for
``Medicare GME affiliation agreements'' are at 42 CFR 413.75(b) and
(f). In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49075, August 10,
2022), we expanded the regulations regarding Medicare GME affiliation
agreements to permit urban and rural hospitals that participate in the
same separately accredited family medicine Rural Track Program (RTP)
and have rural track FTE limitations to enter into ``Rural Track
Medicare GME Affiliation Agreements''.
As previously mentioned, as described in existing Sec.
412.105(a)(1)(i), the numerator of the prior year resident-to bed ratio
may be adjusted to reflect an increase in the current cost reporting
period's resident-to-bed ratio due to residents in a Medicare GME
affiliation agreement (among other limited reasons). We have
occasionally received inquiries related to adjusting the prior year
numerator when the hospital is training more residents in the current
year as a result of an IME FTE cap increase under the terms of a
Medicare GME affiliation agreement. A hospital can train more residents
in the current year versus the prior year under the terms of a Medicare
GME affiliation agreement as a result of several scenarios. As an
example, Hospital A and Hospital B participate in a Medicare GME
affiliation agreement over a period of several years, and generally,
under the terms of the agreement, Hospital A is giving IME FTE cap
slots to Hospital B:
[GRAPHIC] [TIFF OMITTED] TP01MY23.266
In this example, we see that Hospital B's IME cap increases from
2019 to 2020 and again from 2020 to 2021 because it receives cap slots
from Hospital A. However, we also see that Hospital A experiences a net
increase in its FTE cap from 2021 to 2022, even though it continues to
loan IME slots to Hospital B. This is because, under the terms of
[[Page 27017]]
the Medicare GME affiliation agreement, Hospital A loans one less IME
FTE to Hospital B in 2022 than it did in 2021. In this proposed rule,
we are clarifying how to determine the net increase in FTEs in the
current year numerator as compared to the prior year numerator as a
result of the terms of a Medicare GME affiliation agreement. To
determine this change accurately, we need to isolate only changes
resulting from the Medicare GME affiliation agreement, and not, for
example, an increase in the resident-bed-ratio due to participation in
new programs, or due to a change in the number of beds in the
denominator. Under the current cost report instructions (Transmittal
18) on Form CMS-2552-10, Worksheet E, Part A line 20, regarding the
determination the prior year IRB ratio, states:
Line 20--In general, enter from the prior year cost report the
intern and resident to bed ratio by dividing line 12 by line 4 (divide
line 3.14 by line 3 if the prior year cost report was the Form CMS-
2552-96). However, if the provider is participating in training
residents in a new medical residency training program(s) under 42 CFR
413.79(e) for a new program started prior to October 1, 2012, add to
the numerator of the prior year intern and resident to bed ratio (that
is, line 12 of the prior cost report, which might be zero), if
applicable, the number of FTE residents in the current cost reporting
period that are in the initial period of years of a new program (line
16) (that is, the period of years is the minimum accredited length of
the program). For a new program started prior to October 1, 2012,
contact your contractor for instructions on how to complete this line
if you have a new program for which the period of years is less than or
more than three years. For urban hospitals that began participating in
training residents in a new program for the first time on or after
October 1, 2012, under 42 CFR 413.79(e)(1), if this cost reporting
period is prior to the cost reporting period that coincides with or
follows the start of the sixth program year of the first new program
started, then divide line 16 of this cost report by line 4 of the prior
year cost report (see 79 FR 50110 (August 22, 2014)). For rural
hospitals participating in a new program on or after October 1, 2012,
under 42 CFR 413.79(e)(3), for each new program started, if this cost
reporting period is prior to the cost reporting period that coincides
with or follows the start of the sixth program year of each particular
new program, then add the amount from line 12 of the prior year (if
greater than zero) and line 16 of this cost report, and divide the sum
by line 4 of the prior year's cost report (see 79 FR 50110 (August 22,
2014)). If the provider is participating in a Medicare GME affiliation
agreement or rural track Medicare GME affiliation agreement under 42
CFR 413.79(f), and the provider increased its current year FTE cap and
current year FTE count due to this affiliation agreement, identify the
lower of: (a) the difference between the current year numerator and the
prior year numerator, and (b) the number by which the FTE cap increased
per the affiliation agreement, and add the lower of these two numbers
to the prior year's numerator (see 42 CFR 412.105(a)(1)(i)). If the
hospital is participating in a valid emergency Medicare GME affiliation
agreement under a Sec. 1135 waiver, and a portion of this cost report
falls within the time frame covered by that emergency affiliation
agreement, then, effective on and after October 1, 2008, enter the
current year resident-to-bed ratio from line 19 (see 73 FR 48649
(August 19, 2008) and 42 CFR 412.105(f)(1)(vi)). Effective for cost
reporting periods beginning on or after October 1, 2002, if the
hospital is training FTE residents in the current year that were
displaced by the closure of another hospital or program, also adjust
the numerator of the prior year ratio for the number of current year
FTE residents that were displaced by hospital or program closure (see
42 CFR 412.105(a)(1)(iii)). The amount added to the prior year's
numerator is the displaced resident FTE amount that you would not be
able to count without a temporary cap adjustment. This is the same
amount of displaced resident FTEs entered on line 17. For cost
reporting periods beginning on or after October 1, 2022, for urban and
rural hospitals participating in a rural track program(s), adjust the
numerator by adding to the amount on Worksheet E, Part A, line 12, of
the prior year cost report (if greater than zero) the FTEs in the rural
track program(s) on line 16 of this worksheet, if this cost report is
still prior to the cost reporting period that coincides with or follows
the start of the sixth program year of that rural track program
(italics emphasis added).
Our clarification focuses on the italicized text as previously
detailed: ``If the provider is participating in a Medicare GME
affiliation agreement or rural track Medicare GME affiliation agreement
under 42 CFR 413.79(f), and the provider increased its current year FTE
cap and current year FTE count due to this affiliation agreement,
identify the lower of: (a) the difference between the current year
numerator and the prior year numerator, and (b) the number by which the
FTE cap increased per the affiliation agreement, and add the lower of
these two numbers to the prior year's numerator'' (emphasis added).
We have been asked by teaching hospitals to clarify what lines on
the cost report to use to determine that the provider ``increased its
current year FTE cap,'' and that the provider increased its ``current
year FTE count'' due to the affiliation agreement. We have also been
asked to clarify what line on the cost report represents the ``current
year numerator,'' specifically, whether this value refers to current
year line 12, or line 15, or line 18.
Line 8 states: Enter the adjustment (increase or decrease) to the
FTE count for allopathic and osteopathic programs for affiliated
programs in accordance with 42 CFR 413.75(b), 413.79(c)(2)(iv) and 63
FR 26340 (May 12, 1998), and 67 FR 50069 (August 1, 2002).
Line 10 states: Enter the FTE count for allopathic and osteopathic
programs in the current year from your records. Do not include
residents in the initial years of the new program.
Line 12 states: Enter the result of the lesser of line 9, or line
10 added to line 11.
Line 15 states: Enter the sum of lines 12 through 14 divided by
three.
Line 18 states: Enter the sum of lines 15, 16 and 17.
Line 19 states: Enter the current year resident to bed ratio by
dividing line 18 by line 4 [beds].
If the provider is participating in a Medicare GME affiliation
agreement (or rural track Medicare GME affiliation agreement under 42
CFR 413.75(b)), the provider first has to make sure that in fact, it
increased its current year FTE cap, and second, that it increased its
current year allowable FTE count. To determine if there is an increase
in the current year FTE cap ``due to this affiliation agreement,'' the
provider would check if the difference of current year line 8 minus
prior year line 8 is positive. If yes, next the provider would
determine if the difference of current year allowable allopathic and
osteopathic FTE count line 12 minus prior year allowable allopathic and
osteopathic FTE count line 12 is positive. The provider would determine
the difference between current year line 12 and prior year line 12 by
first excluding any dental and podiatry FTEs on line 11 of both years,
if applicable. If negative, then the provider did not increase its
current year allowable allopathic and osteopathic FTE count due to the
affiliation agreement, and there is no adjustment made to the prior
[[Page 27018]]
year IRB ratio. If positive, the provider would proceed with the next
part of the determination to ``identify the lower of: (a) the
difference between the current year numerator and the prior year
numerator, and (b) the number by which the FTE cap increased per the
affiliation agreement, and add the lower of these two numbers to the
prior year's numerator.''
The ``current year numerator'' referred to in the excerpt from
Worksheet E, Part A line 20 is line 15; that is, the current year
numerator before making any adjustments for new programs, new RTPs, or
displaced residents, but including residents counted under the terms of
a Medicare GME affiliation agreement, and subject to the three-year
rolling average. We explain the reasons in detail in this section of
this rule. However, first, we are acknowledging that the phrase
``current year numerator'' in the context of line 20 must refer to a
different value than the numerator of the ``current year resident to
bed ratio'' in line 19, which states, ``Enter the current year resident
to bed ratio by dividing line 18 by line 4.'' In the context of
Medicare GME affiliation agreements in line 20, the current year
numerator cannot refer to line 18, as line 18 represents the current
year IRB ratio with various adjustments, including the FTEs in new
programs from line 16, and FTEs displaced by hospital or program
closure on line 17. As previously stated, we need to isolate only
changes associated with the Medicare GME affiliation agreement, and
including FTEs associated with new programs or closed programs on line
18 would introduce extraneous variables into the equation.
Next, we note that the ``current year numerator'' is not line 12.
Line 12 is the current year allowable FTE count; that is, the lower of
the current year FTE count or the adjusted FTE cap, which reflects the
FTE adjustment under the terms of the Medicare GME affiliation
agreement. The current year allowable FTE count on line 12 is used in
the 3-year rolling average calculation on line 15, which sums the
current year allowable FTE count, the prior year allowable FTE count,
and the penultimate year FTE count, and divides the result by 3. While
it may seem that averaging the current year FTEs with FTEs from prior
years interferes with determining only changes to the current year FTEs
under an affiliation agreement, the law and regulations require that
additional FTEs added due to a Medicare GME affiliation agreement are
subject to the 3-year rolling average (see section 1886(d)(5)(B)(viii)
of the Act and 42 CFR 413.79(f), regarding a Medicare GME affiliated
group, which provides that a hospital may receive a temporary
adjustment to its FTE cap, which is subject to the averaging rules
under Sec. 413.79(d), to reflect residents added or subtracted because
the hospital is participating in a Medicare GME affiliated group (as
defined under Sec. 413.75(b)). Because any additional FTEs due to
participation in a Medicare GME affiliation agreement must be included
in the rolling average on line 15, we believe that the ``current year
numerator'' referred to on Worksheet E, Part A line 20 is line 15, not
line 12. This is in contrast to the ``prior year numerator,'' which we
note is line 12, as the instructions for line 20 state: ``In general,
enter from the prior year cost report the intern and resident to bed
ratio by dividing line 12 by line 4.'' (See 42 CFR 412.105(a)(1)(i),
which states ``this ratio may not exceed the ratio for the hospital's
most recent prior cost reporting period after accounting for the cap on
the number of allopathic and osteopathic full-time equivalent residents
as described in paragraph (f)(1)(iv) of this section.'' This regulation
does not require accounting for the 3-year rolling average.) Therefore,
we propose to clarify the instructions on Worksheet E, Part A line 20
as follows, in italics:
If the provider is participating in a Medicare GME affiliation
agreement or rural track Medicare GME affiliation agreement under 42
CFR 413.79(f), and the provider increased its current year FTE cap
(difference of current year line 8 and prior year line 8 is positive)
and increased its current year allowable FTE count (difference of
current year line 12 (excluding current year dental and podiatry from
line 11) and prior year line 12 (excluding prior year dental and
podiatry from line 11) is positive) due to this affiliation agreement,
identify the lower of: (a) the difference between the current year
numerator line 15 and the prior year numerator line 12 of the prior
year cost report, and (b) the number by which the FTE cap increased per
the affiliation agreement (difference of current year line 8 and prior
year line 8), and add the lower of these two numbers to the prior
year's numerator line 12 of the prior year cost report.
We are not proposing any changes to the regulation text at 42 CFR
412.105, as we believe the appropriate regulations text already exists
at 42 CFR 412.105(a)(1)(i) and 413.79(f), indicating that an adjustment
may be made to the prior year numerator due to an increase in the
Medicare GME affiliated cap, that the lower of the current or prior
year IRB ratio is used for payment, and that FTE residents added under
a Medicare GME affiliation agreement are subject to the rolling
average. Rather, as we stated, we intend to clarify the Medicare cost
report instructions Form CMS-2552-10 Worksheet E, Part A, line 20 to
more clearly indicate how these calculations are performed.
3. Training in New REH Facility Type
In the Hospital Outpatient Prospective Payment System CY 2023 final
rule with comment (87 FR 71748) CMS finalized certain payment policies
and conditions of participation (CoPs) with respect to rural emergency
hospitals (REHs). Section 125 of Division CC of the Consolidated
Appropriations Act, 2021 (CAA) added a new section 1861(kkk) of the Act
to establish REHs as a new Medicare provider type, effective January 1,
2023. REHs are facilities that convert from either a critical access
hospital (CAH) or a rural hospital (or one treated as such under
section 1886(d)(8)(E) of the Act) with not more than 50 beds, and that
do not provide acute care inpatient services with the exception of
post-hospital extended care services furnished in a unit of the
facility that is a distinct part licensed as a skilled nursing
facility. By statute, REH services include emergency department
services and observation care and, at the election of the REH, other
outpatient medical and health services furnished on an outpatient
basis, as specified by the Secretary through rulemaking. REHs are a new
provider type established by the CAA to address the growing concern
over closures of rural hospitals. Similar to CAHs, REHs are intended to
provide much needed healthcare services, often times as the initial and
only accessible point of care for individuals living in rural
underserved areas.
As part of the comments received in response to the CY 2023
Outpatient Prospective Payment System (OPPS) proposed rule (87 FR
44502) and the proposed rule establishing REH CoPs (87 FR 40350), CMS
received the request to designate REHs as graduate medical education
(GME) eligible facilities similar to the GME designation for CAHs (87
FR 72164). CMS' current policy with respect to CAHs and GME is
discussed in the August 16, 2019 Federal Register (84 FR 42411). In
that rule we finalized the policy that effective with portions of cost
reporting periods beginning on or after October 1, 2019, a hospital may
include FTE residents training at a CAH in its direct GME and IME FTE
counts as long as it meets the nonprovider setting requirements
currently included at 42 CFR 412.105(f)(1)(ii)(E) and 413.78(g).
[[Page 27019]]
We stated that while a CAH is considered a ``provider of services''
under section 1861(u) of the Act, the term ``nonprovider'' is not
explicitly defined in the statute. Furthermore, section 1861(e) of the
Act, which states in part that the term ``hospital'' does not include,
unless the context otherwise requires, a critical access hospital (as
defined in section 1861(mm)(1) of the Act), underscores the sometimes
ambiguous status of CAHs. We stated that we believe that the lack of
both an explicit statutory definition of ``nonprovider'' and a
definitive determination as to whether a CAH is considered a hospital
along with the fact that a CAH is a facility primarily engaged in
patient care (we referred readers to section 1886(h)(5)(K) of the Act
which states that the term ``nonprovider setting that is primarily
engaged in furnishing patient care'' means a nonprovider setting in
which the primary activity is the care and treatment of patients, as
defined by the Secretary), provides flexibility within the current
statutory language to consider a CAH as a ``nonprovider'' setting for
direct GME and IME payment purposes.
Section 125(a)(1)(A) of the CAA, 2021, amended section 1861(e) of
the Social Security Act by inserting the phrase ``or a rural emergency
hospital (as defined in subsection (kkk)(2))'', such that the language
now states that the term ``hospital'' does not include, unless the
context otherwise requires, a critical access hospital (as defined in
section 1861(mm)(1) of the Act) or a rural emergency hospital (as
defined in subsection (kkk)(2)). Given the inclusion of REHs in the
last sentence of section 1861(e) and the fact that an REH is a facility
primarily engaged in patient care (see the previous discussion of
1886(h)(5)(K)), we believe that statutory flexibility also exists for
REHs to be considered nonprovider settings for GME payment purposes. In
addition, facilities currently designated as CAHs, which serve as
nonprovider sites, may choose to convert to REH status in order to be
able to continue to provide healthcare services within their
communities. We believe that increasing access to physicians in rural
areas can be supported by a flexible policy which would allow for
residency training to continue at these former CAHs and begin at other
newly designated REHs, which may have not previously trained residents.
Therefore, we are proposing to add a new paragraph (d) at 42 CFR 419.92
to state that effective for portions of cost reporting periods
beginning on or after October 1, 2023, a hospital may include FTE
residents training at an REH in its direct GME and IME FTE counts as
long as it meets the nonprovider setting requirements included at 42
CFR 412.105(f)(1)(ii)(E) and 413.78(g) and any succeeding regulations.
Consistent with our policy regarding residency training at CAHs during
a hospital's cap building period (84 FR 42415), if a hospital is at
some point in its 5-year cap-building period as of October 1, 2023, and
as of that date is sending residents in a new program to train at a
REH, assuming the regulations governing nonprovider site training are
met, the time spent by FTE residents training at the REH on or after
October 1, 2023 will be included in the hospital's FTE cap calculation.
As an alternative to being considered a nonprovider site, we stated
in the August 16, 2019 Federal Register (84 FR 42415), that a CAH may
decide to continue to incur the costs of training residents in an
approved residency training program(s) and receive payment based on 101
percent of the reasonable costs for those training costs. In this
situation no hospital can include the residents training at the CAH in
its direct GME and IME FTE counts. We believe REHs may make a similar
decision to incur residency training costs directly consistent with the
statutory language at section 1886(k)(2)(D) of the Act, which refers to
nonhospital providers, and the aforementioned flexibility provided
under 1861(e) of the Act. Specifically, we are proposing under the
authority of section 1886(k)(2)(D) of the Act to add a new paragraph
(d) at 42 CFR 419.92 indicating that effective for portions of cost
reporting periods beginning on or after October 1, 2023, REHs may
decide to incur the costs of training residents in an approved
residency training program(s) and receive payment based on 100 percent
of the reasonable costs for those training costs, consistent with the
reasonable cost principles at section 1861(v)(1)(A) of the Act. As is
the case when CAHs incur GME costs directly, no hospital can include
the residents training at the REH in its direct GME and IME FTE counts
when the REH chooses to be paid for direct GME costs instead of
functioning as a nonprovider site and as such, residency training in
this instance is not limited by FTE resident caps.
In summary, we are proposing that effective for portions of cost
reporting periods beginning on or after October 1, 2023, an REH may
decide to be a nonprovider site such that if the requirements at 42 CFR
412.105(f)(1)(ii)(E) and 413.78(g) are met, a hospital can include the
FTE residents training at the REH in its direct GME and IME FTE counts
for Medicare payment purposes, or, the REH may decide to incur direct
GME costs and be paid based on reasonable costs for those training
costs. We are proposing to add a new paragraph (d) at 42 CFR 419.92 to
implement these provisions.
4. Notice of Closure of Teaching Hospital and Opportunity To Apply for
Available Slots
a. Background
Section 5506 of the Affordable Care Act (Pub. L. 111-148), as
amended by the Health Care and Education Reconciliation Act of 2010
(Pub. L. 111- 152) (collectively, the Affordable Care Act), authorizes
the Secretary to redistribute residency slots after a hospital that
trained residents in an approved medical residency program closes.
Specifically, section 5506 of the Affordable Care Act amended the Act
by adding subsection (vi) to section 1886(h)(4)(H) of the Act and
modifying language at section 1886(d)(5)(B)(v) of the Act, to instruct
the Secretary to establish a process to increase the FTE resident caps
for other hospitals based upon the FTE resident caps in teaching
hospitals that closed on or after a date that is 2 years before the
date of enactment (that is, March 23, 2008). In the CY 2011 Outpatient
Prospective Payment System (OPPS) final rule with comment period (75 FR
72212), we established regulations at 42 CFR 413.79(o) and an
application process for qualifying hospitals to apply to CMS to receive
direct GME and IME FTE resident cap slots from the hospital that
closed. We made certain modifications to those regulations in the FY
2013 IPPS/LTCH PPS final rule (77 FR 53434), and we made changes to the
section 5506 application process in the FY 2015 IPPS/LTCH PPS final
rule (79 FR 50122 through 50134). The procedures we established apply
both to teaching hospitals that closed on or after March 23, 2008, and
on or before August 3, 2010, and to teaching hospitals that close after
August 3, 2010.
b. Notice of Closure of St. Vincent Charity Medical Center Located in
Cleveland, OH and the Application Process--Round 20
CMS has learned of the closure of St. Vincent Charity Medical
Center, located in Cleveland, OH (CCN 360037).
Accordingly, this notice serves to notify the public of the closure
of this teaching hospital and initiate another round of the section
5506 application and selection process. This round will
[[Page 27020]]
be the 20th round (``Round 20'') of the application and selection
process. The table in this section of this rule contains the
identifying information and IME and direct GME FTE resident caps for
the closed teaching hospital, which are part of the Round 20
application process under section 5506 of the Affordable Care Act.
[GRAPHIC] [TIFF OMITTED] TP01MY23.267
c. Application Process for Available Resident Slots
The application period for hospitals to apply for slots under
section 5506 of the Affordable Care Act is 90 days following notice to
the public of a hospital closure (77 FR 53436). Therefore, hospitals
that wish to apply for and receive slots from the FTE resident caps of
closed St. Vincent Charity Medical Center, located in Cleveland, OH,
must submit applications using the electronic application intake
system, Medicare Electronic Application Request Information
SystemTM (MEARISTM), with application submissions
for Round 20 due no later than July 10, 2023. The Section 5506
application can be accessed at: https://mearis.cms.gov/public/home.
CMS will only accept Round 20 applications submitted via
MEARISTM. Applications submitted through any other method
will not be considered. Within MEARISTM, we have built in
several resources to support applicants:
Please refer to the ``Resources'' section for guidance
regarding the application submission process at: https://mearis.cms.gov/public/resources.
Technical support is available under ``Useful Links'' at
the bottom of the MEARISTM web page.
Application related questions can be submitted to CMS
using the form available under ``Contact'' at: https://mearis.cms.gov/public/resources.
Application submission through MEARISTM will not only
help CMS track applications and streamline the review process, but it
will also create efficiencies for applicants when compared to a paper
submission process.
We have not established a deadline by when CMS will issue the final
determinations to hospitals that receive slots under section 5506 of
the Affordable Care Act. However, we review all applications received
by the deadline and notify applicants of our determinations as soon as
possible.
We refer readers to the CMS Direct Graduate Medical Education
(DGME) website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/DGME.html. Hospitals should access
this website for a list of additional section 5506 guidelines for the
policy and procedures for applying for slots, and the redistribution of
the slots under sections 1886(h)(4)(H)(vi) and 1886(d)(5)(B)(v) of the
Act.
H. Reasonable Cost Payment for Nursing and Allied Health Education
Programs (Sec. Sec. 413.85 and 413.87)
1. General
Under section 1861(v) of the Act, Medicare has historically paid
providers for Medicare's share of the costs that providers incur in
connection with approved educational activities. Approved nursing and
allied health (NAH) education programs are those that are, in part,
operated by a provider, and meet State licensure requirements, or are
recognized by a national accrediting body. The costs of these programs
are excluded from the definition of ``inpatient hospital operating
costs'' and are not included in the calculation of payment rates for
hospitals or hospital units paid under the IPPS, IRF PPS, or IPF PPS,
and are excluded from the rate-of-increase ceiling for certain
facilities not paid on a PPS. These costs are separately identified and
``passed through'' (that is, paid separately on a reasonable cost
basis). Existing regulations on NAH education program costs are located
at 42 CFR 413.85. The most recent rulemakings on these regulations were
in the January 12, 2001 final rule (66 FR 3358 through 3374), and in
the August 1, 2003, final rule (68 FR 45423 and 45434).
b. Medicare Advantage Nursing and Allied Health Education Payments
Section 541 of the Balanced Budget Refinement Act (BBRA) of 1999
provides for additional payments to hospitals for costs of nursing and
allied health education associated with services to Medicare+Choice
(now called Medicare Advantage (MA)) enrollees. Hospitals that operate
approved nursing or allied health education programs and receive
Medicare reasonable cost reimbursement for these programs would receive
additional payments from MA organizations. Section 541 of the BBRA
limits total spending under the provision to no more than $60 million
in any calendar year (CY). (In this document, we refer to the total
amount of $60 million or less as the payment ``pool''.) Section 541 of
the BBRA also provides that direct graduate medical education (GME)
payments for Medicare+Choice utilization are reduced to the extent that
these additional payments are made for nursing and allied health
education programs. This provision was effective
[[Page 27021]]
for portions of cost reporting periods occurring in a CY, on or after
January 1, 2000.
Section 512 of the Benefits Improvement and Protection Act (BIPA)
of 2000 changed the formula for determining the additional amounts to
be paid to hospitals for MA nursing and allied health costs. Under
section 541 of the BBRA, the additional payment amount was determined
based on the proportion of each individual hospital's nursing and
allied health education payment to total nursing and allied health
education payments made to all hospitals. However, this formula did not
account for a hospital's specific MA utilization. Section 512 of the
BIPA revised this payment formula to specifically account for each
hospital's MA utilization. This provision was effective for portions of
cost reporting periods occurring in a calendar year, beginning with CY
2001, and was implemented in the August 1, 2001 IPPS final rule (66 FR
39909 and 39910).
The regulations at 42 CFR 413.87 codified both statutory
provisions. We first implemented the BBRA NAH MA provision in the
August 1, 2000 IPPS interim final rule with comment period (IFC) (65 FR
47036 through 47039). In that IFC, we outlined the qualifying
conditions for a hospital to receive the NAH MA payment, how we would
calculate the NAH MA payment pool, and how a qualifying hospital would
calculate its ``share'' of payment from that pool. Determining a
hospital's NAH MA payment essentially involves applying a ratio of the
hospital-specific NAH Part A payments, total inpatient days, and MA
inpatient days, to national totals of those same amounts, from cost
reporting periods ending in the fiscal year that is 2 years prior to
the current calendar year. The formula is as follows:
(((Hospital NAH pass-through payment/Hospital Part A Inpatient Days) *
Hospital MA Inpatient Days)/((National NAH pass-through payment/
National Part A Inpatient Days) * National MA Inpatient Days)) *
Current Year Payment Pool.
With regard to determining the total national amounts for NAH pass-
through payment, Part A inpatient days, and MA inpatient days, we note
that section 1886(l) of the Act, as added by section 541 of the BBRA,
gives the Secretary the discretion to ``estimate'' the national
components of the formula noted previously. For example, section
1886(l)(2)(A) of the Act states that the Secretary would estimate the
ratio of payments for all hospitals for portions of cost reporting
periods occurring in the year under subsection 1886(h)(3)(D) to total
direct GME payments estimated for the same portions of periods under
section 1886(h)(3) of the Act. Accordingly, we stated in the August 1,
2000 IFC (65 FR 47038) that each year, we would determine and publish
in a final rule the total amount of nursing and allied health education
payments made across all hospitals during the fiscal year 2 years prior
to the current calendar year We would use the best available cost
reporting data for the applicable hospitals from the Hospital Cost
Report Information System (HCRIS) for cost reporting periods in the
fiscal year that is 2 years prior to the current calendar year (65 FR
47038).
To calculate the pool, in accordance with section 1886(l) of the
Act, we would ``estimate'' a total amount for each calendar year, not
to exceed $60 million (65 FR 47038).
To calculate the proportional reduction to Medicare+Choice (now MA)
Direct GME payments, we stated that the percentage is estimated by
calculating the ratio of the Medicare+Choice nursing and allied health
payment ``pool'' for the current calendar year to the projected total
Medicare+Choice direct GME payments made across all hospitals for the
current calendar year. We stated that the projections of
Medicare+Choice direct GME and Part A direct GME are based on the best
available cost report data from the HCRIS (for example, for calendar
year 2000, the projections are based on the best available cost report
data from HCRIS 1998), and these payment amounts were increased using
the increases allowed by section 1886(h) of the Act for these services
(using the percentage applicable for the current calendar year for
Medicare+Choice direct GME and the Consumer Price Index (CPI-U)
increases for Part A direct GME). We also stated that we would publish
the applicable percentage reduction each year in the IPPS proposed and
final rules (65 FR 47038).
Thus, in the August 1, 2000, IFC, we described our policy regarding
the timing and source of the national data components for the NAH MA
add-on payment and the percent reduction to the direct GME MA payments,
and we stated that we would publish the rates for each calendar year in
the IPPS proposed and final rules. While the rates for CY 2000 were
published in the August 1, 2000, IFC (see 65 FR 47038 and 47039), the
rates for subsequent CYs were only issued through Change Requests (CRs)
(CR 2692, CR 11642, CR 12407). After recent issuance of the CY 2019
rates in CR 12407 on August 19, 2021, we reviewed our update
procedures, and were reminded that the August 1, 2000 IFC states that
we would publish the NAH MA rates and direct GME percent reduction
every year in the IPPS rules. Accordingly, for CY 2020 and CY 2021, we
proposed and finalized the NAH MA add-on rates in the FY 2023 IPPS/LTCH
PPS proposed and final rules. We stated that for CYs 2022 and after, we
would similarly propose and finalize their respective NAH MA rates and
direct GME percent reductions in subsequent IPPS/LTCH PPS rulemakings
(see 87 FR 49073 August 10, 2022).
In this FY 2024 IPPS/LTCH PPS proposed rule, we are proposing the
rates for CY 2022. Consistent with the use of HCRIS data for past
calendar years, we are proposing to use data from cost reports ending
in FY 2020 HCRIS (the fiscal year that is 2 years prior to CY 2022) to
compile these national amounts: NAH pass-through payment, Part A
Inpatient Days, MA Inpatient Days.
For this proposed rule, we accessed the FY 2020 HCRIS data from the
fourth quarterly HCRIS update of 2022. However, to calculate the
``pool'' and the direct GME MA percent reduction, we ``project'' Part A
direct GME payments and MA direct GME payments for the current calendar
year, which in this final rule, is CY 2022, based on the ``best
available cost report data from the HCRIS'' (65 FR 47038). Next,
consistent with the method we described previously from the August 1,
2000 IFC, we increased these payment amounts from midpoint to midpoint
of the appropriate calendar year using the increases allowed by section
1886(h) of the Act for these services (using the percentage applicable
for the current calendar year for MA direct GME, and the Consumer Price
Index-Urban (CPI-U) increases for Part A direct GME. For CY 2022, the
direct GME projections are based on the fourth quarterly update of CY
2020 HCRIS, adjusted for the CPI-U and for increasing MA enrollment.
For CY 2022, the proposed national rates and percentages, and their
data sources are set forth in this table. We intend to update these
numbers in the FY 2024 final rule based on the latest available cost
report data.
[[Page 27022]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.268
Section 4143 of the CAA 2023 (enacted December 29, 2022), called
``Waiver of Cap on Annual Payments for Nursing and Allied Health
Education Payments,'' amends section 1886(l)(2)(B) of the Act to state
that for portions of cost reporting periods occurring in each of CYs
2010 through 2019, the $60 million payment limit, or payment ``pool,''
shall not apply to the total amount of additional payments for nursing
and allied health education to be distributed to hospitals that, as of
the date of enactment of this clause, are operating a school of
nursing, a school of allied health, or a school of nursing and allied
health. As noted previously, section 541 of the BBRA limited total
spending under the NAH MA provision to no more than $60 million in any
calendar year. Under CR 11642 issued on November 19, 2020, CMS
instructed MACs to recalculate historical payments to hospitals
consistent with the $60 million limit per calendar year, and make
applicable adjustments to NAH MA payments. In this section, we propose
a method for the MACs to implement section 4143 in the absence of the
$60 million limit on the pool.
In addition, section 541 of the BBRA 1999 also provides that direct
GME payments for MA utilization will be reduced to the extent that
these additional payments are made for nursing and allied health
education programs. However, section 4143 of the CAA 2023 also provides
that in not applying the $60 million limit for each of 2010 through
2019, the Secretary shall not take into account any increase in the
total amount of such additional payment amounts for such nursing and
allied health education for portions of cost reporting periods
occurring in the year. We propose to interpret this to mean that,
pursuant to the requirement set out at section 4143(b) of CAA 2023,
MACs shall not change the DGME MA percent reduction amounts specified
in CR 11642 for CYs 2010 through 2018, and CR 12407 for CY 2019 (and CR
12596 which corrected the DGME MA percent reduction related to CY 2018
specified in CR 11642).
The following table shows the recalculated pool amounts for CYs
2010 through 2019. We propose that MACs would first determine whether
hospitals that received revised payments under CR 11642 were still
receiving NAH MA payments on an interim basis as of December 29, 2022.
For example, if a hospital's payments for a NAH program(s) were
adjusted under CR 11642, but that hospital since closed all of its NAH
programs, that hospital would not be eligible under section 4143 to
receive adjusted payments for CYs 2010 through 2019, even if the
hospital itself has remained operational.
Second, we propose that MACs would use the table in this section of
this rule to recalculate an eligible hospital's NAH MA payment for
portions of cost reporting periods occurring in CY 2010 through CY 2019
that are still within the 3-year reopening period. The formula is
specified previously in this section.
Third, we propose that the MACs would subtract the payment amount
determined under CR 11642 (or CR 12596 or CR 12407 as applicable) for a
CY from the recalculated amount in the second step, as previously
detailed.
Fourth, we propose that the MACs would determine the amount owed to
a hospital in a CY as the amount calculated in the third step plus the
difference, if any, between that amount and the amount previously
recouped under CR 11642 (or CR 12596 or CR 12407 as applicable) or the
amount that would have been recouped under CR 11642 (or CR 12596 or CR
12407 as applicable) if not for the enactment of Section 4143 of the
CAA 2023, if such difference for a CY is greater than $0. We note that
by adding this difference to the amount calculated in the third step,
the amounts previously recouped under CR 11642 (or CR 12596 or CR 12407
as applicable) will be returned to hospitals, and recoupments that
would have occurred under CR 11642 (or CR 12596 or CR 12407 as
applicable) if not for the enactment of Section 4143 of the CAA 2023
will not occur.
[GRAPHIC] [TIFF OMITTED] TP01MY23.269
[[Page 27023]]
We are not proposing any changes to the regulations text at 42 CFR
413.87.
I. Proposed Payment Adjustment for Certain Clinical Trial and Expanded
Access Use Immunotherapy Cases (Sec. Sec. 412.85 and 412.312)
Effective for FY 2021, we created MS-DRG 018 for cases that include
procedures describing CAR T-cell therapies, which were reported using
ICD-10-PCS procedure codes XW033C3 or XW043C3 (85 FR 58599 through
58600). Effective for FY 2022, we revised MS-DRG 018 to include cases
that report the procedure codes for CAR T-cell and non-CAR T-cell
therapies and other immunotherapies (86 FR 44798 through 448106).
Effective for FY 2021, we modified our relative weight methodology
for 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, under our finalized policy we do not
include claims determined to be clinical trial claims that group to MS-
DRG 018 when calculating the average cost for 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 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 MS-DRG 018 to the extent such claims can be identified
in the historical data (85 FR 58600). The term ``expanded access''
(sometimes called ``compassionate use'') is a potential pathway for a
patient with a serious or immediately life-threatening disease or
condition to gain access to an investigational medical product (drug,
biologic, or medical device) for treatment outside of clinical trials
when, among other criteria, there is no comparable or satisfactory
alternative therapy to diagnose, monitor, or treat the disease or
condition (21 CFR 312.305).\164\
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\164\ https://www.fda.gov/news-events/expanded-access/expanded-access-keywords-definitions-and-resources.
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Effective FY 2021, we also finalized an adjustment to the payment
amount for applicable clinical trial and expanded access immunotherapy
cases that group to MS-DRG 018 using the same methodology that we used
to adjust the case count for purposes of the relative weight
calculations (85 FR 58842 through 58844). (As previously noted,
effective beginning FY 2022, we revised MS-DRG 018 to include cases
that report the procedure codes for CAR T-cell and non-CAR T-cell
therapies and other immunotherapies (86 FR 44798 through 448106).)
Specifically, under our finalized policy we apply a payment adjustment
to claims that group to MS-DRG 018 and include ICD-10-CM diagnosis code
Z00.6, with the modification that when the CAR T-cell, non-CAR T-cell,
or other immunotherapy 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 also finalized that when there is expanded access use of
immunotherapy, the payment adjustment will be applied in calculating
the payment for the case. This payment adjustment is codified at 42 CFR
412.85 (for operating IPPS payments) and 42 CFR 412.312 (for capital
IPPS payments), for claims appropriately containing Z00.6, as described
previously, and reflects that the adjustment is also applied for cases
involving expanded access use immunotherapy, and that the payment
adjustment only applies to applicable clinical trial cases; that is,
the adjustment is not applicable to cases where the CAR T-cell, non-CAR
T-cell, or other immunotherapy product is purchased in the usual
manner, but the case involves a clinical trial of a different product.
The regulations at 42 CFR 412.85(c) also specify 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 (85 FR 58844).
For FY 2024, we are proposing to continue to apply an adjustment to
the payment amount for expanded access use of immunotherapy and
applicable clinical trial cases that would group to MS-DRG 018, as
calculated using the same proposed modifications to our existing
methodology, as adopted in the FY 2021 IPPS/LTCH PPS final rule (85 FR
58842), that we are proposing to use to adjust the case count for
purposes of the relative weight calculations, as described in section
II.D. of the preamble of this proposed rule. As discussed in that
section, the December update of the FY 2022 MedPAR claims data now
includes a field that identifies whether or not the claim includes
expanded access use of immunotherapy. For the FY 2022 MedPAR claims
data, this field identifies whether or not the claim includes condition
code ZB. For the FY 2023 MedPAR data and for subsequent years, this
field will identify whether or not the claim includes condition code
90. The MedPAR files now also include information for claims with the
payer-only condition code ``ZC'', which is used by the IPPS Pricer to
identify a case where the CAR T-cell, non-CAR T-cell, or other
immunotherapy product is purchased in the usual manner, but the case
involves a clinical trial of a different product so that the payment
adjustment is not applied in calculating the payment for the case (for
example, see Change Request 11879, available at https://www.cms.gov/files/document/r10571cp.pdf). We refer the readers to section II.D. of
the preamble of this proposed rule for further discussion of our
proposed changes to our methodology for identifying clinical trial
claims and expanded access use claims in MS-DRG 018 and our proposed
modifications to the methodology used to adjust the case count for
purposes of the relative weight calculations.
Consistent with these proposals, and using the same methodology
that we are proposing to use to adjust the case count for purposes of
the relative weight calculations, we are proposing to calculate the
adjustment to the payment amount for expanded access use of
immunotherapy and applicable clinical trial cases as follows:
Calculate the average cost for cases assigned to MS-DRG
018 that either (a) contain ICD-10-CM diagnosis code Z00.6 and do not
contain condition code ``ZC'' or (b) contain condition code 90 (or, for
FY 2024 ratesetting, which is based on the FY 2022 MedPAR data,
condition code ``ZB'').
Calculate the average cost for all other cases assigned to
MS-DRG 018.
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 expanded
access use of immunotherapy and applicable clinical trial cases that
group to MS-DRG 018 by multiplying the relative weight for MS-DRG 018
by the adjustor.
We refer the readers to section II.D. of the preamble of this
proposed rule for further discussion of these proposed methodology
changes.
Consistent with our calculation of the proposed adjustor for the
relative weight
[[Page 27024]]
calculations, for this proposed rule we propose to calculate this
adjustor based on the December 2022 update of the FY 2022 MedPAR file
for purposes of establishing the FY 2024 payment amount. Specifically,
in accordance with 42 CFR 412.85 (for operating IPPS payments) and 42
CFR 412.312 (for capital IPPS payments), we propose to multiply the FY
2024 relative weight for MS-DRG 018 by a proposed adjustor of 0.28 as
part of the calculation of the payment for claims determined to be
applicable clinical trial or expanded use access immunotherapy claims
that group to MS-DRG 018, which includes CAR T-cell and non-CAR T-cell
therapies and other immunotherapies. We also propose to update the
value of the adjustor based on more recent data for the final rule.
J. Hospital Readmissions Reduction Program
1. Statutory Basis for the Hospital Readmissions Reduction Program
Section 1886(q) of the Act establishes the Hospital Readmissions
Reduction Program. We refer readers to the FY 2016 IPPS/LTCH PPS final
rule (80 FR 49530 through 49531) and the FY 2018 IPPS/LTCH PPS final
rule (82 FR 38221 through 38240) for a detailed discussion of and
additional information on the statutory history of the Hospital
Readmissions Reduction Program.
2. Regulatory Background
We refer readers to the following final rules for detailed
discussions of the regulatory background and descriptions of the
current policies for the Hospital Readmissions Reduction Program:
FY 2012 IPPS/LTCH PPS final rule (76 FR 51660 through
51676);
FY 2013 IPPS/LTCH PPS final rule (77 FR 53374 through
53401);
FY 2014 IPPS/LTCH PPS final rule (78 FR 50649 through
50676);
FY 2015 IPPS/LTCH PPS final rule (79 FR 50024 through
50048);
FY 2016 IPPS/LTCH PPS final rule (80 FR 49530 through
49543);
FY 2017 IPPS/LTCH PPS final rule (81 FR 56973 through
56979);
FY 2018 IPPS/LTCH PPS final rule (82 FR 38221 through
38240);
FY 2019 IPPS/LTCH PPS final rule (83 FR 41431 through
41439);
FY 2020 IPPS/LTCH PPS final rule (84 FR 42380 through
42390);
FY 2021 IPPS/LTCH PPS final rule (85 FR 58844 through
58847);
FY 2022 IPPS/LTCH PPS final rule (86 FR 45249 through
45266); and
FY 2023 IPPS/LTCH PPS final rule (87 FR 49081 through
49094).
We have also codified certain requirements of the Hospital
Readmissions Reduction Program at 42 CFR 412.152 through 412.154.
3. Current Measures
The Hospital Readmissions Reduction Program currently includes six
applicable conditions/procedures: Acute myocardial infarction (AMI);
heart failure (HF); pneumonia (PN); elective primary total hip
arthroplasty/total knee arthroplasty (THA/TKA); chronic obstructive
pulmonary disease (COPD); and coronary artery bypass graft (CABG)
surgery.
There are no proposals or updates in this proposed rule for the
Hospital Readmissions Reduction Program. We refer readers to section
I.G.5 of the proposed rule for an updated estimate of the financial
impact of using the proportion of dually-eligible beneficiaries, ERRs,
and aggregate payments for each condition/procedure and all discharges
for applicable hospitals from the FY 2024 Hospital Readmissions
Reduction Program applicable period (that is, July 1, 2019, through
June 30, 2022).
K. Hospital Value-Based Purchasing (VBP) Program: Proposed Policy
Changes
1. Background
a. Overview
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 descriptions of our current policies for the Hospital VBP
Program, we refer readers to our codified requirements for the Hospital
VBP Program at 42 CFR 412.160 through 412.168.
b. FY 2024 Program Year Payment Details
Section 1886(o)(7)(B) of the Act instructs the Secretary to reduce
the base operating DRG payment amount for a hospital for each discharge
in a fiscal year by an applicable percent. Under section 1886(o)(7)(A)
of the Act, the sum 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 2024 program year is 2.00 percent. Using the methodology we
adopted in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53571 through
53573), we estimate that the total amount available for value-based
incentive payments for FY 2024 is approximately $1.7 billion, based on
the December 2022 update of the FY 2022 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 are publishing proxy value-based incentive payment adjustment
factors in Table 16 associated with this proposed rule (which is
available via the internet on the CMS website). We note that these
proposed proxy adjustment factors will not be used to adjust hospital
payments. These proposed proxy value-based incentive payment adjustment
factors were calculated using the historical baseline and performance
periods for the FY 2023 Hospital VBP Program. These proxy factors were
calculated using the December 2022 update to the FY 2022 MedPAR file.
The slope of the linear exchange function used to calculate these proxy
factors was 2.6516107025, and the estimated amount available for value-
based incentive payments to hospitals for FY 2024 is approximately $1.7
billion. We intend to include an update to this table, as Table 16A,
with the FY 2024 IPPS/LTCH PPS final rule, to reflect changes based on
the March 2023 update to the FY 2022 MedPAR file. We will add Table 16B
to display the actual value-based incentive payment adjustment factors,
exchange function slope, and estimated amount available for the FY 2024
Hospital VBP Program. We expect that Table 16B will be posted in Fall
2023.
2. Retention and Removal of Quality Measures
a. Retention of Previously Adopted Hospital VBP Program Measures and
Relationship Between the Hospital IQR and Hospital VBP Program Measure
Sets
In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53592), we finalized
a policy to retain measures from prior program years for each
successive program year, unless otherwise proposed and finalized. In
the FY 2019 IPPS/LTCH PPS final rule (83 FR 41440 through
[[Page 27025]]
41441), we finalized a revision to our regulations at 42 CFR 412.164(a)
to clarify that once we have complied with the statutory prerequisites
for adopting a measure for the Hospital VBP Program (that is, we have
selected the measure from the Hospital IQR Program measure set and
included data on that measure on Hospital Compare for at least one year
prior to its inclusion in a Hospital VBP Program performance period),
the Hospital VBP Program statute does not require that the measure
continue to remain in the Hospital IQR Program.
We are not proposing any changes to these policies in this proposed
rule.
b. Proposal to Codify the Current Hospital VBP Program Measure Removal
Factors
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41441 through
41446), we finalized eight measure removal factors for the Hospital VBP
Program, and we refer readers to that final rule for details. We are
proposing in this proposed rule to codify at 42 CFR 412.164(c) of our
regulations these eight measure removal factors as well as the policies
for updating measure specifications and retaining measures. We believe
this proposal will make it easier for interested parties to find these
policies and will further align the Hospital VBP Program regulations
with the regulations we have codified for other quality reporting
programs. We invite public comment on this proposal.
c. Proposed Substantive Measure Modifications
(1) Proposed Substantive Measure Updates to the Medicare Spending per
Beneficiary (MSPB)--Hospital Measure (CBE #2158) Beginning With the FY
2028 Program Year
We are proposing to adopt substantial measure updates to the MSPB
Hospital measure (CBE #2158) in the Hospital VBP Program beginning with
the FY 2028 program year. We adopted the MSPB Hospital measure in the
Hospital VBP Program in the FY 2012 IPPS/LTCH PPS final rule beginning
with the FY 2014 program year (76 FR 51654 through 51658). We continue
to believe the MSPB Hospital measure provides important data on
resource use (addressing the Meaningful Measures Framework priority of
making care affordable), which is why we are proposing substantive
updates to the MSPB Hospital measure in the Hospital VBP Program under
the Efficiency/Cost Domain. We refer readers to the FY 2019 IPPS/LTCH
PPS final rule for a broader discussion of the Meaningful Measures
Framework (83 FR 41147).
We previously adopted the same substantive updates to the MSPB
Hospital measure for use in the Hospital IQR Program in the FY 2023
IPPS/LTCH PPS final rule (87 FR 49257 through 49263). The substantive
updates to the MSPB Hospital measure are three refinements which ensure
a more comprehensive and consistent assessment of hospital performance
by capturing more episodes and adjusting the measure calculation:
An update to allow readmissions to trigger new episodes to
account for episodes and costs that are currently not included in the
measure but that could be within the hospital's reasonable influence;
A new indicator variable in the risk adjustment model for
whether there was an inpatient stay in the 30 days prior to episode
start date; and
An updated MSPB amount calculation methodology to change
one step in the measure calculation from the sum of observed costs
divided by the sum of expected costs (ratio of sums) to the mean of
observed costs divided by expected costs (mean of ratios).
These refinements also appear in a summary of the measure re-
evaluation on the CMS QualityNet website posted in July 2020.\165\
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\165\ Medicare Spending Per Beneficiary (MSPB) Measure
Methodology. Available at: https://qualitynet.cms.gov/inpatient/measures/mspb/methodology.
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We presented the three substantive updates to the MSPB Hospital
measure (CBE #2158) to the consensus-based entity (CBE) \166\ in the
Fall 2020 cycle for measure re-endorsement. During the Fall 2020 11-
month endorsement cycle, the re-evaluated MSPB Hospital measure was
reviewed by the Scientific Methods Panel (SMP), Cost and Efficiency
Standing Committee, and Consensus Standards Approval Committee
(CSAC).\167\ The re-evaluated measure passed on the reliability and
validity criteria when reviewed by the SMP. The Cost and Efficiency
Standing Committee reviewed each aspect of the re-evaluated measure in
detail across three meetings. The CSAC approved the Standing
Committee's endorsement recommendation unanimously and re-endorsed the
MSPB Hospital measure (CBE #2158) in June 2021 with the three
refinements.\168\ Following re-endorsement, we included the updated
measure in CMS's ``List of Measures Under Consideration (MUC) for
December 1, 2021.'' \169\ The re-evaluated MSPB Hospital measure
(MUC2021-131) underwent Measure Applications Partnership (MAP) review
during the 2021-2022 cycle. On December 15, 2021, the MAP Hospital
Workgroup supported the re-evaluated measure for rulemaking. On January
19, 2022, the MAP Coordinating Committee upheld the MAP Hospital
Workgroup's preliminary recommendation to support the re-evaluated
measure for rulemaking. More detail on the discussion is available in
the MAP's final report.\170\
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\166\ In previous years, we referred to the consensus-based
entity by corporate name. We have updated this language to refer to
the consensus-based entity more generally.
\167\ The submission materials, including the testing results,
are available at: https://www.qualityforum.org/ProjectMeasures.aspx?projectID=86056&cycleNo=2&cycleYear=2020.
\168\ Centers for Medicare & Medicaid Services. (2020). Cost and
Efficiency Final Report--Fall 2020 Cycle. Available at: https://mmshub.cms.gov/sites/default/files/cost-and-efficiency-final-report-fall-2020.pdf.
\169\ Centers for Medicare & Medicaid Services. (2021). List of
Measures Under Consideration for December 1, 2021. Available at:
https://mmshub.cms.gov/sites/default/files/Overview-of-the-2021-MUC-List-20220308-508.pdf.
\170\ Centers for Medicare & Medicaid Services. (2022). Measure
Applications Partnership 2021-2022 Considerations for Implementing
Measures in Federal Programs: Clinician, Hospital, and Post-Acute
Care Long-Term Care. Available at: https://mmshub.cms.gov/sites/default/files/map_2021-2022_considerations_for_implementing_measures_in_federal_programs_final_report.pdf.
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For the purpose of continuing to assess hospitals' efficiency and
resource use and to meet statutory requirements under section
1886(o)(2)(B)(ii) of the Act, we are proposing to adopt the substantive
updates to the MSPB Hospital measure in the Hospital VBP Program under
the Efficiency and Cost Reduction Domain. As previously stated, we
previously adopted the same substantive updates to the measure in the
Hospital IQR Program (87 FR 49257 through 49263), and we intend to
begin posting the updated measure data on Care Compare beginning in
January 2024, which will enable us to post data on the substantive
updates to the measure for at least one year before the proposed
beginning of the performance period for the FY 2028 program year
(discharges beginning January 1, 2026).
We are proposing to adopt the substantive updates to the MSPB
Hospital measure (CBE #2158) in the Hospital VBP Program beginning with
the FY 2028 program year. We refer readers to section V.K.4.c of the
preamble of this proposed rule where we discuss our defined baseline
and performance periods for this updated measure under the Hospital VBP
Program. We are also proposing that the performance standards
calculation methodology for the updated MSPB Hospital measure would be
the same as that which we currently use for the measure. The
performance standards for
[[Page 27026]]
the updated measure for the FY 2028 program year are not yet available.
We invite public comment on this proposal.
(2) Proposed Substantive Measure Updates to the Hospital-Level Risk-
Standardized Complication Rate (RSCR) Following Elective Primary Total
Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) (CBE #1550)
Measure Beginning With the FY 2030 Program Year
We are proposing to adopt substantive measure updates to the
Hospital-level Risk-Standardized Complication Rate (RSCR) Following
Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee
Arthroplasty (TKA) (CBE #1550) (hereinafter referred to as the THA/TKA
Complication measure), beginning with the FY 2030 program year. We
adopted the THA/TKA Complication measure in the FY 2015 IPPS/LTCH PPS
final rule beginning with the FY 2019 program year for use in the
Hospital VBP Program (79 FR 50062 through 50063). We continue to
consider the clinical outcomes of the THA/TKA Complication measure a
high priority, and we believe this measure provides important data on
resource use (addressing the Meaningful Measures Framework priority of
making care affordable), which is why we are proposing to adopt
substantive updates to the THA/TKA Complication measure in the Hospital
VBP Program under the Clinical Outcomes Domain.
We previously adopted the same substantive updates to the THA/TKA
Complication measure for use in the Hospital IQR Program as a re-
evaluated measure in the FY 2023 IPPS/LTCH PPS final rule (87 49257
through 49263). We also listed the re-evaluated THA/TKA Complication
measure in the publicly available document entitled ``List of Measures
Under Consideration for December 1, 2021'' \171\ with identification
number MUC2021-118. The MAP reviewed the re-evaluated measure and voted
to conditionally support the measure for rulemaking for use pending CBE
review and endorsement of the measure update. The MAP Rural Health
Advisory Group reviewed this re-evaluated measure on December 8, 2021,
and agreed that the measure was suitable for use with rural providers
given that there would be no undue consequences for rural
hospitals.\172\ The CBE re-endorsed the original measure in July of
2021,\173\ and we intend to submit the re-evaluated measure to the CBE
for endorsement in Fall 2024.
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\171\ Centers for Medicare & Medicaid Services. (2021) List of
measures under consideration for December 1, 2021. Available at:
https://www.cms.gov/files/document/measures-under-consideration-list-2021-report.pdf.
\172\ Centers for Medicare & Medicaid Services. (2022) MAP 2021-
2022 Considerations for Implementing Measures Final Report--
Clinicians, Hospitals, and PAC-LTC. Available at: https://mmshub.cms.gov/sites/default/files/map_2021-2022_considerations_for_implementing_measures_in_federal_programs_final_report.pdf.
\173\ CMS Measure Inventory Tool. (2023) Hospital-level risk-
standardized complication rate (RSCR) following elective primary
total hip arthroplasty (THA) and/or total knee arthroplasty (TKA)
Measure Specifications. Available at: https://cmit.cms.gov/cmit/#/MeasureView?variantId=11547§ionNumber=1.
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The substantive updates to the THA/TKA Complication measure are the
inclusion of index admission diagnoses and in-hospital comorbidity data
from Medicare Part A claims. Additional comorbidities prior to the
index admission are assessed using Part A inpatient, outpatient, and
Part B office visit Medicare claims in the 12 months prior to index
(initial) admission. As a claims-based measure, hospitals would not be
required to submit additional data for calculating the updated measure.
We refer readers to the FY 2023 IPPS/LTCH PPS final rule (87 FR 49263
through 49267), which describe the same updates we are proposing to
apply to the THA/TKA Complication measure in the Hospital VBP Program,
including updates to the risk adjustment and measure calculations.
Adopting these substantive measure updates into the Hospital VBP
Program would expand the measure outcome to include 26 additional
mechanical complication ICD-10 codes. The additional ICD-10 codes
capture the following diagnoses: fracture following insertion of
orthopedic implant, joint prosthesis, or bone plate of the pelvis,
femur, tibia or fibula, and periprosthetic fracture around internal
prosthetic hip, hip joint, knee, knee joint, and other or unspecified
internal prosthetic joint. We refer readers to FY 2023 IPPS/LTCH PPS
final rule (87 FR 49264) for further information on these additional
included ICD-10 codes that are included in the updated measure as
adopted for the Hospital IQR Program.
Section 1886(o)(2)(A) of the Act requires the Hospital VBP Program
to select measures that have been specified for the Hospital IQR
Program. We note that although section 1886(b)(3)(B)(viii)(IX)(aa) of
the Act generally requires measures specified by the Secretary in the
Hospital IQR Program be endorsed by the entity with a contract under
section 1890(a) of the Act, section 1886(b)(3)(B)(viii)(IX)(bb) of the
Act states that in the case of a specified area or medical topic
determined appropriate by the Secretary for which a feasible and
practical measure has not been endorsed by the entity with a contract
under section 1890(a) of the Act, the Secretary may specify a measure
that is not endorsed as long as due consideration is given to measures
that have been endorsed or adopted by a consensus organization
identified by the Secretary. We reviewed CBE-endorsed measures and were
unable to identify any other CBE-endorsed measures on this topic, and,
therefore, we believe the exception in section 1886
6(b)(3)(B)(viii)(IX)(bb) of the Act applies. We note that we intend to
submit the re-evaluated measure to the CBE for endorsement in Fall
2024.
For the purpose of continuing to assess clinical outcomes, we are
proposing to adopt the substantive measure updates to the THA/TKA
Complication measure (CBE #1550) in the Hospital VBP Program under the
Clinical Domain beginning with the FY 2030 program year. As previously
stated, we previously adopted the same substantive updates to the
measure in the Hospital IQR Program (87 49257 through 49263), and we
intend to begin posting the updated measure data on Care Compare
beginning in July 2023, which will enable us to post data on the
substantive updates to the measure for at least one year before the
proposed beginning of the FY 2030 performance period, April 1, 2025,
through March 31, 2028.
We are proposing to adopt the substantive updates to THA/TKA
Complications measure (CBE #1550) in the Hospital VBP Program beginning
with the FY 2030 program year. We refer readers to section V.K.4.c of
the preamble of this proposed rule where we discuss our defined
baseline and performance periods for this updated measure under the
Hospital VBP Program. We are also proposing that the performance
standards calculation methodology for the updated THA/TKA Complications
measure would be the same as that which we currently use for the
measure. The performance standards for the updated measure for FY 2030
are not yet available.
We invite public comment on this proposal.
3. Proposed New Measure for the Hospital VBP Program Set
We consider measures for adoption based on the statutory
requirements, including specification under the Hospital IQR Program,
posting dates on the Care Compare website, and our priorities for
quality improvement as
[[Page 27027]]
outlined in the CMS National Quality Strategy, available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/CMS-Quality-Strategy. 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 Framework, 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. Due to
the time necessary to adopt measures, we often adopt policies for the
Hospital VBP Program well in advance of the program year for which they
will be applicable.
a. Proposed New Measure Beginning With the FY 2026 Program Year: Severe
Sepsis and Septic Shock: Management Bundle (CBE #0500)
(1) Background
Sepsis, severe sepsis, and septic shock can arise from simple
infections, such as a pneumonia or urinary tract infection. Although it
can affect anyone at any age, sepsis is more common in infants, the
elderly, and patients with chronic health conditions such as diabetes
and immunosuppressive disorders patients.\174\ A 2021 report by the
Healthcare Cost and Utilization Project on the most frequent principal
diagnoses among non-maternal, non-neonatal inpatient stays using the
2018 National Inpatient Sample revealed septicemia as the most frequent
principal diagnosis with over 2.2 million hospital stays.\175\ The CDC
estimates there are approximately 1.7 million adults diagnosed with
sepsis annually with approximately 270,000 resulting deaths. An
analysis of over 2.5 million patients with sepsis discharged from
January 1, 2010, to September 30, 2016, revealed average mortality
rates of 14.9 percent for patients with severe sepsis and 34.3 percent
for patients with septic shock.\176\ Another analysis using CMS claims
data for services provided to approximately 6.9 million patients
admitted to inpatient with sepsis from January 1, 2012 to December 31,
2018 showed that while the number of patients admitted to the hospital
with sepsis increased over this time period, mortality rates decreased,
however they remained high with mortality rates at one week post
discharge of approximately 15 percent for severe sepsis and
approximately 40 percent for patients with septic shock. For this same
population mortality rates increased at six months post discharge to
approximately 36 percent for severe sepsis and 60 percent for septic
shock.\177\
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\174\ National Institute of General Medical Sciences. (2021).
Bethesda, MD: U.S. Department of Health and Human Services.
Available at: https://nigms.nih.gov/education/fact-sheets/Pages/sepsis.aspx.
\175\ McDermott KW, Roemer M. (2021) Most Frequent Principal
Diagnoses for Inpatient Stays in U.S. Hospitals, 2018. Healthcare
Cost and Utilization Project (HCUP) Statistical Brief #277.
Available at: https://www.hcup-us.ahrq.gov/reports/statbriefs/sb277-Top-Reasons-Hospital-Stays-2018.pdf.
\176\ Paoli CJ, Reynolds MA, Sinha M, Gitlin M, Crouser E.
(2018). Epidemiology and Costs of Sepsis in the United States--An
Analysis Based on Timing of Diagnosis and Severity Level. Critical
Care Medicine.46(12):1889-1897. doi: 10.1097/CCM.0000000000003342.
\177\ Buchman TG, Simpson SQ, Sciarretta KL, et al. (2020).
Sepsis Among Medicare Beneficiaries: 1. The Burdens of Sepsis, 2012-
2018. Crit Care Med. 48(3):276-288. doi: 10.1097/
CCM.0000000000004224. PMID: 32058366; PMCID: PMC7017943.
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In a 2001 study by Rivers et al.,\178\ it was shown that an
absolute and relative reduction in mortality from sepsis can be reduced
16 percent and 30 percent, respectively, when aggressive care is
provided within six hours of hospital arrival. In a more recent study
that utilized chart-abstracted data for the Severe Sepsis and Septic
Shock: Management Bundle measure (CBE #0500) from October 1, 2015, to
March 31, 2017, submitted to CMS for over 1.3 million patients,
Townsend et al. found that compliance with the measure was associated
with a reduction in 30-day mortality.\179\
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\178\ Rivers E, Nguyen B, Havstad S et al. (2001) Early goal
directed therapy in the treatment of severe sepsis and septic shock.
N Engl J Med. 345: 1368-77.
\179\ Townsend SR, Phillips GS, Duseja R, et al. (2021) Effects
of compliance with the early management bundle (SEP-1) on mortality
changes among Medicare beneficiaries with sepsis: a propensity score
matched cohort study. Chest. doi:10.1016/j.chest.2021.07.2167.
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(2) Overview of Measure and MAP Feedback
We previously adopted the Severe Sepsis and Septic Shock:
Management Bundle measure (CBE #0500) into the Hospital IQR Program
beginning with the FY 2017 payment determination in the FY 2015 IPPS/
LTCH PPS final rule (79 FR 50236 through 50241). Hospital submission of
patient level data for reporting on the measure began with qualifying
patient discharges starting October 1, 2015. We began public reporting
of the Severe Sepsis and Septic Shock: Management Bundle measure (CBE
#0500) performance results on the Care Compare website with the July
2018 refresh at which time the national average performance for the
measure was 49 percent. Performance rates have increased with each
subsequent Care Compare refresh reaching 60 percent for results
reported from October 1, 2019, through September 30, 2020. During the
COVID-19 public health emergency (PHE), performance rates decreased
slightly to 57 percent for the results reported from January 1, 2021,
through December 31, 2021. Performance rates for the top 10 percent of
hospitals have averaged 80 percent since we began public reporting with
performance data from October 1, 2017, through September 30, 2018. We
believe that additional incentives will support continued improvement
in measure performance. The Severe Sepsis and Septic Shock: Management
Bundle measure (CBE #0500) was initially endorsed by the CBE in 2008
for the hospital/acute care facility setting, and underwent maintenance
review and endorsement renewal in June 2013, November 2014, July 2017,
and December 2021.
The Severe Sepsis and Septic Shock: Management Bundle measure
supports the efficient, effective, and timely delivery of high-quality
sepsis care. The Severe Sepsis and Septic Shock: Management Bundle
provides a standard operating procedure for the early risk
stratification and management of a patient with severe infection. When
the care interventions in the Severe Sepsis and Septic Shock:
Management Bundle measure are provided as a composite significant
reductions in hospital length of stay, re-admission rates and mortality
have been observed.180 181 Additional information about this
measure is available on the CMS Measures Inventory Tool (CMIT)
website.\182\
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\180\ Levy MM, Gesten FC, Phillips GS, et al. (2018). Mortality
Changes Associated with Mandated Public Reporting for Sepsis. The
Results of the New York State Initiative. Am J Respir Crit Care Med.
198(11):1406-1412. doi: 10.1164/rccm.201712-2545OC. PMID: 30189749;
PMCID: PMC6290949.
\181\ Bauer SR, Han X, Wang XF, Blonsky H, Reddy AJ. (2020)
Association Between Compliance With the Sepsis Quality Measure (SEP-
1) and Hospital Readmission. Chest. 158(2):608-611. doi: 10.1016/
j.chest.2020.02.042. Epub 2020 Mar 10. PMID: 32169628.
\182\ Severe Sepsis and Septic Shock: Management Bundle
(Composite Measure) https://cmit.cms.gov/cmit/#/MeasureView?variantId=778§ionNumber=1.
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We believe the adoption of this measure aligns with the Core
Principles outlined in the HHS National Healthcare System Action
Alliance To Advance Patient Safety, including the focus on
demonstrating and fostering commitments to safety as a core value and
the promotion of the development
[[Page 27028]]
of safety cultures.\183\ We also believe the adoption of the Sepsis and
Septic Shock: Management Bundle measure will contribute toward CMS'
goal of advancing health equity, as outlined in the CMS National
Quality Strategy.\184\ Research on in-hospital sepsis mortality between
2004-2013 showed that there is a higher rate of sepsis mortality for
Black and Hispanic patients, compared with White patients.\185\
Further, this research showed that disparities in outcomes disappeared
when results were adjusted for hospital characteristics which
highlights the need for improved septic management in hospitals that
are treating a high proportion of Black and Hispanic patients.\186\
Another study of 249 academic medical centers found that for patients
with a diagnosis of sepsis, Black patients exhibited lower adjusted
sepsis mortality than White patients.\187\ While the results of
research in the field are varied, we believe that this measure, which
outlines standardized protocols, could mitigate potential biases held
by individuals and systems that lead to such variation in outcomes.
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\183\ The National Healthcare System Action Alliance To Advance
Patient Safety. HHS. Available at: ahrq.gov/cpi/about/otherwebsites/action-alliance.html.
\184\ Centers for Medicare & Medicaid Services. (2022) CMS
National Quality Strategy. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/CMS-Quality-Strategy.
\185\ Jones JM, Fingar KR, Miller MA, et al. (2017). Racial
Disparities in Sepsis-Related In-Hospital Mortality: Using a Broad
Case Capture Method and Multivariate Controls for Clinical and
Hospital Variables, 2004-2013. Crit Care Med. 45(12):e1209-e1217.
doi: 10.1097/CCM.0000000000002699. PMID: 28906287.
\186\ Ibid.
\187\ Chaudhary N, Donnelly, J, Wang H (2018). Critical Care
Medicine 46(6):p 878-883, June 2018. [bond] DOI: 10.1097/
CCM.0000000000003020.
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The measure was submitted to the MAP for the Hospital VBP Program
for the 2022-2023 pre-rulemaking cycle and received conditional support
for rulemaking pending the measure developer providing clarity about
the differences between the measure specifications submitted to the MUC
list in May 2022 and reviewed by MAP and the current measure
specifications published in December 2022 which include abstraction
guidance updates related to crystalloid fluid administration volumes.
During the public comment period for the MUC list, we received comments
that were both supportive and not supportive of the inclusion of the
measure in the Hospital VBP Program. Public comments supportive of
including the measure in the Hospital VBP Program noted the measure is
CBE endorsed and that it encourages hospitals to follow published
international guidelines for the early identification and management of
severe sepsis and septic shock.
Public comments not supportive of including the measure in the
Hospital VBP Program centered around two main themes. The first group
of commenters were concerned that the adoption of the Severe Sepsis and
Septic Shock: Management Bundle measure could result in the overuse of
antibiotics, more specifically, that adherence to the Severe Sepsis and
Septic Shock: Management Bundle measure includes administering
antibiotic therapy to all patients with possible sepsis, regardless of
severity-of-illness, which commenters believe could risk excessive and
unwarranted antibiotic administration. The antibiotic requirements and
timing for the measure are consistent with antimicrobial
recommendations Surviving Sepsis Campaign: International Guidelines for
Management of Severe Sepsis and Septic Shock: 2021.\188\ We believe
there is enough flexibility to incorporate clinician judgment in the
measure as there are several opportunities for abstractors to disregard
Systemic Inflammatory Response Syndrome (SIRS) criteria or signs of
organ dysfunction if there is physician, advance practice nurse, or
physician assistant documentation that SIRS criteria or signs of organ
dysfunction are due to a chronic condition, medication, or a non-
infectious source.
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\188\ Evans L, Rhodes A, Alhazzani W, et al. (2021) Surviving
Sepsis Campaign: International Guidelines for Management of Sepsis
and Septic Shock 2021. Crit Care Med. 49(11):e1063-e1143. doi:
10.1097/CCM.0000000000005337. PMID: 34605781.
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Second, some commenters had concerns around the burden associated
with the data abstraction of the measure and staying up to date with
changes to the data abstraction. We note that adding the measure to the
Hospital VBP Program would not create a new burden for hospitals
because they are already required to report data on the measure under
the Hospital IQR Program. With regard to concerns about the overall
burden of collecting these data in the Hospital IQR Program, we note
that we are currently developing a sepsis outcome electronic clinical
quality measure (eCQM) that, if adopted for that program, would not be
as burdensome for hospitals to report. However, in light of our high
priority to address patient safety, we are proceeding with the proposal
to adopt the Severe Sepsis and Septic Shock: Management Bundle measure
at this time. The specifications for the proposed measure are listed in
v5.14 of the CMS Specifications Manual for National Hospital Inpatient
Quality Measures, and those specifications apply to patients discharged
from July 1, 2023, through December 31, 2023.\189\ The proposed measure
specifications for v5.14 include minor technical updates to the data
abstraction guidance and review for consistency with recent published
literature. The minor technical updates were made to address hospital
abstractor and clinician feedback received via the QualityNet Question
and Answer Tool from hospital medical record abstractors and clinicians
about the documentation required for fluid resuscitation within three
hours of tissue hypoperfusion presentation. We routinely make these
minor, technical updates based on feedback we receive from abstractors
and clinicians in order to improve the data abstraction of the measure.
The measure is in alignment with the Surviving Sepsis Campaign:
International Guidelines for Management of Severe Sepsis and Septic
Shock: 2021 which suggest administering at least 30 mL/kg of
intravenous (IV) crystalloid fluids within the first three hours of
resuscitation noting that timely effective fluid resuscitation is
critical to stabilize patients with sepsis-induced tissue
hypoperfusion. The guidelines noted that there are no prospective
interventional studies comparing various crystalloid fluid volumes for
initial resuscitation but reference observational studies and a
retrospective study that demonstrated not administering 30 mL/kg of
crystalloid fluids within three hours of sepsis identification was
associated with higher mortality regardless of comorbidities such as
end-stage renal disease and heart failure. With this in mind, the
guidelines suggest that fluid administration should be guided by
careful assessment of responsiveness to avoid over- and under-
resuscitation. The measure requires starting crystalloid fluids within
three hours of recognition of tissue hypoperfusion but does not require
fluids for resuscitation be completely infused within three hours. This
is in part due to recognition of various factors that can contribute to
complete fluid infusion potentially taking longer. The measure
establishes 30 mL/kg of crystalloid fluids as the default volume for
fluid resuscitation but does allow for lesser volumes ordered by a
clinician and accompanied
[[Page 27029]]
by documentation of a reason for administering a lesser volume in
recognition that some patients may not tolerate 30 mL/kg and that
others may respond adequately to a lesser volume.
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\189\ Hospital IQR Program, Inpatient Specifications Manual
v5.14. https://qualitynet.cms.gov/files/6391eabf76962e0016ad91ba?filename=HIQR_SpecsMan_v5.14.zip.
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We have made technical updates to the measure specifications since
we adopted this measure in the Hospital IQR Program, and we are
proposing to adopt the measure, as updated, for the Hospital VBP
Program. The data submission requirements, Specifications Manual, and
submission deadlines are posted on the QualityNet website at: https://qualitynet.cms.gov (or other successor CMS designated websites).
(3) Overview of the Measure Specifications
a. Numerator
Patients who received all of the following interventions for which
they qualify:
[GRAPHIC] [TIFF OMITTED] TP01MY23.270
b. Denominator
The denominator is patients 18 years of age and older with an ICD-
10-CM Principal or Other Diagnosis Code for sepsis, severe sepsis
without septic shock, or severe sepsis with septic shock, and without
an ICD-10-CM Principal or Other Diagnosis Code of U07.1 (COVID-19).
Patients who are admitted as a transfer from an inpatient,
outpatient, or emergency/observation department of another hospital or
an ambulatory surgical center, or who are enrolled in a clinical trial
associated with treatment of patients with sepsis, are excluded from
the denominator. The denominator is further refined as the number of
patients confirmed with severe sepsis or septic shock through medical
record review for the presence of a suspected infection, two or more
SIRS criteria, and a sign of organ dysfunction that are all documented
within 6 hours of each other. Additional exclusions are for patients:
With advanced directives for comfort care or palliative
care;
Who or for whom a surrogate decision maker declines or is
unwilling to consent to interventions required to meet the numerator;
With severe sepsis or septic shock who are discharged
within six hours of presentation; or
Who received IV antibiotics for more than 24 hours prior
to severe sepsis presentation.
We are proposing to adopt the Severe Sepsis and Septic Shock:
Management Bundle measure in the Hospital VBP Program under the Safety
Domain beginning with the FY 2026 program year. The proposed measure
fulfills all the statutory requirements for the Hospital VBP Program
based on our adoption of the measure in the Hospital IQR Program. We
refer readers to section V.K.4.c of the preamble of this proposed rule
where we discussed our proposed baseline periods and performance
periods for this measure if adopted for the Hospital VBP Program.
We invite public comment on this proposal.
b. Summary of Previously Adopted Measures for the FY 2024 and FY 2025
Program Years, and Previously Adopted Measures and Newly Proposed
Measures Beginning with the FY 2026 Program Year
We refer readers to the FY 2022 IPPS/LTCH PPS final rule (86 FR
45281 through 45284) for summaries of previously adopted measures for
the FY 2024 and FY 2025 program years, and to the FY 2023 IPPS/LTCH PPS
final rule (87 FR 49110 through 49111) for summaries of previously
adopted measures for the FY 2024, FY 2025, and FY 2026 program years.
We are not proposing any changes to the FY 2024 and FY 2025 measure
sets. The Hospital VBP Program measure set for the FY 2024 and FY 2025
years would contain the following measures:
[[Page 27030]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.271
We are proposing substantive measure updates to the MSPB and THA/
TKA Complication measures. We are also proposing to adopt the Severe
Sepsis and Septic Shock: Management Bundle. Table V.K.-02 summarizes
the previously adopted and newly proposed Hospital VBP Program measures
for the FY 2026 through FY 2030 program years:
[[Page 27031]]
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c. Proposed Updates to the Data Collection and Submission Requirements
for the HCAHPS Survey Measure (CBE #0166) Beginning With the FY 2027
Program Year
We refer readers to section IX.C.10.h of this proposed rule where
the Hospital IQR Program is proposing to make updates to the
administration and submission requirements of the HCAHPS Survey measure
beginning with the FY 2027 payment determination. We are also proposing
to make the same updates to the form and manner of the administration
of the HCAHPS Survey measure under the Hospital VBP Program. These
changes are--
Adding three new modes of survey administration (Web-Mail
mode, Web-Phone mode, and Web-Mail-Phone mode) in addition to the
current Mail Only, Telephone Only, and Mail-Phone modes, beginning with
January 2025 discharges, because in the 2021 HCAHPS mode experiment,
adding an initial web component to the three current HCAHPS modes of
survey administration resulted in increased response rates;
Removing the requirement that only the patient may respond
to the survey to thus allow a patient's proxy to
[[Page 27032]]
respond to the survey, beginning with January 2025 discharges;
Extending the data collection period for the HCAHPS Survey
from 42 to 49 days, beginning with January 2025 discharges;
Limiting the number of supplemental items to 12 in order
to align with other CMS CAHPS surveys;
Requiring hospitals to collect information about the
language that the patient speaks while in the hospital (whether
English, Spanish, or another language) and requiring the official CMS
Spanish translation of the HCAHPS Survey be administered to all
patients who prefer Spanish, beginning with January 2025 discharges;
and
Removing two currently available options for
administration of the HCAHPS Survey that are not used by participating
hospitals, beginning in January 2025:
++ The Active Interactive Voice Response (IVR) survey mode, also
known as touch-tone IVR, which has not been employed by any hospital
since 2016 and has never been widely used for the HCAHPS Survey, and
++ The ``Hospitals Administering HCAHPS for Multiple Sites'' option
for HCAHPS Survey administration which has not been utilized by any
hospitals since 2019 and has never been widely used.
Data collection and administration of the HCAHPS Survey measure
would remain the same, except for the proposed changes described in
section V.K.3.c of this proposed rule. There would be no changes to the
HCAHPS Survey measure patient eligibility or exclusion criteria. We
note that adopting these changes in the Hospital VBP Program would not
create a new burden for hospitals because they are already required to
report the measure under the Hospital VBP Program. Therefore, this
proposal to adopt technical changes does not require hospitals to
submit any additional information.
Detailed information on the HCAHPS Survey measure data collection
protocols can be found in the current HCAHPS Quality Assurance
Guidelines, located at: https://www.hcahpsonline.org/en/quality-assurance/.
We invite public comment on this proposal.
4. Previously Adopted and Newly Proposed Baseline and Performance
Periods
a. Background
Section 1886(o)(4) of the Act requires the Secretary to establish a
performance period for the Hospital VBP Program that begins and ends
prior to the beginning of such fiscal year. We refer readers to the FY
2017 IPPS/LTCH PPS final rule (81 FR 56998 through 57003) for a
previously finalized 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), the FY 2020 IPPS/
LTCH PPS final rule (84 FR 42393 through 42395), the FY 2021 IPPS/LTCH
PPS final rule (85 FR 58850 through 58854), FY 2022 IPPS/LTCH PPS final
rule (86 FR 45284 through 45290), and FY 2023 IPPS/LTCH PPS final rule
(87 FR 49111 through 49115) for additional previously adopted baseline
and performance periods for the FY 2025 and subsequent program years.
b. Proposed Baseline and Performance Period for the Severe Sepsis and
Septic Shock: Management Bundle Beginning With the FY 2026 Program Year
As discussed in section V.K.3.a of this proposed rule, we are
proposing the Severe and Septic Shock: Management Bundle measure
beginning with the FY 2026 program year. We are proposing to adopt a
12-month baseline period and a 12-month performance period for that
measure. Therefore, for the FY 2026 program year, we are proposing to
adopt a 12-month performance period that runs from January 1, 2024 to
December 31, 2024 and a baseline period that runs from January 1, 2022
to December 31, 2022. We also propose to use 12-month baseline and
performance periods in subsequent program years, beginning with January
1st and ending with December 31st of a given year. We display these
proposed baseline and performance periods in Table V.K.-04.
c. Summary of Previously Adopted Baseline and Performance Periods for
the FY 2025 Program Year and Previously Adopted and Newly Proposed
Baseline and Performance Periods Beginning With the FY 2026 Program
Year
Tables V.K.-03, V.K.-04, V.K.-05, V.K.-06, and V.K.-07 summarize
the baseline and performance periods that we have previously adopted
and those that we are proposing to adopt.
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BILLING CODE 4120-01-C
[[Page 27035]]
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5. Performance Standards for the Hospital VBP Program
a. Background
We refer readers to sections 1886(o)(3)(A) through 1886(o)(3)(D) of
the Act for the statutory provisions governing performance standards
under the Hospital VBP Program. 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. We refer readers to the FY 2013 IPPS/LTCH PPS
final rule, FY 2014 IPPS/LTCH PPS final rule, and FY 2015 IPPS/LTCH PPS
final rule (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 2022 IPPS/LTCH PPS final rule (86 FR
45290 through 45292) for previously established performance standards
for the FY 2024 program year. We also refer readers to the FY 2023
IPPS/LTCH PPS final rule (87 FR 49115 through 49118) for the previously
established performance standards for the FY 2025 program year. We
refer readers to the FY 2021 IPPS/LTCH PPS final rule for further
discussion on performance standards for which the measures are
calculated with lower values representing better performance (85 FR
58855).
b. Technical Corrections
(1) Background
After publication of the FY 2023 IPPS/LTCH PPS final rule, we
determined there was a display error in the performance standards for
the FY 2025 program year and an incorrectly labeled title for the FY
2028 program year. We are issuing technical corrections in accordance
with 42 CFR 412.160 of our regulations that allows for updates to a
performance standard if making a single correction for calculation
errors or other problems that would significantly change the
performance standards. Technical corrections are being issued for these
performance standards tables to ensure that hospitals have the correct
performance standards for the applicable performance periods. The
corrected performance standards are displayed in sections V.K.5.b.(2)
and V.K.5.b.(3) of this proposed rule.
(2) Technical Correction to the Previously Established and Estimated
Performance Standards for the FY 2025 Program Year
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49115 through
49116), we established performance standards for the measures in the FY
2025 program year in Table V.I.-09. Although the asterisk in this table
denotes that the performance standards for the Safety domain measures
were calculated using CY 2019 data, the numbers for the five hospital-
associated infection (HAI) measures incorrectly displayed performance
standards using CY 2021 data. We are therefore issuing a correction to
display the correct performance standards using CY 2019 data for the FY
2025 program year. The previously established and newly corrected
performance standards for the measures in the FY 2025 program year have
been updated and are set out in Table V.K-08. All other performance
standards for the FY 2025 program year, including the HCAHPS
Performance Standards for the Person and Community Engagement domain,
were correctly displayed in the FY 2023 IPPS/LTCH PPS final rule (87 FR
49115 through 49117).
[[Page 27036]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.278
(3) Technical Correction to the Newly Established Performance Standards
for Certain Measures for the FY 2028 Program Year
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49118), we
established the performance standards for certain measures for the FY
2028 program in Table V.I.-13. The title of Table V.I.-13 incorrectly
labeled the program year as FY 2027. We are therefore issuing a
correction to display the title of the table as, Newly Established
Performance Standards for the FY 2028 Program Year. The performance
standards for the measures in the FY 2028 program year were correctly
displayed and remain as finalized in the FY 2023 IPPS/LTCH PPS final
rule and are set out in section V.K.5.e of this proposed rule.
c. Previously Established and Estimated Performance Standards for the
FY 2026 Program Year
In the FY 2021 IPPS/LTCH PPS final rule (84 FR 42398 through
42399), we established performance standards for the FY 2026 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 Hospital). We note that the performance standards for the MSPB
Hospital measure are based on performance period data. Therefore, we
are unable to provide numerical equivalents for the standards at this
time. The previously established and estimated performance standards
for the measures in the FY 2026 program year have been updated and are
set out in Tables V.K.-09, V.K.-10, V.K.-11, and V.K.-12.
[[Page 27037]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.279
The HCAHPS Base Score is calculated using the eight dimensions of
the HCAHPS measure. For each of the eight dimensions, Achievement
Points (0-10 points) and Improvement Points (0-9 points) are
calculated, the larger of which is then summed across the eight
dimensions to create the HCAHPS Base Score (0-80 points). Each of the
eight dimensions is of equal weight; therefore, the HCAHPS Base Score
ranges from 0 to 80 points. HCAHPS Consistency Points are then
calculated, which range from 0 to 20 points. The Consistency Points
take into consideration the scores of all eight Person and Community
Engagement dimensions. The final element of the scoring formula is the
summation of the HCAHPS Base Score and the HCAHPS Consistency Points,
which results in the Person and Community Engagement domain score that
ranges from 0 to 100 points.
[GRAPHIC] [TIFF OMITTED] TP01MY23.280
[[Page 27038]]
d. Previously Established Performance Standards for Certain Measures
for the FY 2027 Program Year
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 2022 IPPS/LTCH PPS final rule (86 FR 45294 through
45295), we established performance standards for the FY 2027 program
year for the Clinical Outcomes domain measures (MORT-30-AMI, MORT-30-
HF, MORT-30-PN (updated cohort), MORT-30-COPD, MORT-30- CABG, and COMP-
HIP-KNEE) and the Efficiency and Cost Reduction domain measure (MSPB).
We note that the performance standards for the MSPB measure are based
on performance period data. Therefore, we are unable to provide
numerical equivalents for the standards at this time. We also note that
the performance standard calculation methodology for the proposed
substantive updates to the MSPB measure would not change if the
substantive measure updates are adopted. The updated performance
standards for the substantive measure updates to the MSPB measure are
not yet available for FY 2028. The previously established performance
standards for these measures are set out in Table V.K.-11.
[GRAPHIC] [TIFF OMITTED] TP01MY23.281
e. Previously Established Performance Standards for Certain Measures
for the FY 2028 Program Year
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 2023 IPPS/LTCH PPS final rule (86 FR 49118), we
established performance standards for the FY 2028 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 Hospital). We
refer readers to section V.K.5.b.(3) of this proposed rule where we
announce that we are issuing a technical correction with respect to the
title of Table V.I.-13 in the FY 2023 IPPS/LTCH PPS final rule. We note
that the performance standards for the MSPB Hospital 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
Table V.K.-12.
[[Page 27039]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.282
6. Proposed Change to the Scoring Methodology
a. Background
In the Hospital Inpatient VBP Program final rule, we adopted a
methodology for scoring clinical process of care, patient experience of
care, and outcome measures (76 FR 26513 through 26531). We also refer
readers to our codified requirements for performance scoring under the
Hospital VBP Program at 42 CFR 412.165. We are proposing modifications
to the existing scoring methodology to reward excellent care in
underserved populations.
b. Proposal To Revise the Hospital VBP Program Scoring Methodology To
Add a New Adjustment That Rewards Hospitals Based on Their Performance
and the Proportion of Their Patients Who Are Dually Eligible for
Medicare and Medicaid
(1) Background and Overview
Healthcare disparities exist among patients throughout the United
States, and certain patient characteristics such as socioeconomic
status are associated with worse health outcomes.190 191
Research shows that patients experiencing worse health outcomes often
face barriers to accessing health care services and have access to
fewer healthcare providers.192 193 In leveraging our VBP
programs to improve the quality of care and access to that care, we are
interested in utilizing health equity-focused scoring modifications to
create better health outcomes for all populations in these programs.
The Office of the Assistant Secretary for Planning and Education's
(ASPE) March 2020 Report to Congress: Social Risk Factors and
Performance in Medicare's Value-Based Purchasing Program, provides
insight into whether and how value-based programs should account for
social risk factors such as income, housing, transportation, and
nutrition, that might adversely affect access to health care services
or health outcomes.\194\ A key finding was that dual enrollment status
(that is, enrollment in both Medicare and Medicaid) is a strong
predictor of poorer healthcare outcomes in Medicare's VBP programs,
even when accounting for other social and functional risk factors. Dual
enrollment status, an indicator at the individual level, also
represents one way to capture common socioeconomic challenges that
could affect an individual's ability to access care.
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\190\ Hill, L., Artiga, S., and Haldar, S. (2022) Key Facts on
Health and Health Care by Race and Ethnicity. Kaiser Family
Foundation. Available at: https://www.kff.org/report-section/key-
facts-on-health-and-health-care-by-race-and-ethnicity-health-status-
outcomes-and-behaviors/
#:~:text=Health%20Status%2C%20Outcomes%2C%20and%20Behaviors%20Black%2
0people%20fared,than%20White%20people%20for%20most%20examined%20healt
h%20measures.
\191\ National Academies of Sciences, Engineering, and Medicine.
(2017) Accounting for Social Risk Factors in Medicare Payment,
Washington, DC: National Academies Press. 47-84. Available at:
http://nap.nationalacademies.org/21858.
\192\ Kaiser Family Foundation. (2020) Disparities in Health and
Health Care: Five Key Questions and Answers. Available at: https://files.kff.org/attachment/Issue-Brief-Disparities-in-Health-and-Health-Care-Five-Key-Questions-and-Answers.
\193\ Thompson, T., McQueen, A., Croston, M., Luke, A., Caito,
N., Quinn, K., Funaro, J., & Kreuter, M.W. (2019). Social needs and
health-related outcomes among Medicaid beneficiaries. Health
Education & Behavior: The Official Publication of the Society for
Public Health Education, 46(3), 436-444. https://doi.org/10.1177/1090198118822724.
\194\ U.S. Department of Health & Human Services. (2020)
Executive Summary Report to Congress: Social Risk Factors and
Performance in Medicare's Value-Based Purchasing Program. Office of
the Assistant Secretary for Planning and Evaluation. Available at:
https://aspe.hhs.gov/sites/default/files/migrated_legacy_files//195046/Social-Risk-in-Medicare%E2%80%99s-VBP-2nd-Report-Executive-Summary.pdf.
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In the 2016 report to Congress on Social Risk Factors and
Performance Under Medicare's Value-Based Purchasing Programs, ASPE
reported that beneficiaries with social risk factors, including dual
enrollment in Medicare and Medicaid as a marker for low income,
residence in a low-income area, Black race, Hispanic ethnicity,
disability, and residence in a rural area, had worse outcomes and were
more likely to be cared for by lower quality providers.\195\ Patients
with dual eligibility status (DES), those who qualify for both Medicare
and Medicaid coverage, are particularly vulnerable and experience
significant disparities. Patients with DES are more likely to be
disabled or functionally impaired, more
[[Page 27040]]
likely to be medically complex, and have greater social needs compared
to other beneficiaries.\196\ Patients with DES are one of the most
vulnerable populations.197 198 Despite the multitude of
indicators available for assessing vulnerability and health risks, dual
eligibility remains the strongest predictor of negative health
outcomes.\199\
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\195\ Office of the Assistant Secretary for Planning and
Evaluation, U.S. Department of Health & Human Services. First Report
to Congress on Social Risk Factors and Performance in Medicare's
Value-Based Purchasing Program. 2016. Available at: https://aspe.hhs.gov/sites/default/files/migrated_legacy_files/171041/ASPESESRTCfull.pdf.
\196\ Johnston, K.J., & Joynt Maddox, K.E. (2019). The Role of
Social, Cognitive, And Functional Risk Factors In Medicare Spending
For Dual And Nondual Enrollees. Health Affairs (Project Hope),
38(4), 569-576. https://doi.org/10.1377/hlthaff.2018.05032.
\197\ Johnston, K.J., & Joynt Maddox, K.E. (2019). The Role of
Social, Cognitive, and Functional Risk Factors in Medicare Spending
for Dual and Nondual Enrollees. Health Affairs (Project Hope),
38(4), 569-576. https://doi.org/10.1377/hlthaff.2018.05032.
\198\ Wadhera, R.K., Wang, Y., Figueroa, J.F., Dominici, F.,
Yeh, R.W., & Joynt Maddox, K.E. (2020). Mortality and
Hospitalizations for Dually Enrolled and Nondually Enrolled Medicare
Beneficiaries Aged 65 Years or Older, 2004 to 2017. JAMA, 323(10),
961-969. https://doi.org/10.1001/jama.2020.1021.
\199\ Office of the Assistant Secretary for Planning and
Evaluation, U.S. Department of Health & Human Services. Second
Report to Congress on Social Risk Factors and Performance in
Medicare's Value-Based Purchasing Program. 2020. Available at:
https://aspe.hhs.gov/reports/second-report-congress-social-risk-medicares-value-based-purchasing-programs.
---------------------------------------------------------------------------
Executive Order 13985 of January 20, 2021 on Advancing Racial
Equity and Support for Underserved Communities Through the Federal
Government, defines ``equity'' as ``the consistent and systematic fair,
just, and impartial treatment of all individuals, including individuals
who belong to underserved communities that have been denied such
treatment, such as Black, Latino, and Indigenous and Native American
persons, Asian Americans and Pacific Islanders and other persons of
color; members of religious minorities; lesbian, gay, bisexual,
transgender, and queer (LGBTQ[I] \200\+) persons; persons with
disabilities; persons who live in rural areas; and persons otherwise
adversely affected by persistent poverty or inequality)'' (86 FR 7009).
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\200\ We note that the original, cited definition only
stipulates, ``LGBTQ+'', however, HHS and the White House now
recognize individuals who are intersex/have intersex traits.
Therefore, we have updated the term to reflect these changes.
---------------------------------------------------------------------------
CMS defines ``health equity'' as the attainment of the highest
level of health for all people, where everyone has a fair and just
opportunity to attain their optimal health regardless of race,
ethnicity, disability, sexual orientation, gender identity,
socioeconomic status, geography, preferred language, or other factors
that affect access to care and health outcomes.\201\ To achieve this
vision, we are working to advance health equity by designing,
implementing, and operationalizing policies and programs that support
health for all individuals served by our programs, reducing avoidable
differences in health outcomes experienced by people who are
disadvantaged or underserved, and providing the care and support that
our enrollees need to thrive.
---------------------------------------------------------------------------
\201\ Health Equity Strategic Pillar. Centers for Medicare &
Medicaid Services. https://www.cms.gov/pillar/health-equity.
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Achieving health equity, addressing health disparities, and closing
the performance gap in the quality of care provided to populations that
have been disadvantaged, marginalized, and/or underserved by the
healthcare system continue to be priorities for CMS as outlined in the
CMS National Quality Strategy.\202\ The Hospital IQR Program adopted
three new health-equity focused quality measures in the FY 2023 IPPS/
LTCH PPS final rule (87 FR 49191 through 49220). To further align with
our goals to achieve health equity, address health disparities, and
close the performance gap on the quality of care, we are proposing to
add Health Equity Adjustment bonus points to a hospital's Total
Performance Score (TPS) that would be calculated using a methodology
that incorporates a hospital's performance across all four domains for
the program year and its proportion of patients with DES.
---------------------------------------------------------------------------
\202\ Centers for Medicare & Medicaid Services. (2022) CMS
National Quality Strategy. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/CMS-Quality-Strategy.
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We propose to define the points that a hospital can earn based on
its performance and proportion of patients with DES as the Health
Equity Adjustment (HEA) bonus points. We believe the awarding of these
HEA bonus points is consistent with our strategy to advance health
equity and will incentivize high-quality care across all
hospitals.\203\
---------------------------------------------------------------------------
\203\ Centers for Medicare & Medicaid Services. (2022) CMS
Outlines Strategy to Advance Health Equity, Challenges Industry
Leaders to Address Systemic Inequities. Available at: https://
www.cms.gov/newsroom/press-releases/cms-outlines-strategy-advance-
health-equity-challenges-industry-leaders-address-systemic-
inequities#:~:text=In%20effort%20to%20address%20systemic%20inequities
%20across%20the,Medicare%2C%20Medicaid%20or%20Marketplace%20coverage%
2C%20need%20to%20thrive.
---------------------------------------------------------------------------
We propose to define the term ``measure performance scaler'' as the
sum of the points awarded to a hospital for each domain based on the
hospital's performance on the measures in that domain. The number of
points that we would award to a hospital for each domain would be 4, 2,
or 0, based on whether the hospital's performance is in the top third,
middle third, and bottom third of performance, respectively, of all
hospitals for the domain. Specifically, a hospital would receive 4
points if its performance falls in the top third, 2 points if its
performance falls in the middle third, or 0 points if its performance
falls in the bottom third of performance of all hospitals for the
domain. Hospitals could thus receive a maximum of 16 measure
performance scaler points for being a top performer across all four
domains.
We propose to define the term ``underserved multiplier'' as the
number of inpatient stays for patients with DES out of the total number
of inpatient Medicare stays during the calendar year two years before
the start of the respective program year. For example, for the FY 2026
program year, we would use the total number of inpatient stays from
January 1, 2024 through December 31, 2024. A logistic exchange function
would be then applied to the number of patients with DES. Data on DES
is sourced from the State Medicare Modernization Act (MMA) file of dual
eligible beneficiaries, which each of the 50 States and the District of
Columbia submit to CMS at least monthly. This file is utilized to deem
individuals with DES automatically eligible for the Medicare Part D Low
Income Subsidy, as well as other CMS program needs and thus can be
considered the gold standard for determining DES. We note that this is
the same file used for determining DES in the Hospital Readmissions
Reduction Program. More detail on this file can be found on the CMS
website at https://www.cms.gov/Medicare-Medicaid-Coordination/Medicare-and-Medicaid-Coordination/Medicare-Medicaid-Coordination-Office/DataStatisticalResources/StateMMAFile and at the Research Data
Assistance Center website at https://resdac.org/cms-data/variables/monthly-medicare-medicaid-dual-eligibility-code-january.
We propose that the HEA bonus points would be calculated as the
product of the measure performance scaler and the underserved
multiplier. The HEA bonus points are designed to award higher points
for hospitals that (1) serve greater percentages of underserved
populations, which are defined here for the purpose of this proposal as
hospital patients with DES who receive inpatient services, and (2) have
higher quality performance.
The proposed methodology for the calculation of the HEA bonus
points is
[[Page 27041]]
described in sections V.K.6.b.(3) and V.K.6.b.(4) of this proposed
rule. By providing HEA bonus points to hospitals that serve higher
proportions of patients with DES and perform well on quality measures,
we believe we can begin to bridge performance gaps and better address
the social needs of patients, in alignment with our National Quality
Strategy.\204\ We are committed to achieving health equity for
hospitalized patients by supporting hospitals in quality improvement
activities to reduce health disparities, enabling patients and their
family members and caregivers to make more informed decisions, and
promoting provider accountability for health care disparities. We
believe this proposal would continue encouraging high quality
performance and provide an incentive for hospitals to provide high
quality care to all of the populations they serve. We also believe this
proposal aligns with the broader CMS health equity goals to close gaps
in health care quality and promote the highest quality outcomes for all
people.\205\
---------------------------------------------------------------------------
\204\ Centers for Medicare & Medicaid Services. (2022) What is
the CMS National Quality Strategy? Available at: https://
www.cms.gov/medicare/quality-initiatives-patient-assessment-
instruments/value-based-programs/cms-quality-strategy.
\205\ Centers for Medicare & Medicaid Services. (2022) CMS
Outlines Strategy to Advance Health Equity, Challenges Industry
Leaders to Address Systemic Inequities. Available at: https://
www.cms.gov/newsroom/press-releases/cms-outlines-strategy-advance-
health-equity-challenges-industry-leaders-address-systemic-
inequities#:~:text=CMS%20Health%20Equity%20Strategy%3A%20CMS%20Admini
strator%20Chiquita%20Brooks-
LaSure,access%20to%20care.%20They%20include%20the%20following%20actio
ns%3A.
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We are proposing to adopt this adjustment to the Hospital VBP
Program scoring methodology beginning with the FY 2026 program year.
We note that the Shared Savings Program recently adopted a health
equity adjustment for Accountable Care Organizations that report all-
payer electronic clinical quality measures (eCQMs)/Merit-based
Incentive Payment System CQMs, are high-performing on quality, and
serve a large proportion of underserved beneficiaries, as defined by
dual-eligibility, enrollment in the Medicare Part D low income subsidy
(LIS) (meaning the individual is enrolled in a Part D plan and receives
LIS) and an Area Deprivation Index (ADI) score of 85 or above, as
detailed in the CY 2023 Physician Fee Schedule final rule (87 FR 69838
through 69857). The proposed definitions and calculations in this
proposed rule are similar to the health equity adjustment finalized in
the Shared Savings Program. Additionally, a similar health equity
adjustment is being proposed in the FY 2024 Skilled Nursing Facility
Value-Based Purchasing (SNF VBP) Program's Prospective Payment System
(PPS) proposed rule.
(2) Determining the Underserved Multiplier and Measure Performance
Scaler
At this time, for purposes of the Hospital VBP Program's proposed
health equity adjustment, we are unable to obtain patients'
neighborhood-level data necessary to incorporate the ADI under all of
the Hospital VBP Program measures as currently specified. We note that
the use of both the LIS designation and DES could be preferable to
using DES alone, as doing so reduces variability because of the
differences in Medicaid eligibility across States; however, given that
the DES data are readily available and already used in the Hospital
Readmissions Reduction Program, we are proposing to only use DES data
at this time. As DES is a strong indicator of poorer healthcare
outcomes in Medicare's VBP programs,\206\ we believe it can serve as an
appropriate underserved multiplier on its own in the Hospital VBP
Program. If adopted as proposed, we would continue to consider whether
to incorporate the LIS, ADI, and other indicators for underserved
populations in future health equity adjustment proposals for the
Hospital VBP Program. We are seeking comment on the use of these
additional indicators in section V.K.6.b.(7) of this proposed rule.
---------------------------------------------------------------------------
\206\ Assistant Secretary for Planning and Evaluation. (2020)
Social Risk and Performance in Medicare's Value-Based Purchasing
Programs. Available at: https://aspe.hhs.gov/sites/default/files/
migrated_legacy_files//195036/Social-Risk-in-Medicare%E2%80%99s-VBP-
2nd-Report-3-
Pager.pdf#:~:text=After%20accounting%20for%20additional%20social%20an
d%20functional%20risk,and%20resource%20use%20measures%20in%20Medicare
%E2%80%99s%20VBP%20programs.
---------------------------------------------------------------------------
The measure performance scaler points would be available to all
hospitals that exhibit high quality care across the entire patient
population. Each domain would be assessed independently such that a
hospital that performs in the top or middle third of performance for
one domain would be eligible for measure performance scaler points even
if it does not perform in the top or middle third of performance for
any other domain. Similarly, if a hospital performs in the top third of
performance for all domains, they would receive measure performance
scaler points for all domains. Alternatively, a hospital which is in
the bottom third of performance for all four domains would not receive
any performance scaler points. A hospital's performance is relative to
the performance of all other hospitals in the Hospital VBP Program, and
this measure performance scaler methodology is further defined in
section V.K.6.b.(3). of this proposal.
The underserved multiplier would be calculated using a similar
approach as the Hospital Readmissions Reduction Program's dual
proportion calculation, which identifies patients with DES based on the
dual-eligibility codes in the Medicare Beneficiary Summary File.\207\
These data would provide us with the number of inpatient stays for
patients with DES out of the total number of inpatient Medicare stays,
which is all Medicare FFS and Medicare Advantage stays. A stay is
identified as being dually eligible if it is for a patient with
Medicare and full Medicaid benefits for the month the patient was
discharged from the hospital, unless the patient died in the month of
discharge, in which case DES is determined using the previous month. We
are proposing that the dual proportion is calculated with stays that
occurred during the calendar year two years before the start of the
respective program year. A logistic exchange function would then be
applied to this dual proportion. We would then multiply this
underserved multiplier by the aforementioned measure performance scaler
to determine the hospital's HEA bonus points. This methodology is
described further in section V.K.6.b.(3) of this proposed rule. Unlike
the Shared Savings Program's policy, we note that we are not proposing
a minimum percent of patients with DES that a hospital must treat, such
that a hospital serving one percent of patients with DES and a hospital
serving 80 percent of patients with DES are both eligible for HEA bonus
points in order to give every hospital an opportunity to participate in
this proposed scoring change.
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\207\ Research Data Assistance Center. (2023) Medicare-Medicaid
Dual Eligibility Code--January. Available at: https://resdac.org/cms-data/variables/medicare-medicaid-dual-eligibility-code-january.
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Through the proposed HEA bonus points, we seek to improve outcomes
by providing incentives to hospitals to strive for high performance
across the domains as well as to care for a high proportion of
underserved populations, as defined by dual eligibility status for the
purposes of this proposal. While we recognize and discuss in this
proposed rule that there are many different indicators that could be
used to measure underserved populations, we note that we are referring
to patients with DES when we use the term ``underserved
[[Page 27042]]
population'' throughout this proposal. As noted in section V.K.6.b.(1),
DES is a good indicator of socioeconomic disadvantage, as dual
eligibility is associated with a patient's inability to access
care.\208\
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\208\ U.S. Department of Health & Human Services. (2020)
Executive Summary: Report to Congress: Social Risk Factors and
Performance in Medicare's Value-Based Purchasing Program. Available
at: https://aspe.hhs.gov/sites/default/files/migrated_legacy_files//195046/Social-Risk-in-Medicare%E2%80%99s-VBP-2nd-Report-Executive-Summary.pdf.
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The HEA bonus point calculation is purposefully designed to not
reward poor quality. Likewise, if the underserved population represents
only a small proportion of a hospital's total population, such as a
hospital only serving five percent of patients with DES, then the
health equity adjustment would be lower because the bonus points are
not designed to reward hospitals that serve a low number of underserved
patients. Instead, the health equity adjustment is intended to
incentivize hospitals to improve their overall quality of care across
the entire hospital's population by bridging performance gaps and
improving overall health outcomes for patients while reducing the
unintended risk of decreased access to care for underserved patients.
As described more fully in this section of this proposed rule, the
combination of the measure performance scaler and the underserved
multiplier would result in a range of possible HEA bonus points that is
designed to give the highest rewards to hospitals caring for a larger
percentage of underserved individuals and delivering high quality care.
We are also proposing to codify at 42 CFR 412.160 of our
regulations the definitions of these new scoring methodology terms, and
we are proposing to codify at 42 CFR 412.165(b) of our regulations the
updates to the steps for performance scoring with the incorporated
health equity scoring adjustments.
(3) Proposed Application of Health Equity Adjustment
After considering how to modify the existing quality performance
scoring in the Hospital VBP Program to more fully assess the quality of
care provided by hospitals that serve a high proportion of underserved
patients, we are proposing to adjust the sum of an individual
hospital's domain scores based on their overall performance within each
domain, with a maximum potential of 16 measure performance scaler
points across the four domains. For hospitals that only get three
domain scores because they do not meet measure minimums for all four
domains, the maximum number of measure performance scaler points that a
hospital could earn would be 12.
We propose to calculate a hospital's HEA bonus points by
multiplying the measure performance scaler by the hospital's
underserved multiplier. As explained more fully in this section, we are
also proposing that the number of HEA bonus points that could then be
added to a hospital's TPS for a program year would be capped at 10. We
believe that capping the total number of potential HEA bonus points at
10 recognizes the effort hospitals put forth to serve large populations
of patients with DES, while not overly inflating TPSs. We believe that
limiting the number of HEA bonus points that a hospital is eligible to
receive to a maximum of 10 points creates a balanced incentive that
increases a hospital's TPS without dominating the score and creating
unintended incentives. Additionally, the proposed maximum of 10 HEA
bonus points aligns with the magnitude of points we award for a given
measure in the existing Hospital VBP Program's scoring methodology.
Therefore, we propose that the maximum number of HEA bonus points that
could be added to the TPS would be 10 points. Under this proposal, no
hospital could earn more than a 110 maximum final TPS that includes the
HEA bonus points. We refer readers to section V.K.6.b.(6) of this
proposal and to our proposed regulations at 42 CFR 412.160 where we
propose to modify the TPS maximum to 110. This proposed maximum at 110
would ensure that the application of the health equity adjustment
allows for a hospital that receives the maximum number of points in
weighted domain scores to still have the opportunity to receive the
additional 10 HEA bonus points.
(4) Proposed Calculation Steps and Examples
In this section, we outline the calculation steps and provide
examples of the determination of health equity adjustment bonus points
and the application of these bonus points to a hospital's TPS. These
example calculations illustrate possible health equity adjustment bonus
points resulting from the proposed approach, which accounts for both a
hospital's quality performance and a logistic exchange function applied
to its proportion of patients with DES. For each hospital, the bonus
will be calculated according to the following formula:
Health Equity Adjustment (HEA) bonus points = measure performance
scaler x underserved multiplier
The proposed calculation of the HEA bonus points would be as
follows:
Step One--Calculate the Number of Measure Performance Scaler Points for
Each Hospital
We propose to first assign a measure performance scaler to each
domain based on a hospital's domain level scores. We would assign point
values to hospitals for each domain based on their performance on the
measures in that domain. A hospital would receive 4, 2, or 0 points for
top third, middle third, or bottom third of performance, respectively,
on each domain such that a hospital could receive a maximum of 16
measure performance scaler points for being in the top third of
performance for all of the four domains, as depicted in this sample
equation and in Table V.K.-13. We note that if a hospital performs in
the bottom third of performance in all four domains, that hospital
would receive a total of 0 out of 16 measure performance scaler points.
Additionally, hospitals that can be scored in only three domains could
receive a maximum of 12 measure performance scaler points for being in
the top third of performance for each domain.
Hospital 1 (High Performance):
4 pts in Clinical Domain + 4 pts in Cost & Efficiency Domain + 4 pts
Safety Domain + 4 pts in Person and Community Engagement = 16 total
performance scaler points for Hospital 1
Hospital 2 (Medium Performance):
4 pts in Clinical Domain + 2 pts in Cost & Efficiency Domain + 2 pts in
Safety Domain + 0 in Person & Community Engagement Domain = 8 total
performance scaler points for Hospital 2
Hospital 3 (Low Performance):
0 pts in Clinical Domain + 0 pts in Cost & Efficiency Domain + 2 pts in
Safety Domain + 0 pts in Person & Community Engagement Domain = 2 total
performance scaler points for Hospital 3
Table V.K.-13 displays the measure performance scaler that three
example hospitals would receive for each domain based on their
performance.
[[Page 27043]]
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Step Two--Calculate the Underserved Multiplier
Second, we propose to calculate an underserved multiplier for each
hospital, which we propose to define as the logistic function applied
to the proportion of inpatient stays for patients with DES during the
calendar year two years before the applicable program year divided by
the total number of inpatient Medicare stays, which is all Medicare FFS
and Medicare Advantage stays, at each hospital. For example, for the FY
2026 program year, we would use the total number of inpatient stays
from January 1, 2024, through December 31, 2024. The primary goal of
the underserved multiplier is to appropriately reward hospitals that
are able to overcome the challenges of caring for high proportions of
patients with DES. By utilizing a logistic exchange function to
calculate the underserved multiplier, hospitals who care for the
highest proportions of patients with DES would have the opportunity for
the most HEA bonus points. Thus, we are proposing to utilize a logistic
exchange function to calculate the underserved multiplier for scoring
hospitals such that there would be a lower rate of increase at the
beginning and the end of the curve.
The underserved multiplier calculation would thus be:
Underserved Multiplier = Logistic Function (Number of Inpatient Stays
for Patients with DES/Total Medicare Inpatient Stays)
To determine the proportion of the number of inpatient stays for
patients with DES, we propose to use patient level data on the
proportion of all Medicare FFS and Medicare Advantage inpatient stays
in a hospital in which the patient was dually eligible for Medicare and
full Medicaid benefits. For the HEA adjustment, the dual proportion is
calculated with stays that occurred during the calendar year two years
before the applicable the program year, and then a logistic exchange
function is applied to that proportion. For example, for the FY 2026
program year, the dual proportion data would be calculated using stays
from January 1, 2024, through December 31, 2024. In alignment with the
Hospital Readmissions Reduction Program approach to determine the dual
proportion, a stay is identified as being dually eligible if it is for
a patient with Medicare and full Medicaid benefits for the month the
patient was discharged from the hospital, unless the patient died in
the month of discharge, in which case DES is determined using the
previous month. Using the proportion of DES patients calculated among
both Medicare FFS and Medicare Advantage patients more accurately
represents the proportion of patients with DES served by the hospital
compared to only using the proportion of Medicare FFS stays as well as
that DES data for Medicare Advantage patients are readily available.
This is the approach finalized by the Hospital Readmissions Reduction
Program to determine the dual proportion in the FY 2018 IPPS/LTCH PPS
final rule (82 FR 38228 through 38229).
We are proposing to utilize a logistic exchange function to
calculate the underserved multiplier for scoring hospitals such that
there would be a lower rate of increase at the beginning and the end of
the curve. A logistic exchange function assumes a large difference
between hospitals treating the most and fewest patients with DES and
produces a large score difference between the groups, but less
difference within the groups. This would ensure that there would be
very few differences in the points awarded between hospitals with
similar proportions of patients served. For example, there would be
little difference in the points awarded to a hospital serving 59
percent of individuals with DES and a hospital serving 61 percent of
individuals with DES. Utilizing a logistic function allows for
hospitals in the middle third of performance to have a strong
association between an increase in HEA bonus points based on proportion
of patients with DES served. We note that there is no minimum or
maximum threshold on the percentage of individuals with DES that a
hospital serves for the calculation of HEA bonus points. We believe
this gives all hospitals an opportunity and incentive to serve a
percentage of patients with DES. We also considered linear and actual
scoring alternatives to calculate the underserved multiplier, as
displayed in Figure V.K.-01, but we believe logistic function scoring
applied to the proportion of patients with DES (dotted line in Figure
V.K.-01) provides the best opportunity for hospitals serving large
proportions of patients with DES to receive HEA bonus points. We note
that a scoring approach using actual proportion of patients with DES,
as depicted by the dashed line in Figure V.K.-01, assumes that the
hospitals' treatment of patients with DES is reflected simply in their
actual share in the patient population. A linear scoring approach, as
depicted by the solid line in Figure V.K.-01, assumes that a hospital's
treatment of patients with DES is correlated by rank.
[[Page 27044]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.284
Step Three--Calculate the Health Equity Adjustment Bonus Points
We are proposing to calculate the HEA bonus points that apply to a
hospital for a program year by multiplying the measure performance
scaler total by the underserved multiplier. We believe that combining
the measure performance scaler and the underserved multiplier to
calculate the HEA bonus points allows for us to reward those hospitals
with high quality performance across the four domains that are also
serving high populations of patients with DES. This approach also
incentivizes other hospitals to improve their performance (by a higher
measure performance scaler) and serve more patients with DES (by a
higher underserved multiplier) in order to earn greater HEA bonus
points. The product of the measure performance scaler points and the
underserved multiplier proportion results is the HEA bonus point total
capped at 10 points. Table V.K.-14 displays the HEA bonus points that
six example hospitals would receive based on their measure performance
scaler and underserved multiplier, with the cap of 10 total possible
HEA bonus points. For example, Hospital 1 in Table V.K.-14 that has
performed in the top third of performance in all four of the domains
and whose population of patients with DES is 80 percent after applying
the logistic function would earn 16 measure performance scaler points,
which would then be multiplied by an underserved multiplier of 0.8,
resulting in 12.8 HEA bonus points that would then be reduced to 10 HEA
bonus points per the 10 HEA bonus point cap.
Health Equity Adjustment (HEA) bonus points = Performance Scaler x
Underserved Multiplier
[GRAPHIC] [TIFF OMITTED] TP01MY23.285
[[Page 27045]]
Step Four--Add Health Equity Adjustment Bonus Points to the Total of
the Weighted Domain Scores To Calculate the TPS
Finally, we are proposing that we would add a hospital's HEA bonus
points as calculated in Step Three of this section to the total of the
four weighted domain scores that we sum to calculate the hospital's
TPS. The sum of the weighted domain scores, which would remain as
outlined in our regulations at 42 CFR 412.165(b)(4), and the HEA bonus
points would be the hospital's TPS for the program year. We are not
proposing to revise the process for converting the TPS into the
incentive payment adjustment percentage. As established in our
regulations at 42 CFR 412.162(b)(3), the value-based incentive payment
percentage is calculated as the product of: the applicable percent as
defined in 42 CFR 412.160, the hospital's TPS, and the linear exchange
function slope. We note that we are proposing to modify the definition
of TPS in our regulations at 42 CFR 412.160 to align with the proposal
to modify the TPS range to be 0-110 beginning with the FY 2026 program
year as discussed in section V.K.6.b.5 of this proposed rule. Table
V.K.-15 displays the HEA bonus points and TPSs awarded to the six
example hospitals from Table V.K.-14.
Health equity adjustment bonus points + Total of Weighted Domain Scores
= Total Performance Score
[GRAPHIC] [TIFF OMITTED] TP01MY23.286
By adding these HEA bonus points to the total of each hospital's
weighted domain scores, hospitals can be rewarded for delivering
excellent care to large proportions of underserved populations. We
believe a scoring adjustment designed to advance health equity through
the Hospital VBP Program is consistent with CMS's goal to advance
health equity by providing an incentive for hospitals to care for
underserved populations and to provide high quality care to all of the
populations they serve.
We invite public comment on this proposed scoring change which we
are also proposing to codify in our regulations at 42 CFR 412.160 and
412.165(b).
(5) Impact Analysis of Proposed Scoring Methodology Change
We conducted analyses to simulate the proposed scoring methodology
change for HEA bonus points in the Hospital VBP Program to assess the
potential impact on hospitals and payments using FY 2023 program year
data. We also compared these impacts to the impacts of the existing
scoring methodology, as well as a similar alternative that simulates
only awarding 4 measure performance scaler points to the hospitals in
the top third of performance for each domain, while hospitals in the
middle and bottom third of performance received 0 measure performance
scaler points. We modeled this alternative methodology in order to
contextualize the request for additional information in section
V.K.6.b.(7) of this proposal. The proposal and alternative method both
included HEA bonus points comprised of the measure performance scaler
and the underserved multiplier based on the hospital's proportion of
patients who are dually eligible and their performance on existing
Hospital VBP Program measures. For purposes of this simulation, we used
the dual proportion data that were calculated using Medicare inpatient
stays for the Hospital Readmissions Reduction Program FY 2023
performance period which included stays between June 1, 2018, to
December 1, 2019, and July 1, 2020, to June 30, 2021.\209\ A logistic
exchange function was then applied to the dual proportion. This
analysis also used one-year base operating DRG payments for FY 2021
from October 1, 2020, to September 30, 2021, to calculate the bonus
payments and penalties. Additionally, the TPS and quality domain scores
data used in this analysis were calculated for the FY 2023 Hospital VBP
Program. The proposal and alternative method both include a cap of 10
possible HEA bonus points. We note that while this simulation uses
multi-year Hospital Readmissions Reduction Program data for the
calculation of the dual proportion, we are proposing to use dual
proportion data from the calendar year two years ahead of the program
year, as discussed in section V.K.6.b(2) of this proposed rule. The
results of these analyses are outlined in this section and described
further in Tables V.K.-16 and V.K.-17. Based on this initial modeling,
the average TPS would increase with the addition of the HEA bonus
points.
---------------------------------------------------------------------------
\209\ We note that this calculation excludes Q1 and Q2 2020 data
based on the ECE granted in response to the COVID-19 PHE and the
policies finalized in the September 2, 2020 interim final rule with
comment titled ``Medicare and Medicaid Programs, Clinical Laboratory
Improvement Amendments (CLIA), and Patient Protection and Affordable
Care Act; Additional Policy and Regulatory Revisions in Response to
the COVID-19 Public Health Emergency'' (85 FR 54820), we will
exclude qualifying claims data from measure calculations for the
following quarters: January 1, 2020, through March 31, 2020 (Q1
2020), and April 1, 2020, through June 30, 2020 (Q2 2020) that was
voluntarily submitted for scoring purposes under the Hospital VBP
Program.
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Our analysis finds that both the proposed and alternative HEA
scoring
[[Page 27046]]
options increase the number of hospitals getting a bonus compared to
the existing scoring methodology. We note that these analyses show the
percentage of hospitals gaining from the proposed health equity scoring
change. Through these analyses, we found that the hospital-weighted
average payment adjustment is positive even though the Hospital VBP
Program remains budget neutral. The increase in the number of hospitals
receiving a bonus occurs primarily among safety net hospitals compared
to non-safety net. A hospital was considered a safety net hospital if
it was in the top Disproportionate Share Hospital (DSH) quintile.
Table V.K.-16 provides the number of hospitals that received a
bonus or penalty, respectively, along with the size of these bonuses
and penalties. The third column in Table V.K.-16 shows the estimated
impact of our proposed scoring methodology changes. Based on the
analyses, the proposed methodology resulted in the greatest gains among
safety net hospitals and rural hospitals, on average. The proposed
methodology resulted in the largest percent of hospitals gaining from
the HEA bonus overall, where gains are indicated by both greater bonus
payments and smaller penalty payments, compared to the existing
methodology. The mean payment adjustment was 0.20 percent compared to
0.18 percent.
The fourth column in Table V.K.-16 shows the estimated impact of an
alternative method in which we only award 4 measure performance scaler
points to the hospitals in the top third of performance for each
domain, while hospitals in the middle and bottom third of performance
received 0 measure performance scaler points. This produced the
smallest number of hospitals gaining from the alternative health equity
scoring adjustment among rural hospitals and among safety net
hospitals. This produced a smaller number of hospitals gaining from the
alternative health equity scoring adjustment among rural hospitals,
among large hospitals, and among safety net hospitals relative to the
proposed approach. This alternative method resulted in a similar mean
payment adjustment of 0.20 percent as the proposed approach, while the
program remains revenue neutral. For both the proposed and alternative
approaches, the mean payment adjustment, as shown in Table V.K.-16, is
larger than the mean payment adjustment for the existing scoring
methodology.
Table V.K.-17 shows the percentage of hospitals who gained under
the proposed and alternative methodologies. For purposes of discussion
in this proposal and Table V.K.-17, ``Gaining'' is defined as receiving
a larger bonus or smaller penalty under the proposed health equity
adjustment compared to their bonus or penalty under the original
methodology. In Table V.K.-17, we note that the percentage of hospitals
that gain may be different than the percentage of hospitals that
receive a bonus. This is because hospitals, even if they receive a
penalty, can still gain from the health equity adjustment, if the
penalty is smaller after the health equity adjustment.
We are seeking feedback on the alternative scoring method in
section V.K.6.b.(7) of this proposed rule for future consideration.
[[Page 27047]]
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[[Page 27048]]
[GRAPHIC] [TIFF OMITTED] TP01MY23.288
Based on the results of these analyses, we are proposing to change
the scoring methodology to award HEA bonus points (with a measure
performance scaler of 0, 2, and 4 points) because this option allows
more hospitals treating a large share of patients with DES to gain from
the HEA bonus, particularly safety net hospitals. We believe these
bonuses offer an important first step in addressing health equity
within the Hospital VBP Program. Safety net hospitals serve large
proportions of patients with DES, and patients living in rural areas
tend to experience worse health outcomes.210 211 Therefore,
we believe our proposal ensures that we are addressing performance gaps
and incentivizing high-quality care in underserved populations compared
to the existing scoring methodology.
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\210\ Sarkar, R.R., Courtney, P.T., Bachand, K., et al. (2020)
Quality of care at safety-net hospitals and the impact on pay-for-
performance reimbursement. Cancer. 126(20):4584-4592. doi: 10.1002/
cncr.33137. PMID: 32780469.
\211\ Health Resources and Services Administration. (2020) Rural
Health Disparities. Available at: https://www.hrsa.gov/sites/default/files/hrsa/advisory-committees/graduate-medical-edu/publications/cogme-rural-health-policy-brief.pdf.
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In developing this scoring methodology change, we also explored
alternative indicators for the underserved variable, such as an Area
Deprivation Index (ADI) of 85 or greater, and enrollment in LIS.
Identifying and prioritizing social risk or demographic variables to
consider for measuring equity can be challenging. This is due to the
high number of variables that have been identified in the literature as
risk factors for poorer health outcomes and the limited availability of
much of this data. Each source of data has advantages and disadvantages
for identifying the most vulnerable populations to assess disparities.
Income-based indicators are the most frequently used measures of
vulnerability, but other indicators such as neighborhood level
indicators can also provide important insights and are becoming more
common in quality programs. There is research to support that
geographic, neighborhood-level factors are associated with worse health
outcomes for affected residents. The ADI is a demonstrated tool for
assessing socioeconomic conditions based on geographic, neighborhood-
level disadvantage.212 213 Specifically, living in an area
with an ADI score of 85 or above is shown to be a predictor of 30-day
readmission rates, lower rates of cancer survival, poor end-of-life
care for patients with heart failure, and longer lengths of stay and
fewer home discharges post-knee surgery even after accounting for
individual social and economic risk
factors.214 215 216 217 218
[[Page 27049]]
Many rural areas also have relatively high levels of neighborhood
disadvantage and high ADI levels. We believe dual Medicare and Medicaid
eligibility and ADI scores are both good indicators of patients with
high needs. Dual eligibility, an indicator at the beneficiary level, is
intended to capture socioeconomic challenges that could affect a
patient's ability to access care, while ADI, a neighborhood-level
indicator, is intended to capture local socioeconomic factors
correlated with medical disparities and underservice. However, the ADI
data are updated infrequently.\219\ Additionally, to date, the ADI has
not been extensively studied or widely used in value-based purchasing
programs, and we do not collect patient level demographic level data
for all measures that would allow us to use a neighborhood-level
factors such as ADI in the Hospital VBP Program. However, we hope to
utilize the ADI in the Hospital VBP Program in future years as data
becomes more readily available through new measures in the Program in
order to better align with other CMS programs such as the Shared
Savings Program. ASPE recently conducted an environmental scan and
concluded that while area-level indices can be beneficial, none of the
existing area-level indices are ideal and should only be implemented in
very specific circumstances.\220\ Finally, as compared to DES, use of
the proportion of patients that receive LIS under the Medicare Part D
prescription drug program may capture a more consistent group of low-
income patients as the eligibility criteria for LIS does not vary by
state. However, we note that the Part D LIS has certain limitations as
well. For example, individuals with DES or who receive Supplemental
Security Income (SSI) automatically receive the LIS designation in CMS
data systems. LIS designation means that the individual is enrolled in
a Medicare Part D plan and receives the low-income subsidy. Individuals
without DES or SSI status, but whose income is lower than 150 percent
of the Federal poverty level and whose resources are limited, can
qualify for LIS, but must apply. Additionally, LIS is not available in
the U.S. territories. Most Medicare beneficiaries with the LIS
designation are those who automatically receive this designation,
rather than those who applied for the benefit and were approved.
Nonetheless, despite this limitation, we agree that the use of the LIS
designation, in addition to DES, is preferable to using DES alone, as
doing so reduces variability across States. However, LIS is not
available in the U.S. territories. Ultimately, we believe using DES
data is an important first step to introducing health equity adjustment
bonus points in the Hospital VBP Program and will consider other
indicators for the underserved multiplier in the future.
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\212\ Center for Health Disparities Research University of
Wisconsin. (2022). Neighborhood Atlas. Available at: https://www.neighborhoodatlas.medicine.wisc.edu/.
\213\ Maroko, A.R., Doan, T.M., Arno, P.S., Hubel, M., Yi, S.,
Viola, D. Integrating Social Determinants of Health With Treatment
and Prevention: A New Tool to Assess Local Area Deprivation. Prev
Chronic Dis 2016;13:160221. DOI: http://dx.doi.org/10.5888/pcd13.160221.
\214\ Kind, A.J., Jenks, S., Brock, J., et al. (2014).
Neighborhood socioeconomic disadvantage and 30-day
rehospitalization: a retrospective cohort study. Annals of Internal
Medicine. No. 161(11), pp 765-74, doi: 10.7326/M13-2946. Available
at: https://www.acpjournals.org/doi/epdf/10.7326/M13-2946.
\215\ Jencks, S.F., Schuster, A., Dougherty, G.B., et al. (2019)
Safety-Net Hospitals, Neighborhood Disadvantage, and Readmissions
Under Maryland's All-Payer Program. Annals of Internal Medicine. No.
171, pp 91-98, doi:10.7326/M16-2671. Available at: https://www.acpjournals.org/doi/epdf/10.7326/M16-2671.
\216\ Cheng, E., Soulos, P.R., Irwin, M.L., et al. (2021).
Neighborhood and Individual Socioeconomic Disadvantage and Survival
Among Patients With Nonmetastatic Common Cancers.JAMA Network Open
Oncology. No. 4(12), pp 1-17, doi: 10.1001/
jamanetworkopen.2021.39593 Available at: https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2787244.
\217\ Hutchinson, R.N., Han, P.K.J, Lucas, F.L., Black, A.,
Sawyer, D., and Fairfield, K. (2022) Rural disparities in end-of-
life care for patients with heart failure: Are they due to geography
or socioeconomic disparity? The Journal of Rural Health. No. 38, pp
457-463, doi: 10.1111/jrh.12597 Available at: https://onlinelibrary.wiley.com/doi/epdf/10.1111/jrh.12597.
\218\ Khlopas, A., Grits, D., Sax, O., et al. (2022).
Neighborhood Socioeconomic Disadvantages Associated With Prolonged
Lengths of Stay, Nonhome Discharges, and 90-Day Readmissions After
Total Knee Arthroplasty. The Journal of Arthroplasty. No. 37(6), pp
S37-S43, doi: 10.1016/j.arth.2022.01.032 Available at: https://www.sciencedirect.com/science/article/pii/S0883540322000493.
\219\ Office of the Assistant Secretary for Planning and
Evaluation, U.S. Department of Health & Human Services. First Report
to Congress on Social Risk Factors and Performance in Medicare's
Value-Based Purchasing Program. 2016. https://aspe.hhs.gov/sites/default/files/migrated_legacy_files/171041/ASPESESRTCfull.pdf.
\220\ ASPE. (2022) Addressing Social Drivers of Health:
Evaluating Area-level indices. Available at: https://aspe.hhs.gov/sites/default/files/documents/474a62378abf941f20b3eaa74ca5721c/Area-level-Indices-ASPE-Reflections.pdf.
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(6) Proposal To Modify the Total Performance Score (TPS) Maximum
The Hospital Inpatient VBP Program final rule finalized a
methodology for assessing the total performance of each hospital based
on its performance under the Hospital VBP Program with respect to a
fiscal year (76 FR 26493 through 26494). Additionally, section
1886(o)(5)(A) of the Act provides the Secretary with the discretion to
adopt a performance scoring methodology. Currently, the TPS is defined
in our regulations as a numeric score ranging from 0 to 100. We are
proposing to modify the Total Performance Score (TPS) maximum to be
110, resulting in numeric score range of 0 to 110, beginning with the
FY 2026 program year. A TPS maximum of 110 would allow for hospitals
that have achieved top performance across all four domains to still be
eligible to earn HEA bonus points. For example, if a hospital obtains a
summed total of 100 weighted domain score points, that hospital could
still receive up to 10 HEA bonus points, resulting in a maximum TPS of
110. We believe that proposing to modify the TPS range will afford even
top-performing hospitals the opportunity to receive up to an additional
10 HEA bonus points.
We are also proposing to codify at 42 CFR 412.160, 412.162(b)(3),
and 412.165(b)(6) of our regulations the new TPS numeric score range of
0 to 110. We believe this proposal will make it easier for interested
parties to find these updated policies.
We invite public comment on this proposal.
(7) Request for Information on Potential Additional Changes to the
Hospital VBP Program That Would Address Health Equity
As noted in the CMS National Quality Strategy, we are committed to
addressing the disparities that underlie our health system, both within
and across settings, to ensure equitable access and care for all.\221\
We believe the proposed scoring methodology embodies this commitment,
but recognize it is only a first step.
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\221\ Centers for Medicare & Medicaid Services. (2022) CMS
National Quality Strategy. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/CMS-Quality-Strategy.
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Therefore, we invite public comment on the following:
Should we consider using any of the previously detailed
variables, ADI of greater than or equal to 85 and Medicare Part D LIS,
in combination with or instead of DES? For example, should we use the
higher of a few selected factors based on a hospital's inpatient
population in a given program year, including: (1) the proportion of
the hospital's patient population residing in a census block group with
an ADI national percentile rank of at least 85 (or another threshold);
(2) the proportion of the hospital's patients that are dually eligible
for Medicare and Medicaid; or (3) the proportion of the hospital's
patients receiving LIS? Should we consider patients with partial-dual
eligibility in addition to full-dual eligibility? Are there additional
variables we should consider using to identify populations that have
been disadvantaged, marginalized, and/or underserved by the healthcare
system?
Should we consider other thresholds for scoring, such as
using a quintile-based scoring approach whereby hospitals are awarded
measure performance scaler points based on 5 levels of performance
rather than 3? This would include awarding 0, 1, 2, 3, and 4, measure
performance scaler points across the 5 levels from bottom to top
performance, respectively, to allow for more nuance in the distribution
of performance across each of the current four domains.
[[Page 27050]]
In the future, we are considering further refining this
scoring methodology change to only look at a hospital's quality
performance on patients in the focus population (for example, patients
with DES). We believe this future potential refinement would more
specifically address disparities in performance, and in turn, close
equity gaps which would ultimately result in greater overall
improvement for the entire hospital patient population. At this time,
we collect patient-level data on the claims measures in the clinical
domain and the MSPB measure, but not on all other measures in the
Hospital VBP Program. Because we do not collect patient level
demographic level data for all measures, it is difficult to use
neighborhood-level indicators, such as the ADI, the measure level at
this time. Therefore, we are instead proposing to use performance on
existing measures for all eligible patients and thus welcome
stakeholder feedback on for the Hospital VBP Program to assess patient-
level data in the future.
Should we use a linear scoring function or actual scoring
for calculating the underserved multiplier instead of the proposed
logistic exchange function as depicted in Figure V.K.-01 instead?
Are there other approaches that the Hospital VBP Program
could propose to adopt in order to effectively address healthcare
disparities and advance health equity, such as the alternative
methodology simulated in the analysis displayed in Tables V.K.-16 and
V.K.-17? For example, should we only award measure performance scaler
points to the top third of performance whereby a hospital in the middle
and bottom thirds of performance would receive 0 performance scaler
points, as simulated in the analysis? Alternatively, should we only
provide measure performance scaler points to the Clinical, Safety, and
Patient and Community Engagement Domains, excluding the Cost and
Effectiveness Domain from performance scaler points?
b. Domain Weighting for Hospitals That Receive a Score on All Domains
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38265 through
38266), we finalized our proposal to retain the equal weight of 25
percent for each of the four domains in the Hospital VBP Program for
the FY 2020 program year and subsequent years for hospitals that
receive a score in all domains.
We are not proposing any changes to these domain weights.
c. Domain Weighting for Hospitals Receiving Scores on Fewer Than Four
Domains
In the FY 2015 IPPS/LTCH PPS final rule (79 FR 50084 through
50085), we adopted a policy that hospitals must receive domain scores
on at least three of four quality domains in order to receive a TPS,
for the FY 2017 program year and subsequent years. Hospitals with
sufficient data on only three domains will have their TPSs
proportionately reweighted (79 FR 50084 through 50085).
We are not proposing any changes to these domain weights.
d. Minimum Numbers of Measures for Hospital VBP Program Domains
We refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR
38266) for our previously finalized requirements for the minimum
numbers of measures for hospitals to receive domain scores.
We are not proposing any changes to these policies.
e. Minimum Numbers of Cases for Hospital VBP Program Measures
(1) Background
Section 1886(o)(1)(C)(ii)(IV) of the Act requires the Secretary to
exclude for the fiscal year hospitals that do not report a minimum
number (as determined by the Secretary) of cases for the measures that
apply to the hospital for the performance period for the fiscal year.
For additional discussion of the previously finalized minimum numbers
of cases for measures under the Hospital VBP Program, we refer readers
to the Hospital Inpatient VBP Program final rule (76 FR 26527 through
26531); the CY 2012 OPPS/ASC final rule (76 FR 74532 through 74534);
the FY 2013 IPPS/LTCH PPS final rule (77 FR 53608 through 53610); the
FY 2015 IPPS/LTCH PPS final rule (79 FR 50085 through 50086); the FY
2016 IPPS/LTCH PPS final rule (80 FR 49570); and the FY 2018 IPPS/LTCH
PPS final rule (82 FR 38266 through 38267).
(2) Summary of Previously Adopted and Newly Proposed Minimum Numbers of
Cases
The previously adopted minimum numbers of cases for the Hospital
VBP measures are set forth in Table V.K.-18. Table V.K.-18 also sets
forth the proposed minimum number of cases for the proposed Severe
Sepsis and Septic Shock: Management Bundle measure beginning with the
FY 2026 program year. For the proposed updates to MSPB Hospital measure
and the proposed THA/TKA Complications measure, we are proposing to
maintain the same minimum number of cases as the current measures.
We are proposing to codify at 42 CFR 412.165(a)(1)(i) these minimum
numbers of cases. We believe this proposal will make it easier for
interested parties to find these policies.
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We invite comment on these proposals.
7. Extraordinary Circumstance Exception (ECE) Policy for the Hospital
VBP Program
We refer readers to the FY 2022 IPPS/LTCH PPS final rule (86 FR
45298 through 45299) and 42 CFR 412.165(c) for additional details
related to the Hospital VBP Program ECE policy.
We are not proposing any changes to the Hospital VBP Program ECE
policy.
L. Hospital-Acquired Condition (HAC) Reduction Program
1. Regulatory Background
We refer readers to the FY 2014 IPPS/LTCH PPS final rule (78 FR
50707 through 50708) for a general overview of the HAC Reduction
Program 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).
The FY 2021 IPPS/LTCH PPS final rule (85 FR 58860 through
58865).
The FY 2022 IPPS/LTCH PPS final rule (86 FR 45300 through
45310).
The FY 2023 IPPS/LTCH PPS final rule (87 FR 49120 through
49138).
We have also codified certain requirements of the HAC Reduction
Program at 42 CFR 412.170 through 412.172.
2. Measures for FY 2024 and Subsequent Years in the HAC Reduction
Program
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 our goal of bringing quality measurement,
transparency, and improvement together with value-based purchasing to
the hospital inpatient care setting through the Meaningful Measures
Framework and Meaningful Measures 2.0.\222\
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\222\ Centers for Medicare & Medicaid Services. (2022).
Meaningful Measures 2.0: Moving from Measure Reduction to
Modernization. Available at: https://www.cms.gov/medicare/meaningful-measures-framework/meaningful-measures-20-moving-measure-reduction-modernization.
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a. Current Measures
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 Centers for Disease Control and Prevention (CDC) National
Healthcare Safety Network (NHSN) hospital-associated infection (HAI)
measures: (1) Catheter-associated Urinary Tract Infection (CAUTI)
Outcome Measure; (2) Facility-wide Inpatient Hospital-onset Clostridium
difficile Infection (CDI) Outcome Measure; (3) Central Line-Associated
Bloodstream Infection (CLABSI) Outcome Measure; (4) Colon and Abdominal
Hysterectomy Surgical Site Infection (SSI) Outcome Measure; and (5)
Facility-wide Inpatient Hospital-onset Methicillin-resistant
Staphylococcus aureus (MRSA) bacteremia Outcome Measure. In the FY 2017
IPPS/LTCH PPS final rule (81 FR 57014), we finalized the use of the CMS
PSI 90 measure. These previously finalized measures are shown in table
IX.L.-01.
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[GRAPHIC] [TIFF OMITTED] TP01MY23.290
Technical specifications for the CMS PSI 90 measure can be found on
the QualityNet website available at: https://qualitynet.cms.gov/inpatient/measures/psi/resources. Technical specifications for the CDC
NHSN HAI measures can be found at the CDC's NHSN website at https://www.cdc.gov/nhsn/acute-care-hospital/index.html and on the QualityNet
website available at: https://qualitynet.cms.gov/inpatient/measures/hai/resources. These three web pages provide measure updates and other
information necessary to guide hospitals participating in the
collection of HAC Reduction Program data.
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\223\ In previous years, we referred to the consensus-based
entity by corporate name. We have updated this language to refer to
the consensus-based entity more generally.
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We are not proposing to add or remove any measures from the HAC
Reduction Program.
b. Measure Removal Factors Policy
We 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. We are not proposing
any measure removal and retention factor policy changes.
3. Maintenance of Technical Specifications for Quality Measures in the
HAC Reduction Program
In the FY 2015 IPPS/LTCH PPS final rule (79 FR 50100 through
50101), we adopted a process that allows us to expeditiously
incorporate technical measure specification updates while preserving
the public's ability to comment upon updates that fundamentally change
a measure. In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49133 through
49134), we adjusted the minimum threshold criteria for the CMS PSI 90
measure beginning in the FY 2023 program year, requiring hospitals to
have one or more component PSI measures with at least 25 eligible
discharges and seven or more component PSI measures with at least three
eligible discharges to receive a CMS PSI 90 Composite score. We also
announced a technical measure specification update to the CMS PSI 90
software to include COVID-19 diagnosis as a risk adjustment parameter
beginning with the FY 2024 program year, to address the impact of the
COVID-19 on hospitalized individuals on the CMS PSI 90 measure,
although the Public Health Emergency is scheduled to end in CY
2023.\224\
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\224\ The White House. (2023). Notice of the Continuation of the
National Emergency Concerning the Coronavirus Disease 2019 (COVID-
19) Pandemic. Available at: https://www.whitehouse.gov/briefing-room/presidential-actions/2023/02/10/notice-on-the-continuation-of-the-national-emergency-concerning-the-coronavirus-disease-2019-covid-19-pandemic-3/.
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We are not proposing any changes in this proposed rule.
4. Advancing Patient Safety in the HAC Reduction Program--Request for
Comment
As discussed in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50708),
the intent of the HAC Reduction Program is to encourage all hospitals
to reduce the incidence of hospital-acquired conditions. According to
the CDC 2021 National and State Healthcare-Associated Infection
Progress Report, rates of CLABSI, CAUTI, and MRSA bacteremia increased
between 2020 and 2021, by 7 percent, 5 percent, and 14 percent
respectively.\225\ HAI standard infection ratios for these three
measures were notably higher than pre-COVID-19 pandemic levels,
indicating continued room for improvement to reduce the incidence of
hospital-acquired conditions nationwide.\226\ The HAC Reduction
Program's efforts to reduce hospital-acquired conditions are vital to
improving patients' quality of care and reducing complications and
mortality, while simultaneously decreasing costs. The reduction of
hospital-acquired conditions is an important marker of quality of care
and has a positive impact on both patient outcomes and cost of care.
Moreover, the HAC Reduction Program has an opportunity to advance both
healthcare safety and equity by encouraging participating hospitals to
further focus their improvement efforts on eliminating disparities that
exist in the rate and severity of hospital-acquired conditions among
different patient populations. According to a
[[Page 27053]]
2021 study conducted by the Urban Institute, Black patients experienced
worse quality of care in 6 out of 11 patient safety indicators relative
to White patients in 2017 across 26 states.\227\ We aim to have the HAC
Reduction Program advance the CMS National Quality Strategy goals of
improving health equity by addressing underlying disparities in our
health system and promoting safety by preventing harm or death from
health care errors.\228\ Further, we also seek to align with the HHS-
led National Healthcare System Action Alliance to Advance Patient
Safety and its priority of establishing and sustaining a strong culture
of safety in a way that is equitable and engaging of patients,
families, care partners, and the health care
workforce.229 230
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\225\ Centers for Disease Control and Prevention. (2022).
Current HAI Progress Report. Available at: https://www.cdc.gov/hai/data/portal/progress-report.html#2018.
\226\ Lastinger, L., Alvarez, C., Kofman, A., Konnor, R., Kuhar,
D., Nkwata, A., . . . Dudeck, M. (2022). Continued increases in the
incidence of healthcare-associated infection (HAI) during the second
year of the coronavirus disease 2019 (COVID-19) pandemic. Infection
Control & Hospital Epidemiology, 1-5. doi:10.1017/ice.2022.116
\227\ Gangopadhyaya, Anuj. (2021). Black patients are more
likely than white patients to be in hospitals with worse patient
safety conditions. Urban Institute. Available at: https://www.urban.org/sites/default/files/publication/103925/black-patients-are-more-likely-than-white-patients-to-be-in-hospitals-with-worse-patient-safety-conditions.pdf.
\228\ Centers for Medicare & Medicaid Services. (2022). What is
the CMS National Quality Strategy?. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/CMS-Quality-Strategy.
\229\ Agency for healthcare Research and Quality. (2022). The
National Healthcare System Action Alliance to Advance Patient
Safety. Available at: https://www.ahrq.gov/cpi/about/otherwebsites/action-alliance.html.
\230\ National Steering Committee for Patient Safety. (2020).
Safer Together: A National Action Plan to Advance Patient Safety.
Boston, Massachusetts: Institute for Healthcare Improvement.
Available at: www.ihi.org/SafetyActionPlan.
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We are conducting a review of the patient safety and healthcare-
associated infection measures and the scoring and weighting
methodology, as part of our ongoing efforts to evaluate and strengthen
the HAC Reduction Program. As we did in the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19986 through 19990), the FY 2019 IPPS/LTCH PPS
proposed rule (83 FR 20437), and in the FY 2023 IPPS/LTCH PPS proposed
rule (87 FR 28452) we are seeking input from interested parties on the
addition of new program measures. We seek to adopt patient safety
focused electronic clinical quality measures (eCQMs) to strengthen the
growing portfolio of eCQMs and promote further alignment across quality
reporting and value-based purchasing programs.
Adoption of eCQMs in the HAC Reduction Program supports the CMS
Meaningful Measures 2.0 priority to move fully to digital quality
measurement. In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49136), we
described the Request for Comment (RFC) on the potential future
adoption of the digital NHSN Healthcare-associated Clostridioides
difficile Infection Outcome measure and the digital NHSN Hospital-Onset
Bacteremia & Fungemia Outcome measure. We received public input in
support of the adoption of these two eCQMs. However, a few commenters
stated concern regarding baseline data testing, measure definitions,
and the risk adjustment methodology for both eCQMs. We would appreciate
feedback on potentially adopting patient safety related eCQMs which are
currently used in the Hospital Inpatient Quality Reporting (IQR)
Program, including: Hospital Harm--Opioid-Related Adverse Events eCQM,
Hospital Harm-Severe Hypoglycemia eCQM, and Hospital Harm-Severe
Hyperglycemia eCQM. In the FY 2023 IPPS/LTCH PPS final rule (87 FR
49233), the Hospital IQR Program adopted the Hospital Harm--Opioid-
Related Adverse Events eCQM and in the FY 2022 IPPS/LTCH PPS final rule
(86 FR 45382), the Hospital IQR Program adopted the Hospital Harm-
Severe Hypoglycemia eCQM and Hospital Harm-Severe Hyperglycemia eCQM.
In sections IX.C.5.a and IX.C.5.b of this proposed rule, the Hospital
IQR Program is proposing to adopt three additional eCQMs, which we seek
input on for inclusion in the HAC Reduction Program, including:
Hospital Harm-Acute Kidney Injury eCQM, Hospital Harm-Pressure Injury
eCQM, and Excessive Radiation Dose or Inadequate Image Quality for
Diagnostic Computer Tomography in Adults eCQM. We believe adoption of
hospital harm eCQMs would address two high priority areas including
safety and adopting outcome eCQMs. In addition, as part of our
commitment to patient safety, we are developing new digital quality
measures that use data from hospital electronic health records that
would assess various aspects of patient safety in the inpatient care
setting. We invite public comment on the adoption of these six eCQMs in
the HAC Reduction Program.
To the extent practicable, HAC Reduction Program measures should be
nationally endorsed by a multi-stakeholder organization. Measures
should be aligned with best practices among other payers and the needs
of the end users of the measures. Measures should consider widely
accepted criteria established in medical literature.
We invite public comment on potential future measures as well as on
how the HAC Reduction Program can further promote patient safety.
Specifically, we invite comment on:
What measures should be introduced in the HAC Reduction
Program to address emerging high priority patient harm events and
healthcare-associated infections?
What measures should be introduced in the HAC Reduction
Program to address equity gaps in the rate and severity of patient harm
events and healthcare-associated infections?
How can weighting and scoring methods be improved to
better assess hospital performance and promote equity in the HAC
Reduction Program payment assessments?
How can the HAC Reduction Program be strengthened to
encourage patient safety best practices, which also prioritize the
delivery of equitable care, in inpatient facilities?
5. HAC Reduction Program Scoring Methodology and Scoring Review and
Corrections Period
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41484), we clarified
the Scoring Calculations Review and Correction Period for the HAC
Reduction Program. Hospitals must register and submit quality data
through the Hospital Quality Reporting (HQR) System (previously
referred to as the QualityNet Secure Portal) in order to access their
annual hospital-specific reports. The HQR System is safeguarded in
accordance with the HIPAA Privacy and Security Rules to protect
submitted patient information. See 45 CFR parts 160 and 164, subparts
A, C, and E.
We are not proposing any changes to the Scoring Calculations Review
and Correction Period process.
6. Validation of HAC Reduction Program Data
We previously adopted data validation policies for the CDC NHSN HAI
measures in the HAC Reduction Program in the FY 2019 IPPS/LTCH PPS
final rule (83 FR 41478 through 41484). Since then, we have continued
to update the validation policies. We refer readers to the FY 2020
IPPS/LTCH PPS final rule (84 FR 42406 through 42410), the FY 2021 IPPS/
LTCH PPS final rule (85 FR 58862 through 58865), and the FY 2023 IPPS/
LTCH PPS final rule (87 FR 49137 through 49138) for detailed
information on the HAC Reduction Program data validation processes.
a. Validation Reconsideration Beginning With the FY 2025 Program Year
(1) Background
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41480) and FY 2020
IPPS/LTCH final rule (84 FR 42407), we finalized annual random
selection of up to 200 hospitals for inpatient validation,
[[Page 27054]]
and the annual targeted selection of up to 200 hospitals using the
following targeting criteria:
Any hospital that failed validation the previous year;
Any hospital that submits data to NHSN after the HAC
Reduction Program data submission deadline has passed;
Any hospital that has not been randomly selected for
validation in the past 3 years;
Any hospital that passed validation in the previous year,
but had a two-tailed confidence interval that included 75 percent; and
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.
As discussed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41480),
under the current policies, once we validate all quarters of the
relevant fiscal year, we calculate a total score reflecting a
hospital's reporting accuracy for the HAI measures used within the HAC
Reduction Program. The calculated total score is then utilized to
compute a confidence interval with the consideration of the results
from the educational review process. If the estimated reliability upper
bound (ERUB) of the confidence interval is 75 percent or higher, the
hospital will pass the HAC Reduction Program validation requirement; if
the ERUB is below 75 percent, the hospital will fail the HAC Reduction
Program validation requirement.
As described in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41481
through 41482), a hospital that fails validation (that is, their ERUB
is below the 75 percent threshold) is assigned the maximum Winsorized
z-scores only for the set of measures validated. For example, if a
hospital were selected on CLABSI, CAUTI, and SSI, and failed
validation, that hospital would receive the maximum Winsorized z-scores
(that is, the worst score) for CLABSI, CAUTI, and SSI. We are not
proposing any changes to these processes.
(2) Proposal To Adopt a Validation Reconsideration Process
In this proposed rule, we are proposing to add a validation
reconsideration process to the HAC Reduction Program, giving hospitals
the opportunity to request reconsideration of their final validation
scores. Prior to establishing administrative policies for the HAC
Reduction Program to collect, validate, and publicly report quality
measure data independently instead of conducting these activities
through the Hospital IQR Program, as finalized in FY 2019 IPPS/LTCH PPS
final rule (83 FR 41475 through 41484), hospitals that failed their
Annual Payment Update (APU) requirement related to validation of
certain Hospital IQR Program measures, which included but was not
limited to HAI measures, had the opportunity to request reconsideration
of their final validation scores for the HAI measures. We intend for
the HAC Reduction Program's proposed reconsideration processes to be
similar to the current validation reconsideration processes of the
Hospital IQR Program, which hospitals are familiar with. We refer
readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51650 through
51651) for further detail on the Hospital IQR Program validation
reconsideration process. Beginning with the FY 2025 program year
(affecting calendar year 2022 discharges), we are proposing to allow
hospitals that fail validation to request reconsideration of their
validation results before use in HAC Reduction Program scoring
calculations. The validation reconsideration process would be conducted
once per program fiscal year after the validation of HAIs for all four
quarters of the relevant fiscal year's data period and after the
confidence interval has been calculated.
The process, if finalized, would complement the quarterly
educational reviews that are currently available to hospitals. The
adoption of a reconsideration process for the HAC Reduction Program
aligns data validation processes with the Hospital IQR Program
reconsideration process, which hospitals are familiar with. We refer
readers to the FY 2019 IPPS/LTCH PPS final rule (83 FR 41480 through
41481) for more details on the HAC Reduction Program educational review
process.
(a) Notification of Validation Results and Request for Reconsideration
Process
Once we calculate the confidence intervals for validation total
scores, we are proposing to notify hospitals that failed the HAC
Reduction Program validation requirement for the CDC NHSN HAI measures
via a notification letter sent by certified mail. The letter would
instruct hospitals on how to submit a request for reconsideration to
CMS. A hospital requesting validation reconsideration must submit a
reconsideration request form within 30 days from the date stated on the
notification letter. The form for submitting a reconsideration request
and a detailed description of the reconsideration process would be
available on the QualityNet website.
A hospital's request for validation reconsideration must include,
among other things:
Basis for requesting reconsideration--identifying specific
reason(s) for why the hospital believes it met the HAC Reduction
Program validation requirements.
All documentation and evidence that supports the
hospital's request for reconsideration.
We would provide hospitals an email acknowledgement, following
receipt of a request for validation reconsideration, using the contact
information provided in the validation reconsideration request. We
would also provide written notification of the formal decision
regarding the reconsideration request to the hospital contact(s) listed
on the validation reconsideration form. We anticipate that the
reconsideration process may take approximately 90 days from the receipt
of the reconsideration request.
Only hospitals that fail to meet the passing threshold for the end-
of-year confidence interval calculation would receive an opportunity to
request reconsideration of their validation results. The scope of the
proposed reconsideration parallels the scope used within the Hospital
IQR Program reconsideration process:
If the hospital requests reconsideration for CMS
contractor-abstracted data elements classified as mismatches affecting
validation scores, hospitals must submit a copy of the entire requested
medical record to CMS during the initial validation process (not during
reconsideration) by the 30-day deadline date indicated on the
notification letter for the requested case to be eligible to be
reconsidered on the basis of mismatched data elements.
On occasion, a hospital requests reconsideration for
medical record copies submitted during the initial validation process
and classified as invalid record selections. Such invalid record
selections are defined as medical records submitted by hospitals during
the initial validation process that do not match the patient's episode
of care information as determined by CMS (in other words, CMS
determines that the hospital returned a medical record that is
different from that which was requested). For more information about
inpatient validation case statuses, we refer readers to the CMS
Inpatient Data Validation Case Status Details for Validated Results on
the QualityNet website available at https://qualitynet.cms.gov/inpatient/data-management/data-validation/resources. If we determine
that the hospital has submitted an invalid record selection case, it
will be awarded a zero validation score for the case because the
hospital did not submit the entire copy
[[Page 27055]]
of the medical record for that requested case. During the
reconsideration process, our review of invalid record selections would
be limited to determining whether the record submitted was actually an
entire copy of the requested medical record. If we determine during
reconsideration that the hospital did submit the entire copy of the
requested medical record, then we would re-abstract data elements from
the medical record submitted by the hospital.
If the hospital requests reconsideration for medical
records not submitted within the 30-day deadline of the initial
validation process, our review would initially be limited to
determining whether we received the requested record within 30 calendar
days of the initial validation process. If we determined during
reconsideration that we did receive a copy of the requested medical
record within 30 calendar days, then we would abstract data elements
from the medical record submitted by the hospital. This proposed policy
is also designed to address those instances where the hospital's
request is based on invalid record selections, which are defined as
medical records submitted during the initial validation process that do
not match the patient's episode of care information as determined by
CMS, as previously discussed.
In summary, similar to the validation reconsideration process under
the Hospital IQR Program, we are proposing to limit the scope of our
HAC Reduction Program data validation reconsideration reviews to
information already submitted by the hospital during the initial
validation process, and we would not abstract medical records that were
not submitted during the initial validation process. We would expand
the scope of our review only if we found during the review that the
hospital correctly and timely submitted the requested medical records.
In that case, we would abstract data elements from the medical record
submitted by the hospital as part of our review of its reconsideration
request. After the reconsideration process was complete, we would re-
calculate a hospital's confidence interval based on the results of the
reconsideration of the hospital's cases and determine whether the
hospital passed or failed validation requirements for the HAC Reduction
Program. Those results would then be used for HAC Reduction Program
scoring, as detailed in the FY 2019 IPPS/LTCH PPS final rule (83 FR
41485 through 41489). The updated validation results could impact a
hospital's payment adjustments. If a hospital still fails validation
after receiving updated validation results, we will assign the maximum
Winsorized z-score for the three measures CMS validated. If a hospital
passes validation after the reconsideration process, their SIRs for the
measures validated will be their measure results in the HAC Reduction
Program scoring calculations process. As described in Sec. 412.172(b)
and (e)(2), hospitals in the worst performing quartile, that is the 25
percent of hospitals with the highest Total HAC Scores, are subject to
a 1-percent payment reduction under the HAC Reduction Program. We note
that the proposed HAC Reduction Program reconsideration process is
limited to reconsideration as to the data validation requirements of
the program. We are not proposing a reconsideration process as to any
other program requirements, including measure calculations, scoring, or
determination of payment reductions not related to data validation. We
refer readers to the FY 2019 IPPS/LTCH PPS final rule (83 FR 41484)
where we discuss our policies related to the Scoring Review and
Corrections Period for hospitals that may have questions about their
Total HAC Score calculations.
We invite public comment on this proposal.
(3) Proposal To Update the Targeting Criteria for Hospitals Granted an
Extraordinary Circumstances Exception (ECE)
As proposed in the Hospital IQR program in section IX.C.11.b of
this proposed rule, we are proposing to update our targeting criteria
for validation of hospitals granted an extraordinary circumstances
exception (ECE) in the HAC Reduction Program. Specifically, we are
proposing to modify the validation targeting criteria to include any
hospital with a ERUB of the two-tailed confidence interval that is less
than 75 percent and received an extraordinary circumstances exception
(ECE) for one or more quarters beginning with the FY 2027 program year,
affecting validation of calendar year 2024 discharges.
We propose to add a new criterion to the five established targeting
criteria used to select the up to 200 additional hospitals. We propose
that a hospital subject to validation who received an extraordinary
circumstance exception (ECE) for one or more quarters for the data
period validated and has a ERUB of the two-tailed confidence interval
that is less than 75 percent would be targeted for validation in the
subsequent validation year and would not fail data validation in the
HAC Reduction Program. The hospital would not receive the penalty of
the maximum Winsorized z-scores, the worst scores, for measures
validated. This exception would not except a hospital from
participation in the HAC Reduction Program, and the hospital would
still receive a Total HAC Score. We refer readers to the previously
established program scoring methodology in the FY 2019 IPPS/LTCH PPS
final rule (83 FR 41485). We believe adopting this additional criterion
would promote alignment with what is being proposed in Hospital IQR
Program. Hospitals that meet this criterion would be required to submit
medical records to CMS within 30 days of the date identified on the
written request as finalized in the Hospital IQR Program in FY 2017
IPPS/LTCH PPS final rule (81 FR 57179 and 57180) and in the HAC
Reduction Program in FY 2019 Rule IPPS/LTCH PPS final rule (83 FR
41482).
It is important to clarify that, consistent with our previously
finalized policy, a hospital is subject to both the maximum Winsorized
z-scores penalty and targeting for validation in the subsequent year if
it does not have an ECE for one more or more quarters and does not meet
the 75 percent threshold.
Specifically, we propose to add the following criterion for
targeting up to 200 additional hospitals for validation: any hospital
with a two-tailed confidence interval that is less than 75 percent, and
received an ECE for one or more quarters for the data period validated.
This proposal would align targeting criteria across the HAC
Reduction, Hospital IQR and Hospital OQR Programs. In the CY 2023 OPPS/
ASC final rule, we finalized the addition of this criterion to the
Hospital OQR Program's targeting criteria for validation selection
beginning with validations affecting the CY 2023 reporting period/CY
2025 payment determination (87 FR 72115 and 72116). Our proposal would
also allow us to appropriately address instances in which hospitals,
with an ECE for one or more quarters for the data period validated,
would receive the maximum Winsorized z-scores penalty and thus be more
likely to be subject to the payment reduction under the current
validation policies.
We invite public comment on this proposal.
M. Rural Community Hospital Demonstration Program
1. Introduction
The Rural Community Hospital Demonstration was originally
[[Page 27056]]
authorized by section 410A of the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173). The
demonstration has been extended three times since the original 5-year
period mandated by the MMA, each time for an additional 5 years. These
extensions were authorized by sections 3123 and 10313 of the Affordable
Care Act (Pub. L. 111-148), section 15003 of the 21st Century Cures Act
(Pub. L. 114-255) (Cures Act) enacted in 2016, and most recently, by
section 128 of the Consolidated Appropriations Act of 2021 (Pub. L.
116-260). In this proposed rule, we summarize the status of the
demonstration program, and the current methodologies for implementation
and calculating budget neutrality.
We are also proposing the amount to be applied to the national IPPS
payment rates to account for the costs of the demonstration in FY 2024,
and, in addition, we are proposing to include the reconciled amount of
demonstration costs for FY 2018 in the FY 2024 IPPS/LTCH final rule. We
expect all finalized cost reports for this earlier year to be available
by that time.
2. Background
Section 410A(a) of Public Law 108-173 required the Secretary to
establish a demonstration program to test the feasibility and
advisability of establishing rural community hospitals to furnish
covered inpatient hospital services to Medicare beneficiaries. The
demonstration pays rural community hospitals under a reasonable cost-
based methodology for Medicare payment purposes for covered inpatient
hospital services furnished to Medicare beneficiaries. A rural
community hospital, as defined in section 410A(f)(1) of Public Law 108-
173, 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.
Our policy for implementing the 5-year extension period authorized
by Public Law 116-260 (the Consolidated Appropriations Act of 2021)
follows upon the previous extensions under the Affordable Care Act
(Pub. L. 111-148) and the Cures Act (Pub. L. 114-255). Section 410A of
Public Law 108-173 (MMA) initially 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. In addition, Public Law 111-
148 limited the number of hospitals participating to no more than 30.
Section 15003 of the Cures Act required a 10-year extension period in
place of the 5-year extension period under the Affordable Care Act,
thereby extending the demonstration for another 5 years. Section 128 of
Public Law 116-260, in turn, revised the statute to indicate a 15-year
extension period, instead of the 10-year extension period mandated by
the Public Law 114-159 (Cures Act). Please refer to the FY 2023 IPPS
proposed and final rules (87 FR 28454 through 28458 and 87 FR 49138
through 49142, respectively) for an account of hospitals entering into
and withdrawing from the demonstration with these re-authorizations.
There are currently 26 hospitals participating in the demonstration.
3. Budget Neutrality
a. Statutory Budget Neutrality Requirement
Section 410A(c)(2) of Public Law 108-173 requires that, in
conducting the demonstration program under this section, the Secretary
shall ensure that the aggregate payments made by the Secretary do not
exceed the amount that 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. We note that the
payment methodology for this demonstration, that is, cost-based
payments to participating small rural hospitals, makes it unlikely that
increased Medicare outlays will produce an offsetting reduction to
Medicare expenditures elsewhere. Therefore, in the 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. (We applied a
different methodology for FY 2017, with the demonstration expected to
end prior to the Cures Act extension). 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 statutory language of the budget
neutrality requirements permits the agency to implement the budget
neutrality provision in this manner.
We resumed this methodology of offsetting demonstration costs
against the national payment rates in the IPPS final rules from FY 2018
through FY 2023. Please see the FY 2023 IPPS final rule for an account
of how we applied the budget neutrality requirement for these fiscal
years (87 FR 49140 through 49142).
b. General Budget Neutrality Methodology
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
[[Page 27057]]
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 2017 between the actual costs of the demonstration as
determined from finalized cost reports once available, and estimated
costs of the demonstration as identified in the applicable IPPS final
rules for these years.
c. Budget Neutrality Methodology for the Extension Period Authorized by
Public Law 116-159
For the most-recently enacted extension period, under the
Consolidated Appropriations Act of 2021, we have continued upon the
general budget neutrality methodology used in previous years, as
previously described in the citations to earlier IPPS final rules. In
this proposed rule, we outline the methodology to be used for
determining the offset to the national IPPS payment rates for FY 2024.
(1) Methodology for Estimating Demonstration Costs for FY 2024
Consistent with the general methodology from previous years, we are
estimating the costs of the demonstration for the upcoming fiscal year,
and proposing to incorporate this estimate into the budget neutrality
offset amount to be applied to the national IPPS rates for the upcoming
fiscal year, that is, FY 2024. We are conducting this estimate for FY
2024 based on the 26 currently participating hospitals. The methodology
for calculating this amount for FY 2024 proceeds according to the
following steps:
Step 1: For each of these 26 hospitals, we identify the reasonable
cost amount calculated under the reasonable cost-based methodology for
covered inpatient hospital services, including swing beds, as indicated
on the ``as submitted'' cost report for the most recent cost reporting
period available. For each of these hospitals, the ``as submitted''
cost report is that with cost report period end date in CY 2021. We sum
these hospital-specific amounts to arrive at a total general amount
representing the costs for covered inpatient hospital services,
including swing beds, across the total 26 hospitals eligible to
participate during FY 2024.
Then, we multiply this amount by the FYs 2022, 2023, and 2024 IPPS
market basket percentage increases, which are calculated by the CMS
Office of the Actuary. (We are using the proposed market basket
percentage increase for FY 2024, which can be found at section V.B.1 of
the preamble to this proposed rule.) The result for the 26 hospitals is
the general estimated reasonable cost amount for covered inpatient
hospital services for FY 2024.
Consistent with our methods in previous years for formulating this
estimate, we are applying the IPPS market basket percentage increases
for FYs 2022 through 2024 to the applicable estimated reasonable cost
amount (previously described) in order to model the estimated FY 2024
reasonable cost amount under the demonstration. We believe that the
IPPS market basket percentage increases appropriately indicate the
trend of increase in inpatient hospital operating costs under the
reasonable cost methodology for the years involved.
Step 2: For each of the participating hospitals, we identify the
estimated amount that would otherwise be paid in FY 2024 under
applicable Medicare payment methodologies for covered inpatient
hospital services, including swing beds (as indicated on the same set
of ``as submitted'' cost reports as in Step 1), if the demonstration
were not implemented. We sum these hospital-specific amounts, and, in
turn, multiply this sum by the FYs 2022, 2023, and 2024 IPPS applicable
percentage increases. (For FY 2024, we are using the proposed
applicable percentage increase, per section V.B.1 of the preamble of
this proposed rule.) This methodology differs from Step 1, in which we
apply the market basket percentage increases to the hospitals'
applicable estimated reasonable cost amount for covered inpatient
hospital services. We believe that the IPPS applicable percentage
increases are appropriate factors to update the estimated amounts that
generally would otherwise be paid without the demonstration. This is
because IPPS payments constitute the majority of payments that would
otherwise be made without the demonstration and the applicable
percentage increase is the factor used under the IPPS to update the
inpatient hospital payment rates.
Step 3: We subtract the amount derived in Step 2 from the amount
derived in Step 1. According to our methodology, the resulting amount
indicates the total difference for the 26 hospitals (for covered
inpatient hospital services, including swing beds), which will be the
general estimated amount of the costs of the demonstration for FY 2024.
For this proposed rule, the resulting amount is $37,658,408, to be
incorporated into the budget neutrality offset adjustment for FY 2024.
This estimated amount is based on the specific assumptions regarding
the data sources used, that is, recently available ``as submitted''
cost reports and historical update factors for cost and payment. If
updated data become available prior to the final rule, we will use them
as appropriate to estimate the costs for the demonstration program for
FY 2024 in accordance with our methodology for determining the budget
neutrality estimate. We will also incorporate any statutory change that
might affect the methodology for determining hospital costs either with
or without the demonstration.
(2) Reconciling Actual and Estimated Costs of the Demonstration for
Previous Years
As described earlier, we have calculated the difference for FYs
2005 through 2017 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.
At this time, for the FY 2024 proposed rule, not all of the
finalized cost reports are available for the 29 hospitals that
completed cost report periods beginning in FY 2018 under the
demonstration payment methodology. We expect all of these finalized
cost reports to be available by the time of the final rule, and thus we
are proposing to include the difference between the actual cost of the
demonstration for FY 2018 as determined from finalized cost reports
within the budget neutrality offset amount in the FY 2024 final rule.
(3) Total Proposed Budget Neutrality Offset Amount for FY 2024
Therefore, for this FY 2024 IPPS/LTCH PPS proposed rule, the
proposed budget neutrality offset amount for FY 2024 is the amount
determined under section V.M.3.c.(1). of the preamble of this proposed
rule, representing the difference applicable to FY 2023 between the sum
of the estimated reasonable cost amounts that would be paid under the
demonstration for covered inpatient services to the 26 hospitals
eligible to participate in the fiscal year and the sum of the estimated
amounts that would generally be paid if the demonstration had not been
implemented. This estimated amount is $37,658,408.
However, we note, that the overall amount might change if there are
any revisions prior to the final rule to the data used to formulate
this estimate. We also expect to revise the budget neutrality offset
amount upon calculating the actual costs of the demonstration for FY
2018, after
[[Page 27058]]
receiving all of the finalized cost reports for that fiscal year.
VI. Proposed Changes to the IPPS for Capital Related Costs
A. Overview
Section 1886(g) of the Act requires the Secretary to pay for the
capital-related costs of inpatient acute hospital services in
accordance with a prospective payment system established by the
Secretary. Under the statute, the Secretary has broad authority in
establishing and implementing the IPPS for acute care hospital
inpatient capital-related costs. We initially implemented the IPPS for
capital-related costs in the FY 1992 IPPS final rule (56 FR 43358). In
that final rule, we established a 10-year transition period to change
the payment methodology for Medicare hospital inpatient capital-related
costs from a reasonable cost-based payment methodology to a prospective
payment methodology (based fully on the Federal rate).
FY 2001 was the last year of the 10-year transition period that was
established to phase in the IPPS for hospital inpatient capital-related
costs. For cost reporting periods beginning in FY 2002, capital IPPS
payments are based solely on the Federal rate for almost all acute care
hospitals (other than hospitals receiving certain exception payments
and certain new hospitals). (We refer readers to the FY 2002 IPPS final
rule (66 FR 39910 through 39914) for additional information on the
methodology used to determine capital IPPS payments to hospitals both
during and after the transition period.)
The basic methodology for determining capital prospective payments
using the Federal rate is set forth in the regulations at 42 CFR
412.312. For the purpose of calculating capital payments for each
discharge, the standard Federal rate is adjusted as follows:
(Standard Federal Rate) x (DRG Weight) x (Geographic Adjustment Factor
(GAF) x (COLA for hospitals located in Alaska and Hawaii) x (1 +
Capital DSH Adjustment Factor + Capital IME Adjustment Factor, if
applicable).
In addition, under Sec. 412.312(c), hospitals also may receive
outlier payments under the capital IPPS for extraordinarily high-cost
cases that qualify under the thresholds established for each fiscal
year.
B. Additional Provisions
1. Exception Payments
The regulations at 42 CFR 412.348 provide for certain exception
payments under the capital IPPS. The regular exception payments
provided under Sec. 412.348(b) through (e) were available only during
the 10-year transition period. For a certain period after the
transition period, eligible hospitals may have received additional
payments under the special exceptions provisions at Sec. 412.348(g).
However, FY 2012 was the final year hospitals could receive special
exceptions payments. For additional details regarding these exceptions
policies, we refer readers to the FY 2012 IPPS/LTCH PPS final rule (76
FR 51725).
Under Sec. 412.348(f), a hospital may request an additional
payment if the hospital incurs unanticipated capital expenditures in
excess of $5 million due to extraordinary circumstances beyond the
hospital's control. Additional information on the exception payment for
extraordinary circumstances in Sec. 412.348(f) can be found in the FY
2005 IPPS final rule (69 FR 49185 and 49186).
2. New Hospitals
Under the capital IPPS, the regulations at 42 CFR 412.300(b) define
a new hospital as a hospital that has operated (under previous or
current ownership) for less than 2 years and lists examples of
hospitals that are not considered new hospitals. In accordance with
Sec. 412.304(c)(2), under the capital IPPS, a new hospital is paid 85
percent of its allowable Medicare inpatient hospital capital related
costs through its first 2 years of operation, unless the new hospital
elects to receive full prospective payment based on 100 percent of the
Federal rate. We refer readers to the FY 2012 IPPS/LTCH PPS final rule
(76 FR 51725) for additional information on payments to new hospitals
under the capital IPPS.
3. Payments for Hospitals Located in Puerto Rico
In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57061), we revised
the regulations at 42 CFR 412.374 relating to the calculation of
capital IPPS payments to hospitals located in Puerto Rico beginning in
FY 2017 to parallel the change in the statutory calculation of
operating IPPS payments to hospitals located in Puerto Rico, for
discharges occurring on or after January 1, 2016, made by section 601
of the Consolidated Appropriations Act, 2016 (Pub. L. 114-113). Section
601 of Public Law 114-113 increased the applicable Federal percentage
of the operating IPPS payment for hospitals located in Puerto Rico from
75 percent to 100 percent and decreased the applicable Puerto Rico
percentage of the operating IPPS payments for hospitals located in
Puerto Rico from 25 percent to zero percent, applicable to discharges
occurring on or after January 1, 2016. As such, under revised Sec.
412.374, for discharges occurring on or after October 1, 2016, capital
IPPS payments to hospitals located in Puerto Rico are based on 100
percent of the capital Federal rate.
C. Proposed Annual Update for FY 2024
The proposed annual update to the national capital Federal rate, as
provided for in 42 CFR 412.308(c), for FY 2024 is discussed in section
III. of the Addendum to this FY 2024 IPPS/LTCH PPS proposed rule.
D. Treatment of Rural Reclassifications for Capital DSH Payments
Section 1886(d)(8)(E)(i) of the Act, implemented at Sec. 412.103,
specifies for a hospital that meets certain requirements and criteria,
the Secretary shall treat the hospital as being located in the rural
area of the State in which the hospital is located for purposes of
section 1886(d) of the Act. In the FY 2007 IPPS/LTCH PPS final rule (71
FR 48104), we codified at Sec. 412.320(a)(1)(iii) that hospitals
reclassified as rural under Sec. 412.103 also are considered rural
under the capital IPPS for purposes of determining eligibility for
capital DSH payments. Under the capital IPPS, as set forth in Sec.
412.320(a), only urban hospitals with 100 or more beds are eligible for
capital DSH payments. Therefore, under the current regulations,
hospitals reclassified as rural under Sec. 412.103 are not eligible to
receive capital DSH payments. On September 30, 2021, in Toledo Hospital
v. Becerra, the U.S. District Court for the District of Columbia issued
a decision that the FY 2007 final rule codifying CMS's policy of not
providing capital DSH payments to urban hospitals that are reclassified
as rural under Sec. 412.103 was arbitrary and capricious because, the
court concluded, the record did not demonstrate that CMS took relative
costs into account when considering the rule and the policy at issue.
We do not necessarily agree with the court's conclusions but
nevertheless in light of the decision we propose to revise the capital
DSH regulations in response to this court ruling. Specifically, we are
proposing that effective for discharges occurring on or after October
1, 2023, hospitals reclassified as rural under Sec. 412.103 will no
longer be considered rural for
[[Page 27059]]
purposes of determining eligibility for capital DSH payments. We
propose to codify this change by amending existing Sec.
412.320(a)(1)(iii) to specify that the exception for an urban hospital
that is reclassified as rural as set forth in Sec. 412.103 is
effective for discharges occurring on or after October 1, 2006, and
before October 1, 2023. That is, for discharges occurring on or after
October 1, 2023, for purposes of Sec. 412.320, the geographic
classifications specified under Sec. 412.64 would apply with no
exceptions.
VII. Proposed Changes for Hospitals Excluded From the IPPS
A. Proposed Rate-of-Increase in Payments to Excluded Hospitals for FY
2024
Certain hospitals excluded from a prospective payment system,
including children's hospitals, 11 cancer hospitals, and hospitals
located outside the 50 States, the District of Columbia, and Puerto
Rico (that is, hospitals located in the U.S. Virgin Islands, Guam, the
Northern Mariana Islands, and American Samoa) receive payment for
inpatient hospital services they furnish on the basis of reasonable
costs, subject to a rate-of-increase ceiling. A per discharge limit
(the target amount, as defined in Sec. 413.40(a) of the regulations)
is set for each hospital based on the hospital's own cost experience in
its base year, and updated annually by a rate-of-increase percentage.
For each cost reporting period, the updated target amount is multiplied
by total Medicare discharges during that period and applied as an
aggregate upper limit (the ceiling as defined in Sec. 413.40(a)) of
Medicare reimbursement for total inpatient operating costs for a
hospital's cost reporting period. In accordance with Sec. 403.752(a)
of the regulations, religious nonmedical health care institutions
(RNHCIs) also are subject to the rate-of-increase limits established
under Sec. 413.40 of the regulations discussed previously.
Furthermore, in accordance with Sec. 412.526(c)(3) of the regulations,
extended neoplastic disease care hospitals also are subject to the
rate-of-increase limits established under Sec. 413.40 of the
regulations discussed previously.
As explained in the FY 2006 IPPS final rule (70 FR 47396 through
47398), beginning with FY 2006, we have used the percentage increase in
the IPPS operating market basket to update the target amounts for
children's hospitals, the 11 cancer hospitals, and RNHCIs. Consistent
with the regulations at Sec. Sec. 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 FY 2018 IPPS/LTCH PPS final
rule, we rebased and revised the IPPS operating market basket to a 2014
base year, effective for FY 2018 and subsequent fiscal 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 fiscal years. As discussed in section IV. of the preamble of
the FY 2022 IPPS/LTCH PPS final rule (86 FR 45194 through 45207), we
rebased and revised the IPPS operating market basket to a 2018 base
year. Therefore, we used the percentage increase in the 2018-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 2022 and subsequent fiscal
years.
For this FY 2024 IPPS/LTCH PPS proposed rule, based on IGI's 2022
fourth quarter forecast, we estimate that the 2018-based IPPS operating
market basket percentage increase for FY 2024 is 3.0 percent (that is,
the estimate of the market basket rate-of-increase). Based on this
estimate, the FY 2024 rate-of-increase percentage that will be applied
to the FY 2023 target amounts in order to calculate the FY 2024 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 3.0 percent,
in accordance with the applicable regulations at 42 CFR 413.40.
However, we are proposing that if more recent data becomes available
for the FY 2024 IPPS/LTCH PPS final rule, we would use such data, if
appropriate, to calculate the final IPPS operating market basket update
for FY 2024.
In addition, payment for inpatient operating costs for hospitals
classified under section 1886(d)(1)(B)(vi) of the Act (which we refer
to as ``extended neoplastic disease care hospitals'') for cost
reporting periods beginning on or after January 1, 2015, is to be made
as described in 42 CFR 412.526(c)(3), and payment for capital costs for
these hospitals is to be made as described in 42 CFR 412.526(c)(4).
(For additional information on these payment regulations, we refer
readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38321 through
38322).) Section 412.526(c)(3) provides that the hospital's Medicare
allowable net inpatient operating costs for that period are paid on a
reasonable cost basis, subject to that hospital's ceiling, as
determined under Sec. 412.526(c)(1), for that period. Under Sec.
412.526(c)(1), for each cost reporting period, the ceiling was
determined by multiplying the updated target amount, as defined in
Sec. 412.526(c)(2), for that period by the number of Medicare
discharges paid during that period. Section 412.526(c)(2)(i) describes
the method for determining the target amount for cost reporting periods
beginning during FY 2015. Section 412.526(c)(2)(ii) specifies that, for
cost reporting periods beginning during fiscal years after FY 2015, the
target amount will equal the hospital's target amount for the previous
cost reporting period updated by the applicable annual rate-of-increase
percentage specified in Sec. 413.40(c)(3) for the subject cost
reporting period (79 FR 50197).
For FY 2024, in accordance with Sec. Sec. 412.22(i) and
412.526(c)(2)(ii) of the regulations, for cost reporting periods
beginning during FY 2024, the proposed update to the target amount for
extended neoplastic disease care hospitals (that is, hospitals
described under Sec. 412.22(i)) is the applicable annual rate-of-
increase percentage specified in Sec. 413.40(c)(3), which is estimated
to be the percentage increase in the 2018-based IPPS operating market
basket (that is, the estimate of the market basket rate-of-increase).
Accordingly, the proposed update to an extended neoplastic disease care
hospital's target amount for FY 2024 is 3.0 percent, which is based on
IGI's fourth quarter 2022 forecast. Furthermore, we are proposing that
if more recent data becomes available for the FY 2024 IPPS/LTCH PPS
final rule, we would use such data, if appropriate, to calculate the
IPPS operating market basket rate of increase for FY 2024.
B. Critical Access Hospitals (CAHs)
1. Background
Section 1820 of the Act provides for the establishment of Medicare
Rural Hospital Flexibility Programs (MRHFPs), under which individual
States may designate certain facilities as critical access hospitals
(CAHs). Facilities that are so designated and
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meet the CAH conditions of participation under 42 CFR part 485, subpart
F, will be certified as CAHs by CMS. Regulations governing payments to
CAHs for services to Medicare beneficiaries are located in 42 CFR part
413.
2. Frontier Community Health Integration Project Demonstration
a. Introduction
The Frontier Community Health Integration Project Demonstration was
originally authorized by section 123 of the Medicare Improvements for
Patients and Providers Act of 2008 (Pub. L. 110-275). The demonstration
has been extended by section 129 of the Consolidated Appropriations
Act, 2021 (Pub. L. 116-260) for an additional 5 years. In this proposed
rule, we are summarizing the status of the demonstration program, and
the ongoing methodologies for implementation and budget neutrality for
the demonstration extension period.
b. Background and Overview
As discussed in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49144
through 49147), section 123 of the Medicare Improvements for Patients
and Providers Act of 2008, 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 a Medicare Rural Hospital Flexibility Program (MRHFP)
grantee under section 1820(g) of the Act (that is, a CAH); and is
located in a state in which at least 65 percent of the counties in the
state are counties that have 6 or less residents per square mile.
The authorizing statute stipulated several other requirements for
the demonstration. 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. CMS selected
CAHs to participate in 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. These waivers were formulated with
the goal of increasing access to care with no net increase in costs.
Section 123 of Public Law 110-275 initially required a 3-year
period of performance. The FCHIP Demonstration began on August 1, 2016,
and concluded on July 31, 2019 (referred to in this section of the
proposed rule as the ``initial period''). Subsequently, section 129 of
the Consolidated Appropriations Act, 2021 (Pub. L. 116-260) extended
the demonstration by 5 years (referred to in this section of the
proposed rule as the ``extension period''). The Secretary is required
to conduct the demonstration for an additional 5-year period. CAHs
participating in the demonstration project during the extension period
began such participation in their cost reporting year that began on or
after January 1, 2022.
As described in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49144
through 49147), 10 CAHs were selected for participation in the
demonstration initial period. The selected CAHs were located in three
states--Montana, Nevada, and North Dakota--and participated in three of
the four interventions identified in the FY 2023 IPPS/LTCH PPS final
rule. 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.
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 45323 through
45328), CMS concluded that the initial period of the FCHIP
Demonstration (covering the performance period of August 1, 2016, to
July 31, 2019) had satisfied the budget neutrality requirement
described in section 123(g)(1)(B) of Public Law 110-275. Therefore, CMS
did not apply a budget neutrality payment offset policy for the initial
period of the demonstration.
Section 129 of Public Law 116-260, stipulates that only the 10 CAHs
that participated in the initial period of the FCHIP Demonstration are
eligible to participate during the extension period. Among the eligible
CAHs, five have elected to participate in the extension period. The
selected CAHs are located in two states--Montana and North Dakota--and
are implementing three of the four interventions. The eligible CAH
participants elected to change the number of interventions and payment
waivers they would participate in during the extension period. CMS
accepted and approved the CAHs intervention and payment waiver updates.
For the extension period, four CAHs are participants in the telehealth
intervention, three CAHs are participants in the skilled nursing
facility/nursing facility bed intervention, and three CAHs are
participants in the ambulance services intervention. As with the
initial period, each CAH was allowed to participate in more than one of
the interventions during the extension period. None of the selected
CAHs are participants in the home health intervention, which was the
fourth intervention.
c. Intervention Payment and Payment Waivers
As described in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49144
through 49147), CMS waived certain Medicare rules for CAHs
participating in the demonstration initial period to allow for
alternative reasonable cost-based payment methods in the three distinct
intervention service areas: telehealth services, ambulance services,
and skilled nursing facility/nursing facility (SNF/NF) beds expansion.
The payments and payment waiver provisions only apply if the CAH is a
participant in the associated intervention. CMS Intervention Payment
and Payment Waivers for the demonstration extension period consist of
the following:
(1) Telehealth Services Intervention Payments
CMS waives section 1834(m)(2)(B) of the Act, which specifies the
facility fee to the originating site for Medicare telehealth services.
CMS modifies the facility fee payment specified under section
1834(m)(2)(B) of the Act to make reasonable cost-based reimbursement to
the participating CAH where the participating CAH serves as the
originating site for a telehealth service furnished to an eligible
telehealth
[[Page 27061]]
individual, as defined in section 1834(m)(4)(B) of the Act. CMS
reimburses the participating CAH serving as the originating site at 101
percent of its reasonable costs for overhead, salaries and fringe
benefits associated with telehealth services at the participating CAH.
CMS does not fund or provide reimbursement to the participating CAH for
the purchase of new telehealth equipment.
CMS waives section 1834(m)(2)(A) of the Act, which specifies that
the payment for a telehealth service furnished by a distant site
practitioner is the same as it would be if the service had been
furnished in-person. CMS modifies the payment amount specified for
telehealth services under section 1834(m)(2)(A) of the Act to make
reasonable cost-based reimbursement to the participating CAH for
telehealth services furnished by a physician or practitioner located at
distant site that is a participating CAH that is billing for the
physician or practitioner professional services. Whether the
participating CAH has or has not elected Optional Payment Method II for
outpatient services, CMS would pay the participating CAH 101 percent of
reasonable costs for telehealth services when a physician or
practitioner has reassigned their billing rights to the participating
CAH and furnishes telehealth services from the participating CAH as a
distant site practitioner. This means that participating CAHs that are
billing under the Standard Method on behalf of employees who are
physicians or practitioners (as defined in section 1834(m)(4)(D) and
(E) of the Act, respectively) would be eligible to bill for distant
site telehealth services furnished by these physicians and
practitioners. Additionally, CAHs billing under the Optional Method
would be reimbursed based on 101 percent of reasonable costs, rather
than paid based on the Medicare physician fee schedule, for the distant
site telehealth services furnished by physicians and practitioners who
have reassigned their billing rights to the CAH. For distant site
telehealth services furnished by physicians or practitioners who have
not reassigned billing rights to a participating CAH, payment to the
distant site physician or practitioner would continue to be made as
usual under the Medicare physician fee schedule. Except as described
herein, CMS does not waive any other provisions of section 1834(m) of
the Act for purposes of the telehealth services intervention payments,
including the scope of Medicare telehealth services as established
under section 1834(m)(4)(F) of the Act.
(2) Ambulance Services Intervention Payments
CMS waives 42 CFR 413.70(b)(5)(i)(D) and section 1834(l)(8) of the
Act, which provides that payment for ambulance services furnished by a
CAH, or an entity owned and operated by a CAH, is 101 percent of the
reasonable costs of the CAH or the entity in furnishing the ambulance
services, but only if the CAH or the entity is the only provider or
supplier of ambulance services located within a 35-mile drive of the
CAH, excluding ambulance providers or suppliers that are not legally
authorized to furnish ambulance services to transport individuals to or
from the CAH. The participating CAH would be paid 101 percent of
reasonable costs for its ambulance services regardless of whether there
is any provider or supplier of ambulance services located within a 35-
mile drive of the participating CAH or participating CAH-owned and
operated entity. CMS would not make cost-based payment to the
participating CAH for any new capital (for example, vehicles)
associated with ambulance services. This waiver does not modify any
other Medicare rules regarding or affecting the provision of ambulance
services.
(3) SNF/NF Beds Expansion Intervention Payments
CMS waives 42 CFR 485.620(a), 42 CFR 485.645(a)(2), and section
1820(c)(2)(B)(iii) of the Act which limit CAHs to maintaining no more
than 25 inpatient beds, including beds available for acute inpatient or
swing bed services. CMS waives 1820(f) of the Act permitting
designating or certifying a facility as a critical access hospital for
which the facility at any time is furnishing inpatient beds which
exceed more than 25 beds. Under this waiver, if the participating CAH
has received swing bed approval from CMS, the participating CAH may
maintain up to ten additional beds (for a total of 35 beds) available
for acute inpatient or swing bed services; however, the participating
CAH may only use these 10 additional beds for nursing facility or
skilled nursing facility level of care. CMS would pay the participating
CAH 101 percent of reasonable costs for its SNF/NF services furnished
in the 10 additional beds.
d. Budget Neutrality
(1) Budget Neutrality Requirement
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 45323 through
45328), we finalized a policy to address the budget neutrality
requirement for the demonstration initial period. As explained in the
FY 2022 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 meaning that
the demonstration would produce savings from reduced transfers and
admissions to other health care providers, 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 finalized for
the demonstration initial period of performance in the FY 2022 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.
In the FY 2023 IPPS/LTCH PPS final rule, we adopted the same budget
neutrality policy contingency plan used during the demonstration
initial period to ensure that the budget neutrality requirement in
section 123 of Public Law 110-275 is met during the demonstration
extension period. 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 the participating CAHs,
shows that increases in Medicare payments under the demonstration
during the 5-year extension period are not sufficiently offset by
reductions elsewhere, we would recoup the additional expenditures
attributable to the demonstration through a reduction in payments to
all CAHs nationwide.
As explained in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49144
through 49147, because of the small scale of the demonstration, we
indicated that we did not believe it would be feasible to implement
budget neutrality for the demonstration extension period by reducing
payments to only the participating CAHs. Therefore, in the event that
this demonstration extension period is found to result in aggregate
payments in excess of the amount that would have been paid if this
demonstration extension period were not implemented, CMS policy is to
comply with the budget neutrality requirement finalized in the FY 2023
IPPS/LTCH PPS final rule, by reducing payments to all CAHs, not just
those participating in the demonstration extension period.
In the FY 2023 IPPS/LTCH PPS final rule, we stated that we believe
it is appropriate to make any payment
[[Page 27062]]
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.
In the FY 2023 IPPS/LTCH PPS final rule, we finalized a policy that
in the event the demonstration extension period is found not to have
been budget neutral, any excess costs would be recouped within one
fiscal year. We explained our belief that this policy is a more
efficient timeframe for the government to conclude the demonstration
operational requirements (such as analyzing claims data, cost report
data and/or other data sources) to adjudicate the budget neutrality
payment recoupment process due to any excess cost that occurred as
result of the demonstration extension period.
(2) FCHIP Budget Neutrality Methodology and Analytical Approach
As explained in the FY 2022 IPPS/LTCH PPS final rule, we finalized
a policy to address the demonstration budget neutrality methodology and
analytical approach for the initial period of the demonstration. In the
FY 2023 IPPS/LTCH PPS final rule, we finalized a policy to adopt the
budget neutrality methodology and analytical approach used during the
demonstration initial period to ensure budget neutrality for the
extension period. The analysis of budget neutrality during the initial
period of the demonstration identified both the costs related to
providing the intervention services under the FCHIP Demonstration and
any potential downstream effects of the intervention-related services,
including any savings that may have accrued.
The budget neutrality analytical approach for the demonstration
initial period incorporated two major data components: (1) Medicare
cost reports; and (2) Medicare administrative claims. As described in
the FY 2022 IPPS/LTCH PPS final rule (86 FR 45323 through 45328), CMS
computed the cost of the demonstration for each fiscal year of the
demonstration initial period using Medicare cost reports for the
participating CAHs, and Medicare administrative claims and enrollment
data for beneficiaries who received demonstration intervention
services.
In addition, in order to capture the full impact of the
interventions, CMS developed a statistical modeling, Difference-in-
Difference (DiD) regression analysis to estimate demonstration
expenditures and compute the impact of expenditures on the intervention
services by comparing cost data for the demonstration and non-
demonstration groups using Medicare administrative claims across the
demonstration period of performance under the initial period of the
demonstration. The DiD regression analysis would 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 would be
reconciled using data obtained from auditing the participating CAHs'
Medicare cost reports. We would estimate the costs of the demonstration
using ``as submitted'' cost reports for each hospital's financial
fiscal year participation within each of the demonstration extension
period performance years. Each CAH has its own Medicare cost report end
date applicable to the 5-year period of performance for the
demonstration extension period. The cost report is structured to gather
costs, revenues and statistical data on the provider's financial fiscal
period. As a result, we finalized a policy in the FY 2023 IPPS/LTCH PPS
final rule that we would determine the final budget neutrality results
for the demonstration extension once complete data is available for
each CAH for the demonstration extension period.
e. Policies for Implementing the 5-year Extension and Provisions
Authorized by Section 129 of the Consolidated Appropriations Act, 2021
(Pub. L. 116-260)
As stated in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49144
through 49147), our policy for implementing the 5-year extension period
for section 129 of Public Law 116-260 follows same budget neutrality
methodology and analytical approach as the demonstration initial period
methodology. While we expect to use the same methodology that was used
to assess the budget neutrality of the FCHIP Demonstration during
initial period of the demonstration to assess the financial impact of
the demonstration during this extension period, upon receiving data for
the extension 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.
f. Total Budget Neutrality Offset Amount for FY 2024
At this time, for the FY 2024 IPPS/LTCH PPS proposed rule, while
this discussion represents our anticipated approach to assessing the
financial impact of the demonstration extension period based on upon
receiving data for the full demonstration extension period, we may
update and/or modify the FCHIP Demonstration budget neutrality
methodology and analytical approach to ensure that the full impact of
the demonstration is appropriately captured.
Therefore, we propose not to apply a budget neutrality payment
offset to payments to CAHs in FY 2024. This policy will have no impact
for any national payment system for FY 2024.
VIII. Proposed Changes to the Long-Term Care Hospital Prospective
Payment System (LTCH PPS) for FY 2024
A. Background of the LTCH PPS
1. Legislative and Regulatory Authority
Section 123 of the Medicare, Medicaid, and SCHIP (State Children's
Health Insurance Program) Balanced Budget Refinement Act of 1999 (BBRA)
(Pub. L. 106-113), as amended by section 307(b) of the Medicare,
Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000
(BIPA) (Pub. L. 106-554), provides for payment for both the operating
and capital-related costs of hospital inpatient stays in long-term care
hospitals (LTCHs) under Medicare Part A based on prospectively set
rates. The Medicare prospective payment system (PPS) for LTCHs applies
to hospitals that are described in section 1886(d)(1)(B)(iv) of the
Act, effective for cost reporting periods beginning on or after October
1, 2002.
Section 1886(d)(1)(B)(iv)(I) of the Act originally defined an LTCH
as a hospital that 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 also provided an alternative
definition of LTCHs (``subclause II'' 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
[[Page 27063]]
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 resource
use and costs in LTCHs.
Section 307(b)(1) of the BIPA, among other things, mandates that
the Secretary shall examine, and may provide for, adjustments to
payments under the LTCH PPS, including adjustments to DRG weights, area
wage adjustments, geographic reclassification, outliers, updates, and a
disproportionate share adjustment.
In the August 30, 2002 Federal Register, we issued a final rule
that implemented the LTCH PPS authorized under the BBRA and BIPA (67 FR
55954). For the initial implementation of the LTCH PPS (FYs 2003
through 2007), the system used information from LTCH patient records to
classify patients into distinct long-term care-diagnosis-related groups
(LTCDRGs) based on clinical characteristics and expected resource
needs. Beginning in FY 2008, we adopted the Medicare severity-long-term
care-diagnosis related groups (MS-LTC-DRGs) as the patient
classification system used under the LTCH PPS. Payments are calculated
for each MS-LTC-DRG and provisions are made for appropriate payment
adjustments. Payment rates under the LTCH PPS are updated annually and
published in the Federal Register.
The LTCH PPS replaced the reasonable cost-based payment system
under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA)
(Pub. L. 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. 98-21), which added section 1886(d) to the
Act, certain hospitals, including LTCHs, were excluded from the PPS for
acute care hospitals and paid their reasonable costs for inpatient
services subject to a per discharge limitation or target amount under
the TEFRA system. For each cost reporting period, a hospital specific
ceiling on payments was determined by multiplying the hospital's
updated target amount by the number of total current year Medicare
discharges. (Generally, in this section of the preamble of this
proposed rule, when we refer to discharges, we describe Medicare
discharges.) The August 30, 2002 final rule further details the payment
policy under the TEFRA system (67 FR 55954).
In the August 30, 2002 final rule, we provided for a 5-year
transition period from payments under the TEFRA system to payments
under the LTCH PPS. During this 5-year transition period, an LTCH's
total payment under the PPS was based on an increasing percentage of
the Federal rate with a corresponding decrease in the percentage of the
LTCH PPS payment that is based on reasonable cost concepts, unless an
LTCH made a one-time election to be paid based on 100 percent of the
Federal rate. Beginning with LTCHs' cost reporting periods beginning on
or after October 1, 2006, total LTCH PPS payments are based on 100
percent of the Federal rate.
In addition, in the August 30, 2002 final rule, we presented an in-
depth discussion of the LTCH PPS, including the patient classification
system, relative weights, payment rates, additional payments, and the
budget neutrality requirements mandated by section 123 of the BBRA. The
same final rule that established regulations for the LTCH PPS under 42
CFR part 412, subpart O, also contained LTCH provisions related to
covered inpatient services, limitation on charges to beneficiaries,
medical review requirements, furnishing of inpatient hospital services
directly or under arrangement, and reporting and recordkeeping
requirements. We refer readers to the August 30, 2002 final rule for a
comprehensive discussion of the research and data that supported the
establishment of the LTCH PPS (67 FR 55954).
In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49601 through
49623), we implemented the provisions of the Pathway for Sustainable
Growth Rate (SGR) Reform Act of 2013 (Pub. L. 113-67), which mandated
the application of the ``site neutral'' payment rate under the LTCH PPS
for discharges that do not meet the statutory criteria for exclusion
beginning in FY 2016. For cost reporting periods beginning on or after
October 1, 2015, discharges that do not meet certain statutory criteria
for exclusion are paid based on the site neutral payment rate.
Discharges that do meet the statutory criteria continue to receive
payment based on the LTCH PPS standard Federal payment rate. For more
information on the statutory requirements of the Pathway for SGR Reform
Act of 2013, we refer readers to the FY 2016 IPPS/LTCH PPS final rule
(80 FR 49601 through 49623) and the FY 2017 IPPS/LTCH PPS final rule
(81 FR 57068 through 57075).
In the FY 2018 IPPS/LTCH PPS final rule, we implemented several
provisions of the 21st Century Cures Act (``the Cures Act'') (Pub. L.
114-255) that affected the LTCH PPS. (For more information on these
provisions, we refer readers to 82 FR 38299.)
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41529), we made
conforming changes to our regulations to implement the provisions of
section 51005 of the Bipartisan Budget Act of 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, which was a payment adjustment that was applied to
payments for Medicare patient LTCH discharges when the number of such
patients originating from any single referring hospital was in excess
of the applicable threshold for given cost reporting period.
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.
2. Criteria for Classification as an LTCH
a. Classification as an LTCH
Under the regulations at Sec. 412.23(e)(1), to qualify to be paid
under the LTCH PPS, a hospital must have a provider agreement with
Medicare. Furthermore, Sec. 412.23(e)(2)(i), which implements section
1886(d)(1)(B)(iv) of the Act, requires that a hospital have an average
Medicare inpatient length of stay of greater than 25 days to be paid
under the LTCH PPS. In accordance with section 1206(a)(3) of the
Pathway for SGR Reform Act of 2013 (Pub. L. 113-67), as amended by
section 15007 of Public Law 114-255, we amended our regulations to
specify that Medicare Advantage plans' and site neutral payment rate
discharges are
[[Page 27064]]
excluded from the calculation of the average length of stay for all
LTCHs, for discharges occurring in cost reporting period beginning on
or after October 1, 2015.
b. Hospitals Excluded From the LTCH PPS
The following hospitals are paid under special payment provisions,
as described in Sec. 412.22(c) and, therefore, are not subject to the
LTCH PPS rules:
Veterans Administration hospitals.
Hospitals that are reimbursed under State cost control
systems approved under 42 CFR part 403.
Hospitals that are reimbursed in accordance with
demonstration projects authorized under section 402(a) of the Social
Security Amendments of 1967 (Pub. L. 90-248) (42 U.S.C. 1395b-1),
section 222(a) of the Social Security Amendments of 1972 (Pub. L. 92-
603) (42 U.S.C. 1395b1 (note)) (Statewide-all payer systems, subject to
the rate-of increase test at section 1814(b) of the Act), or section
3201 of the Patient Protection and Affordable Care Act (Pub. L. 111-
148) (42 U.S.C. 1315a).
Nonparticipating hospitals furnishing emergency services
to Medicare beneficiaries.
3. Limitation on Charges to Beneficiaries
In the August 30, 2002 final rule, we presented an in-depth
discussion of beneficiary liability under the LTCH PPS (67 FR 55974
through 55975). This discussion was further clarified in the RY 2005
LTCH PPS final rule (69 FR 25676). In keeping with those discussions,
if the Medicare payment to the LTCH is the full LTC-DRG payment amount,
consistent with other established hospital prospective payment systems,
Sec. 412.507 currently provides that an LTCH may not bill a Medicare
beneficiary for more than the deductible and coinsurance amounts as
specified under Sec. Sec. 409.82, 409.83, and 409.87, and for items
and services specified under Sec. 489.30(a). However, under the LTCH
PPS, Medicare will only pay for services furnished during the days for
which the beneficiary has coverage until the short-stay outlier (SSO)
threshold is exceeded. If the Medicare payment was for a SSO case (in
accordance with Sec. 412.529), and that payment was less than the full
LTC-DRG payment amount because the beneficiary had insufficient
coverage as a result of the remaining Medicare days, the LTCH also is
currently permitted to charge the beneficiary for services delivered on
those uncovered days (in accordance with Sec. 412.507). In the FY 2016
IPPS/LTCH PPS final rule (80 FR 49623), we amended our regulations to
expressly limit the charges that may be imposed upon beneficiaries
whose LTCHs' discharges are paid at the site neutral payment rate under
the LTCH PPS. In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57102), we
amended the regulations under Sec. 412.507 to clarify our existing
policy that blended payments made to an LTCH during its transitional
period (that is, an LTCH's payment for discharges occurring in cost
reporting periods beginning in FYs 2016 through 2019) are considered to
be site neutral payment rate payments.
4. Best Available Data
We refer readers to section I.E. of the preamble of this proposed
rule for our discussion on our proposal to use the most recent data
available for the FY 2024 LTCH PPS ratesetting, including the FY 2022
MedPAR claims and FY 2021 cost report data.
B. Medicare Severity Long-Term Care Diagnosis-Related Group (MS-LTC-
DRG) Classifications and Relative Weights for FY 2024
1. Background
Section 123 of the BBRA required that the Secretary implement a PPS
for LTCHs to replace the cost-based payment system under TEFRA. Section
307(b)(1) of the BIPA modified the requirements of section 123 of the
BBRA by requiring that the Secretary examine the feasibility and the
impact of basing payment under the LTCH PPS on the use of existing (or
refined) hospital DRGs that have been modified to account for different
resource use of LTCH patients.
Under both the IPPS and the LTCH PPS, the DRG-based classification
system uses information on the claims for inpatient discharges to
classify patients into distinct groups (for example, DRGs) based on
clinical characteristics and expected resource needs. 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. We referred to this patient
classification system as the ``long-term care diagnosis-related groups
(LTC-DRGs).'' 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), we adopted the MS-DRGs and the Medicare severity
long-term care diagnosis-related groups (MS-LTC-DRGs) under the IPPS
and the LTCH PPS, respectively, effective beginning October 1, 2007 (FY
2008). For a full description of the development, implementation, and
rationale for the use of the MS-DRGs and MS-LTC-DRGs, we refer readers
to the FY 2008 IPPS final rule with comment period (72 FR 47141 through
47175 and 47277 through 47299). (We note that, in that same final rule,
we revised the regulations at Sec. 412.503 to specify that for LTCH
discharges occurring on or after October 1, 2007, when applying the
provisions of 42 CFR part 412, subpart O, applicable to LTCHs for
policy descriptions and payment calculations, all references to LTC-
DRGs would be considered a reference to MS-LTC-DRGs. For the remainder
of this section, we present the discussion in terms of the current MS-
LTC-DRG patient classification system unless specifically referring to
the previous LTC-DRG patient classification system that was in effect
before October 1, 2007.)
Consistent with section 123 of the BBRA, as amended by section
307(b)(1) of the BIPA, and Sec. 412.515 of the regulations, we use
information derived from LTCH PPS patient records to classify LTCH
discharges into distinct MS-LTC-DRGs based on clinical characteristics
and estimated resource needs. As noted previously, we adopted the same
DRG patient classification system utilized at that time under the IPPS.
The MS-DRG classifications are updated annually, which has resulted in
the number of MS-DRGs changing over time. For FY 2024, there would be
766 MS-DRG, and by extension, MS-LTC-DRG, groupings based on the
proposed changes, as discussed in section II.E. of the preamble of this
proposed rule.
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. That is, we assign an appropriate weight
to the MS-LTC-DRGs to account for the differences in resource use by
patients exhibiting the case complexity and multiple medical problems
characteristic of LTCH patients.
2. Patient Classifications Into MS-LTC-DRGs
a. Background
The MS-DRGs (used under the IPPS) and the MS-LTC-DRGs (used under
the LTCH PPS) are based on the CMS DRG structure. As noted previously
in this section, we refer to the DRGs under the LTCH PPS as MS-LTC-DRGs
although
[[Page 27065]]
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 are 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 the 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 are 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 sets 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 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 proposed rule. Additional coding
instructions and examples are published in the AHA's Coding Clinic for
ICD-10-CM/PCS.
To create the MS-DRGs (and by extension, the MS-LTC-DRGs), base
DRGs were subdivided according to the presence of specific secondary
diagnoses designated as complications or comorbidities (CCs) into one,
two, or three levels of severity, depending on the impact of the CCs on
resources used for those cases. Specifically, there are sets of MS-DRGs
that are split into 2 or 3 subgroups based on the presence or absence
of a CC or a major complication or comorbidity (MCC). We refer readers
to section II.D. of the 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 types of cases are selected for further
explanation (74 FR 43949).
After screening through the MCE, each claim is classified into the
appropriate MS-LTC-DRG by the Medicare LTCH GROUPER software on the
basis of diagnosis and procedure codes and other demographic
information (age, sex, and discharge status). The GROUPER software used
under the LTCH PPS is the same GROUPER software program used under the
IPPS. Following the MS-LTC-DRG assignment, the MAC determines the
prospective payment amount by using the Medicare PRICER program, which
accounts for hospital-specific adjustments. Under the LTCH PPS, we
provide an opportunity for LTCHs to review the MS-LTC-DRG assignments
made by the MAC and to submit additional information within a specified
timeframe as provided in Sec. 412.513(c).
The GROUPER software is used both to classify past cases to measure
relative hospital resource consumption to establish the MS-LTC-DRG
relative weights and to classify current cases for purposes of
determining payment. The records for all Medicare hospital inpatient
discharges are maintained in the MedPAR file. The data in this file are
used to evaluate possible MS-DRG and MS-LTC-DRG classification changes
and to recalibrate the MS-DRG and MS-LTC-DRG relative weights during
our annual update under both the IPPS (Sec. 412.60(e)) and the LTCH
PPS (Sec. 412.517), respectively.
b. Proposed Changes to the MS-LTC-DRGs for FY 2024
As specified by our regulations at Sec. 412.517(a), which require
that the MS-LTC-DRG classifications and relative weights be updated
annually, and consistent with our historical practice of using the same
patient classification system under the LTCH PPS as is used under the
IPPS, in this proposed rule, we are proposing to update the MS-LTC-DRG
classifications effective October 1, 2023 through September 30, 2024
(FY 2024) consistent with the proposed changes to specific MS-DRG
classifications presented in section II.F. of the preamble of this
proposed rule. Accordingly, the proposed MS-LTC-DRGs for FY 2024 are
the same as the MS-DRGs being proposed for use under the IPPS for FY
2024. In addition, because the proposed MS-LTC-DRGs for FY 2024 are the
same as the proposed MS-DRGs for FY 2024, the other proposed changes
that affect MS-DRG (and by extension MS-LTC-DRG) assignments under
proposed GROUPER Version 41, as discussed in section II.E. of the
preamble of this proposed rule, including the proposed changes to the
MCE software and the ICD-10-CM/PCS coding system, are also applicable
under the LTCH PPS for FY 2024.
[[Page 27066]]
3. Proposed Development of the FY 2024 MS-LTC-DRG Relative Weights
a. General Overview of the MS-LTC-DRG Relative Weights
One of the primary goals for the implementation of the LTCH PPS is
to pay each LTCH an appropriate amount for the efficient delivery of
medical care to Medicare patients. The system must be able to account
adequately for each LTCH's case-mix 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. Under the LTCH PPS,
relative weights for each MS-LTC-DRG are a primary element used to
account for the variations in cost per discharge and resource
utilization among the payment groups (Sec. 412.515). To ensure that
Medicare patients classified to each MS-LTC-DRG have access to an
appropriate level of services and to encourage efficiency, we calculate
a relative weight for each MS-LTC-DRG that represents the resources
needed by an average inpatient LTCH case in that MS-LTC-DRG. For
example, cases in an MS-LTC-DRG with a relative weight of 2 would, on
average, cost twice as much to treat as cases in an MS-LTC-DRG with a
relative weight of 1.
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 or nonmonotonicity or both resulting
from the adoption of the MS-LTC-DRGs. We also made a modification 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). We also adopted, beginning in FY 2023, a
10-percent cap policy on the reduction in a MS-LTC-DRG's relative
weight in a given year. (For details on the modifications to our
historical procedures for assigning relative weights in cases of zero
volume and nonmonotonicity or both, 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). For details on our adoption of the 10-percent
cap policy, we refer readers to the FY 2023 IPPS/LTCH PPS final rule
(87 FR 49152 through 49154).)
For purposes of determining the MS-LTC-DRG relative weights, under
our historical methodology, there are three different categories of MS-
LTC-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 in Step 3 of our proposed
methodology) 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 later in this section in Step 8
of our proposed methodology). For FY 2024, we are proposing to continue
to use applicable LTCH cases to establish the same volume-based
categories to calculate the FY 2024 MS-LTC-DRG relative weights.
b. Proposed Development of the MS-LTC-DRG Relative Weights for FY 2024
In this section, we present our proposed methodology for
determining the MS-LTC-DRG relative weights for FY 2024. We first list
and provide a brief description of our proposed steps for determining
the FY 2024 MS-LTC-DRG relative weights. We then, later in this
section, discuss in greater detail each proposed step. (We note for FY
2023, to account for the impact of COVID-19 on the ratesetting data, we
finalized a temporary modification to our relative weights methodology
that established the FY 2023 MS-LTC-DRG relative weights as an average
of the relative weights calculated both including and excluding COVID-
19 cases. For FY 2024, we are proposing to return to our historical
relative weight methodology as described in the FY 2021 IPPS/LTCH PPS
final rule (85 FR 58898 through 58907), subject to a ten percent cap as
described in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49162). Our
historical LTCH ratesetting methodologies do not separately account for
the impact of COVID-19 on the ratesetting data, which we believe is
appropriate for FY 2024 as discussed in further detail in section I.E.
of the preamble of this proposed rule. For this reason, the steps
presented in this section differ from those presented in the FY 2023
IPPS/LTCH PPS final rule (87 FR 49155 through 49162).